BERLIN–With all its oth­er prob­lems, the eu­ro is al­so get­ting un­ex­pect­ed–and "un­der­ground"–com­pe­ti­tion from a new vir­tu­al cur­ren­cy.It's called the bit­coin, and in case you haven't heard, it is the most am­bi­tious (and to-date, suc­cess­ful) at­tempt to cre­ate a new on­line cur­ren­cy, gen­er­at­ed by the cal­cu­la­tions of thou­sands of com­put­ers. Some say it amounts to a kind of an­ar­chic mon­ey.

This week, as the eu­ro cri­sis has reached Cyprus, the bit­coin (BTC) marked a record high on the largest on­line ex­change, bit­coin.de. The ex­change rate has ap­proached 50 eu­ros, more than dou­bling the val­ue of the vir­tu­al cur­ren­cy with­in four weeks.

The lat­est run on bit­coins was caused by re­ports of a bit­coin fund be­ing launched by Mal­ta-based hedge fund called Ex­ante. The Bit­coin Fund has an ini­tial min­i­mum sub­scrip­tion of $100,000 and a 0.5 per cent up­front sub­scrip­tion fee. Cur­rent as­sets un­der man­age­ment in the Bit­coin Fund are $3.2 mil­lion."In­vestor de­mand is ris­ing quick­ly," says Oliv­er Flask�mper, who dri­ves bit­coin.de: "Many in­vestors re­alise that the present mar­ket cap of around $520 mil­lion leaves a lot of room."

Eu­ro­peans alone have more than 5 tril­lion eu­ros in their wal­let files and ac­counts. Every­one can use bit­coins as long as they have a wal­let app in­stalled on a PC or a smart­phone.What makes bit­coins par­tic­u­lar­ly at­trac­tive is that users can use them for pay­ment at an in­creas­ing num­ber of places. More than 2,000 com­pa­nies and or­gan­i­sa­tions now ac­cept the al­ter­na­tive cur­ren­cy, in­clud­ing piz­za de­liv­ery out­fits, but al­so gam­bling sites of du­bi­ous re­pute.

It has al­so been said that bit­coins are used in drug trans­ac­tions. Un­like cred­it cards or on­line pay­ment ser­vices like Pay­pal, bit­coin trans­ac­tions are es­sen­tial­ly anony­mous which has aroused the sus­pi­cions of bankers and politi­cians alike. Bit­coin fans ar­gue that cash was and re­mains the pri­ma­ry means of pay­ing for drugs–and that no­body has aired the idea that cash should be abol­ished.

His­to­ry of bit­coins

The his­to­ry of the bit­coin has so far been marked by ups and downs. The vir­tu­al cur­ren­cy was in­tro­duced in 2009 by Japan­ese pro­gram­mer Satoshi Nakamo­to, who want­ed to cre­ate coun­ter­feit-proof mon­ey for the Web. It now ap­pears how­ev­er that the name is a pseu­do­nym, and that no­body re­al­ly knows who is be­hind the bit­coin idea.

Hype de­vel­oped around the cryp­to-cur­ren­cy rel­a­tive­ly quick­ly. In 2011 the first spec­u­la­tion bub­ble–that had dri­ven the ex­change rate to $30–burst. Then came a hack­er at­tack on the ma­jor bit­coin ex­changes. Users lost vir­tu­al coins worth sev­er­al hun­dred thou­sand eu­ros and con­fi­dence–and prices–col­lapsed.

De­spite fluc­tu­a­tions, bit­coins re­main an ex­treme­ly in­ter­est­ing con­cept. They are cre­at­ed by high­ly com­plex cal­cu­la­tions run­ning on thou­sands of com­put­ers. Ap­prox­i­mate­ly every 10 min­utes, 25 new bit­coins are cre­at­ed. The al­go­rithm takes in­to ac­count that at some point a max­i­mum num­ber of vir­tu­al coins will be reached–os­ten­si­bly around 2140, and from 2033 on no large quan­ti­ties of new bit­coins will be made.

In that sense the bit­coin sys­tem bears re­sem­blance to the gold stan­dard. Un­like eu­ros or dol­lars the amount of bit­coins can­not be in­creased at will. The vir­tu­al coins are in­ter­est­ing for in­vestors bet­ting on the in­fla­tion of pa­per mon­ey.

Bit­coins might even presage a whole new era. "Mon­ey is be­ing re-in­vent­ed," Thorsten Polleit, chief econ­o­mist at De­gus­sa Bank, be­lieves. He sees a fu­ture where dif­fer­ent kinds of mon­ey will be com­pet­ing with each oth­er. "The banks are mis­us­ing the mon­ey mo­nop­oly they have, us­ing mon­ey for po­lit­i­cal pur­pos­es. In the long run that will lead to de­val­u­a­tion"–and the de­mand for pri­vate medi­ums of ex­change will in­crease, he says.