Bill Buchanan: ‘We could go from boom to bust instantly’
Bitcoins are a radical move away from the financial infrastructure which we have created, where the strength of currency is based on the strength of the financial markets to support its value, writes Bill Buchanan.
The main risk is that there is no current method to define bitcoins’ actual worth, and we could go from a boom to a bust in a single instance. This can be likened to the Wall Street crash in the US, where the actual worth of shares did not reflect the real worth when matched to the value of a company.
This type of technology is a massive leap from our existing financial infrastructure to a radical one which creates a new infrastructure not built around existing finance arrangements, and thus anyone who uses them will be at risk.
If trust is high, the value of the coins is likely to increase, but a small glitch could cause the whole infrastructure to collapse.
• Professor Bill Buchanan is a cybercrime expert at Edinburgh Napier University.