Bitcoin Bourse

Worth a Virtual Fortune

Betting on the bitcoin. Source: Photothek via Getty Images
Betting on the bitcoin.
  • Why it matters

    Why it matters

    Bitcoins are rapidly gaining acceptance in the wider commercial world but many companies remain concerned about the virtual currency’s security.

  • Facts

    Facts

    • Bitcoins were created by a mysterious Japanese group that used NSA encryption methods to protect them.
    • One bitcoin is currently worth about €230 ($250).
    • The system’s greatest vulnerability lies in exchanges, where users convert bitcoins into paper money.
  • Audio

    Audio

  • Pdf

The digital revolution is supposed to begin in northern Germany, specifically in the provincial German town of Herford, not far from Bielefeld.

It isn’t easy to visit Germany’s only exchange for bitcoins, a popular virtual currency. There are no directions on its website, and there isn’t even a sign on the door. Oliver Flaskämper, the head of Bitcoin.de, apologizes for the game of hide-and-seek. “As an online business, we have almost no visitors,” he said.

Bitcoin owners can exchange their virtual coins into euros – or the other way around – at Bitcoin.de. The few employees at the Herford office are there to respond to customer inquiries. Most of the business takes place automatically.

For security reasons, Mr. Flaskämper is unwilling to reveal the location of the computers that bring together buyers and sellers of the virtual cryptocurrency. It sounds a little paranoid, and Mr. Flaskämper is aware of that. “Our earlier projects were definitely not as nerve-wracking,” he said. But that was before he launched the bitcoin exchange.

At this story went to press, one bitcoin was worth about €230 ($250). This is remarkable for a currency you can’t actually touch. Bitcoins are cybermoney. Rather than being printed by a central bank, their value is calculated with computers using cryptographic algorithms.

The most important feature is that the same algorithm that creates new bitcoins also monitors the currency’s trading. Someone who wants to pay for something with the virtual coins can transfer them to the recipient with a few mouse clicks, almost like sending an email. This is an advantage. For the same reason, however, they can also be stolen, almost like cash – and that is a drawback.

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