A little while back, I discussed Bitcoin being accepted at Meltdown Comics, a comic book shop. As a quick refresher, Bitcoin is a cryptocurrency. It’s basically a digital file with no financial value other than what people believe it has. In a way, paper currency is similar. Prior to the Great Depression, American currency (and currency elsewhere) was tied to the nation’s gold reserves. After the Great Depression, this aspect was removed and money became much more abstract and adaptable to the times. Bitcoin is similar in this respect with the added benefit that it can render Bitcoin transactions functionally anonymous. The anonymity isn’t perfect. There are videos explaining how to track someone down by their Bitcoin transactions. That said, it’s time consuming and not nearly as easy as tracking someone via their credit card swipe, as many retailers do. Bitcoin’s big problem was people taking it seriously.
The major hurdle was always that the cryptocurrency required people to accept it has value. That Meltdown Comics began taking Bitcoin is a big step towards legitimacy in the mainstream market. After all, if it’s being accepted for comics, it can be accepted for anything else. Apparently, a new startup called RoboCoin agrees with this sentiment and is selling ATM kiosks for BitCoin for $10,000 a unit. Using the kiosks, users will be able to buy and sell Bitcoin using their phone number as a user name and their handprint as a password. Wait, what was that about anonymity again?
Using biometric data to purchase sell Bitcoin ties you to the Bitcoin account that you are using at the kiosk. You can have more than one account, of course, but if you try to go home and transfer the Bitcoin from your kiosk account to your alternate account, you’ve just exposed your connection to the alternate account. The way Bitcoin can be traced is to see it’s transaction history. That is, which account sends Bitcoin, and which account receives it. Once your identity is tied to one account, you help to create a path that trace the life of the Bitcoin you use, exposing everyone else along the way.
RoboCoin is doing this because Bitcoin began finding acceptance in the underbelly of humanity. This is common for new technologies. Cars were once referred to as “ambulatory whorehouses” because it was so easy to drive someplace remote for sex. The home video and streaming video industries flourished due to porn. During the Prohibition era, the value and social allure of alcohol skyrocketed because it was taboo and therefore desirable. Bitcoin found it’s niche amongst Internet drug dealers, credit card thieves and other undesirables. By breaking the anonymity feature of Bitcoin, RoboCoin hopes to attract more “honest” users, gain more acceptance for the new currency and perhaps herald a new financial industry.
The intentions seem noble, but I suppose it ruins the mystique a little. Lets see where things go.