I object to the idea of using (any) currency as an investment or as a store of value but some people are fleeing from Euros into Bitcoins anyway.

http://business.financialpost.com/2012/0....

Quote:

Fearful of the future, Europeans are moving their money out of their banks and dumping it into safe havens such as U.S. Treasuries, Government of Canada bonds — and apparently the virtual currency Bitcoin.

“European volume has been skyrocketing,” said Charlie Shrem, chief executive of BitInstant LLC, a company in New York that enables clients to transfer funds between Bitcoin and U.S. and Canadian dollars, British pounds, euros and other major currencies.

According to Mr. Shrem, the sudden rise has been driven by people in countries like Greece, Italy, Spain — and even the Netherlands — anxious to protect their savings.

“We’re getting requests from people literally saying, can we mail you euros? We can’t do that legally, but they keep asking.”

The bad news out of Europe is benefitting safe haven countries, pushing down borrowing costs for a whole swath of governments. On May 30 the yield on the benchmark 10-year U.S. Treasury slipped to 1.6%, the lowest since the Second World War. Ten-year bond yields in Germany, France and Canada have all hit record lows in recent weeks. Even the U.K. is getting a lift.

But why is Bitcoin caught up in the frenzy?

The darling of techies, hipsters and, increasingly, currency traders, it was created back in 2009 as an Internet-only currency regulated by a network algorithm. Traditional currencies, the thinking went, are cumbersome and expensive to use in online transactions. Every time a purchase is made, fees must be paid to a bank or credit card company. Costs are even more onerous when one currency is converted to another.

Bitcoin solved these problems and others as well, since it operates outside the payment systems operated by the banks. More importantly, it’s not under the control of any central bank or government. In fact, the supply of Bitcoins is controlled by an algorithm.

Proponents argue that makes it safer than traditional fiat currencies and essentially immune to the political pressures.

Indeed, at a time when governments around the world are pumping massive amounts of so-called fiscal stimulus into the economy, potentially setting the stage for untold inflation down the road, it’s not surprising that Bitcoin is suddenly attracting a lot of attention, as are other digital currencies.

For fans of the currency, it’s hard to imagine a better way to shelter your savings from the ravages of the gales that are blowing through global financial markets.

But it’s not the only alternative currency that’s garnering attention.

Second Life, a popular online game, has its own cyber money, known as linden dollars. Originally intended for use only within the game, linden dollars have morphed into a real currency that is becoming widely used across the internet by real consumers.

Earlier this year the Canadian Mint announced a project to create its own digital money, MintChip. Analysts call it a positive sign, since it shows that even the government has recognized the importance of digital currency.

So far though, the concept mostly remains a work in progress. Almost since its creation, Bitcoin has been wrestling with hurdles, including software bugs and, more worryingly, hacker attacks. Last June, Mount Gox, one of the biggest Bitcoin exchanges, suffered a security breach with hackers reportedly making off with thousands of account passwords and a substantial amount of Bitcoin money, inflicting a huge blow to user confidence.

Since then the value has recovered somewhat — it was trading around US$4 in April. But amid renewed fears around the eurozone it’s been on a steady upward trajectory, climbing from around $5.20 at the start of June to an intraday high of $5.65 on Friday.

can you eat a bitcoin? just saying and what if the net goes down?

If the net goes down, you have bigger problems.