To most of the world, the recent news about Bitcoin has not been good. A prominent board member of the Bitcoin Foundation was charged with money laundering. Multiple Bitcoin-using websites, implicated in drug and illegal gun sales, have been shut down. And the digital currency's largest online exchange, Tokyo-based Mt. Gox, filed for bankruptcy protection after saying it had most likely "lost" 850,000 coins worth more than $450 million.
If Bitcoin were a normal currency, these developments would have triggered a severe crisis of confidence. But to Bitcoin's many enthusiasts, they were but mere bumps in the road. Mt. Gox, they said, would be replaced by more established exchanges, such as New York-based SecondMarket.
Bitcoin's happy world is driven by an almost mystical belief it will deliver a new global financial order. In this new world, libertarians will have outsmarted hegemonic governments and rapacious banks to create a borderless currency of the people.
Perhaps some day. But this particular currency of the people had a rather murky origin. It was created in 2009 by someone who might or might not be named Satoshi Nakamoto. From there it spread rapidly, being accepted by companies ranging from retailer Overstock.com to gaming company Zynga. But its spread has slowed since its recent setbacks.
For most people, using Bitcoins is a bit like using a bank. You put money in and it can be stored, transferred to another account, converted back to cash, or used to make direct purchases at selected retailers.
The catch is that unlike dollars, Bitcoin's value is unstable. Lately, it has been on a roller-coaster ride, rising from less than $10 in 2012 to $1,100 in November, then down to $500 and now passing $600. It's a high-risk investment, not a chequing account.
Bitcoin has other forces working against it. One is that few law-abiding people have a genuine need for a hyper-volatile currency not guaranteed by government or not regulated against fraud or theft.
Its main legitimate users are traders with a libertarian bent. They see value in it as a way to bypass governments (which they believe debase their own currencies by printing too much of it) and banks (which impose onerous fees as they move people's money around). But that appeal will no doubt fade, perhaps as the result of losses, or perhaps as a realization that financial transactions are a practical matter and not an ideological one.
An even bigger problem is that drug dealers, tax cheats, money launderers and terrorists do have uses for such a currency. Bitcoin gives them a way to try to hide money or move it to places undetected. For this reason, numerous countries have announced bans or restrictions, with more likely to follow.
Whatever utilitarian appeal there might be to a government-less currency has to be weighed against its attractiveness to lawbreakers. Is it really such a great thing to undermine law enforcement and empower bad guys?
We have yet to hear a good reason why the answer should be yes.