Virtual Currencies threaten the power of governments by weakening their grip over the medium of exchange - ie
Fiat Currency. In that sense, it is not surprising to see one of the more Authoritarian States definitively
cracking down on Virtual Currency exchange. In practise, this will lessen the booming virtual currencies business and put many Chinese "gold farmers" out of work, but generally drive the digital currency market to ever higher levels of sophistication and security.
We have
touched on this issue before.
An exposition on the topic of secure digital currencies can be found in David Friedman's
Future Imperfect.
We suspect that the collapse of the value of the private US Federal Reserve Dollar will spark a real push for legalisation of competing Commodity backed digital currencies.
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