peer to peer

National | World | Economic History | Pop Eco | Interactive Articles

Learning to trust strangers

Anisha Kidd considers how new technology is helping strangers trust each other – and thus opening up a new world of economic transactions.

The BitCoin: ‘In no one we trust’

Last year I wrote a few articles discussing the origins of money and how its development arose from the need to have some sort of commonly accepted medium for storing and exchanging value, led by governments who could enforce and guarantee the value of currency. ┬áMore generally, this is the case for the vast majority of assets as there must be some guarantee of value before a counterparty would be willing to make a trade: a stake in a company for shares, the right to collateral for debt and a government backing for fiat currencies. Rationally it doesn’t make much sense for people to use something without any form of intrinsic value or guarantee as a medium for exchange.

One of my interests is exploring these anomalies in the economy and it just so happens that such a currency has emerged: it is called the BitCoin, a virtual currency which can be created and used by running a program on your average home PC.

Read more