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Euro Beware: The Real Threat May Be Bitcoin, The Online "Crypto-Currency"

Virtual money, real value
Virtual money, real value
Daniel Eckert

BERLIN - With all its other problems, the euro is also getting unexpected -- and “underground” -- competition from a new virtual currency.

It's called the bitcoin, and in case you haven't heard, it is the most ambitious (and to-date, successful) attempt to create a new online currency, generated by the calculations of thousands of computers. Some say it amounts to a kind of anarchic money.

This week, as the euro crisis has reached Cyprus, the bitcoin (BTC) marked a record high on the largest online exchange, bitcoin.de. The exchange rate has approached 50 euros, more than doubling the value of the virtual currency within four weeks.

The latest run on bitcoins was caused by reports of a bitcoin fund being launched by Malta-based hedge fund called Exante. The Bitcoin Fund has an initial minimum subscription of $100,000 and a 0.5% upfront subscription fee. Current assets under management in the Bitcoin Fund are $3.2 million.

"Investor demand is rising quickly," says Oliver Flaskämper, who drives bitcoin.de: "Many investors realize that the present market cap of around $520 million leaves a lot of room."

Europeans alone have more than 5 trillion euros in their wallet files and accounts. Everyone can use bitcoins as long as they have a wallet app installed on a PC or a smartphone.

What makes bitcoins particularly attractive is that users can use them for payment at an increasing number of places. Over 2,000 companies and organizations now accept the alternative currency, including pizza delivery outfits, but also gambling sites of dubious repute.

It has also been said that bitcoins are used in drug transactions. Unlike credit cards or online payment services like Paypal, bitcoin transactions are essentially anonymous which has aroused the suspicions of bankers and politicians alike. Bitcoin fans argue that cash was and remains the primary means of paying for drugs – and that nobody has aired the idea that cash should be abolished.

The history of the bitcoin has so far been marked by ups and downs. The virtual currency was introduced in 2009 by Japanese programmer Satoshi Nakamoto, who wanted to create counterfeit-proof money for the web. It now appears however that the name is a pseudonym, and that nobody really knows who is behind the bitcoin idea.

Bubbles and fluctuations, but still there

Hype developed around the crypto-currency relatively quickly. In 2011 the first speculation bubble – that had driven the exchange rate to $30 – burst. Then came a hacker attack on the major bitcoin exchanges. Users lost virtual coins worth several hundred thousand euros and confidence – and prices – collapsed.

Despite fluctuations, bitcoins remain an extremely interesting concept. They are created by highly complex calculations running on thousands of computers. Approximately every 10 minutes, 25 new bitcoins are created. The algorithm takes into account that at some point a maximum number of virtual coins will be reached – ostensibly around 2140, and from 2033 on no large quantities of new bitcoins will be made.

In that sense the bitcoin system bears resemblance to the gold standard. Unlike euros or dollars the amount of bitcoins cannot be increased at will. The virtual coins are interesting for investors betting on the inflation of paper money.

Bitcoins might even presage a whole new era. "Money is being re-invented," Thorsten Polleit, chief economist at Degussa Bank, believes. He sees a future where different kinds of money will be competing with each other. "The banks are misusing the money monopoly they have, using money for political purposes. In the long run that will lead to devaluation" – and the demand for private mediums of exchange will increase, he says.

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Indigenous Women Of Ecuador Set Example For Sustainable Agriculture

In southern Ecuador, a women-led agricultural program offers valuable lessons on sustainable farming methods, but also how to end violence.

Photo of women walking in Ecuador

Women walking in Guangaje Ecuador

Camila Albuja

SARAGURO — Here in this corner of southern Ecuador, life seems to be like a mandala — everything is cleverly used in this ancestral system of circular production. But the women of Saraguro had to fight and resist to make their way of life, protecting the local water and the seeds. When weaving, the women share and take care of each other, also weaving a sense of community.

With the wrinkled tips of her fingers, Mercedes Quizhpe, an indigenous woman from the Kichwa Saraguro people, washes one by one the freshly harvested vegetables from her garden. Standing on a small bench, with her hands plunged into the strong torrent of icy water and the bone-chilling early morning breeze, she checks that each one of her vegetables is ready for fair day. Her actions hold a life of historical resistance, one that prioritizes the care of life through the defense of territory and food sovereignty.

Mercedes' way of life is also one that holds many potential lessons for how to do agriculture and tourism better.

In the province of Loja, work begins before sunrise. At 5:00 a.m., the barking of dogs, the guardians of each house, starts. There is that characteristic smell of damp earth from the morning dew. Sheep bah uninterruptedly through the day. With all this life around, the crowing of early-rising roosters doesn't sound so lonely.

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