• 16 May 2014 at 4:25 PM

The Bitcoin Bugle: By Fiat

The guy who founded CNet has figured out how to save bitcoin from itself: Turn it into the U.S. dollar.

Launched Thursday in an invites-only beta version, BitReserve differs from most other bitcoin payment businesses, however, in that peer-to-peer transactions can occur within its network as if only traditional currencies are being exchanged.

“The idea that bitcoin itself could be so volatile and become money is almost an impossibility,” said founder and Executive Chairman Halsey Minor, the entrepreneur behind news service CNet and other early Internet platform, in a presentation to the media earlier Thursday. As such, Bitreserve allows “members to convert bitcoin into money they know, trust, and understand,” he said….

Unlike the bitcoin-storing wallets offered by firms such as Coinbase, Blockchain.info or Bitgo, the value as expressed in these fiat currencies won’t fluctuate, something BitReserve claims it can guarantee because the accumulated digital “bitcurrency” value will be backed by a full reserve of real-world currencies.

And it’s just that kind of confidence in bitcoin qua bitcoin that’s threatened by the sort of infighting that happens when allegedly sex-and-drugged crazed former child stars are elected to groups designed to improve the fake currency’s reputation.

At least 10 members of the nonprofit Bitcoin Foundation have resigned over last week’s election of onetime Disney child star and current Bitcoin entrepreneur and financier Brock Pierce as a new director, officials at the group said.

Some of the members cited Pierce’s troubled past. That includes allegations in lawsuits from three employees of Pierce’s first company, bankrupt web video business Digital Entertainment Network, that he provided drugs and pressured them for sex when they were minors….

“The allegations against me are not true, and I have never had intimate or sexual contact with any of the people who made those allegations,” Pierce told Reuters via email.

Court records show 33-year-old Pierce, who played the title role in Disney’s “First Kid,” paid more than $21,000 to settle one employee suit, and he said others dropped their claims without money changing hands.

Now before you go back to ignoring the bit, do be sure to take a peek at this Journal interactive history of the former Magic: The Gathering Online Exchange, full of unflattering photos of former Bitcoin Foundation director Mark Karpelès, whose seat Pierce now holds.

BitBeat: BitReserve Vows Bitcoin-Like Costs, No Bitcoin-Like Risk [WSJ MoneyBeat blog]
Bitcoin Foundation hit by resignations over new director [Reuters]
A History of Mt. Gox [WSJ]

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Comments (2)

  1. Posted by UFOinsider | May 16, 2014 at 4:53 PM

    Sooooo, backing a highly volatile crypto currency with paper fiat currency lends credibility to the worthless crypto currency by virtue of being pegged to the paper currency it's supposed to replace.

    Makes sense to me!

    - UBS circular reference quant

  2. Posted by Learnto | May 17, 2014 at 10:24 AM

    Author of this article has a confusing, and difficult to read writing style. Terrible. Just like CNet guys idea. Terrible.