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Ransoms aren’t what they used to be

Gold gets no respect once again.

Hackers attempting to  hold the world’s computers for ransom demand payment not in gold but in Bitcoin.

There is a lesson here.

Gold is an inflation hedge. Gold is a hedge against economic uncertainty. It retains its value forever.

But if you need an anonymous payment in a pinch, gold doesn’t offer much.

It  has the same drawbacks as cash.

It costs time and money to acquire gold. The premiums paid for physical gold are basically handling charges.

There is a cost to keeping the gold safe even if it is being sent to pay off criminals.

If other criminals could track the payment, they might steal the gold from the criminals who were attempting to earn it dishonestly.

Bitcoin offers a way to transfer value anonymously. It doesn’t cost any handling charge to buy Bitcoin.

Value transfers over the Internet easily. Bitcoin goes from one owner to the next with little effort.

Anonymous criminals can pocket their gains.

The problems associated with large gold payments have been evident for centuries.

That’s why northern Italian bankers figured out over 700 years ago how to pay in gold without actually moving the gold.

Letters of credit, bills of exchange and checks were born.

Ever afterwards the convenience of paper transfers and now those by Internet clashed with the certainty of gold.

Bitcoin eliminates the clash by claiming to be value without any substance other than an electronic block-chain entry.

It is still early days as to whether Bitcoin will actually become a full-fledged substitute for gold.

Already there have been Bitcoin thefts.

But the long-term future of Bitcoin is not the concern of collectors of ransom today.

On their minds is how little they have earned since launching their computer attacks on Friday.

The financial media says it’s about $50,000.

Buzz blogger Dave Harper has twice won the Numismatic Literary Guild Award for Best Blog and is editor of the weekly newspaper “Numismatic News.”

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