Digital money gets up to speed with its first rally.

Isn't it fitting that the next financial bubble could be triggered by speculation in a completely dematerialised currency? A Bitcoin is about as substantial as a hole in the ether, but it punched through the $1,000 barrier last week on Mt Gox, the biggest Bitcoin exchange, making it the most expensive currency on earth. Paradoxically, the digital currency achieved this feat shortly after the marketplaces where it first found favour, the escrow bazaars for contraband goods and services hidden inside the Tor anonymous network, were laid waste by law enforcement agencies and hackers.

The responses to the sudden rally of Bitcoin are equally paradoxical. Germany is ready to invest in it. Ben Bernanke cautiously expects it to make something of itself in the future. And China has banned its banks from touching it. The most creative uses that people have dreamed up for the first completely digital currency range in ethical value from almost illegal to utterly contemptible. And ironically, a Bitcoin billionaire could starve to death, because you can't buy food with it.

But as commerce migrates online and sunders ties with banknotes and the paper trail, digital currencies will become mainstream. Bitcoin is only the first mover in a sunrise sector built on new ways of calibrating scarcity and value, the basis of all currencies. But don't break out the bubbly just yet. First, the bubble needs to be popped.

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