Mt.Gox declared bankruptcy today, leading to widespread fears about the security of other bitcoin exchanges. Could banks step into the breach? Could banks even release their own brands of virtual currencies? In the early days of paper money, banks issued their own notes. (See left.) But as time went on, currency became increasingly centralized, issued almost exclusively from central governments — and then along came bitcoins, famously decentralized and backed only by the will of bitcoin users. But history has a way of traveling full-circle and now an analyst, digital finance consultant, Larry Smith, is speculating that banks themselves might look to issue their own cryptocurrencies. Smith believes that cryptocurrencies will have wide application across business and culture, including both banking and online advertising. For banks, Bitcoin is “just a new source of money,” he suggests. “Banks are very hungry to advance their value through technology.” It’s easy to imagine, say, HSBCoin, or BarclaysBucks, giving investors who want choice in the currencies they use the services of a trusted financial brand. And why not? JPMorgan Chase made waves when a patent application involving a proprietary virtual currency, seemingly first filed in 1999, emerged online last December. (We reported this here.) The best [...]
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