Bitcoin is looking increasingly naïve as a currency; with a very expensive computer churning away at an overclocked speed you can create 'money' you can spend in very few places for only the cost of the electricity - and the risk of brain damage.
Bitcoin is a problematic economic proposition - and not just because US authorities are cracking down on the sites that allow you to buy drugs with bitcoins. With the Mt Gox bitcoin 'currency' exchange being hacked and then rolling back transactions that took advantage of the resulting drop in bitcoin value, the system isn't robust (while the bitcoin system attempts to deal with inflation, easing and other economic complexities, currency exchanges respond rather more simply to the laws of supply and demand). There's not much you can buy; we did see a silicon valley store promising to sell memory for bitcoins, but mostly it's drugs and - for some reason- alpaca socks. If it actually turned into a realistic alternative currency, it would probably turn out to be illegal.
But bitcoin is dangerous to more than your wealth (really; don't put your life savings into it).
There's a built-in incentive to destroy other bitcoin wallets; if you 'lose' a bitcoin, the value of all the other bitcoins goes up. So as well as the malware out there designed to steal bitcoin wallets and the botnets out there that are using compromised systems to mine bitcoins we're expecting to see malware that just deletes wallets.
And there might be more immediate dangers. There's a string of accident reports on the rather delightful Bitcoin Mining Accidents site, few of them serious. But one anonymous college student claims that he's giving up bitcoin mining.
His original post (on a site I'm not linking to because of the level of casual and amusing obscenity there ) reads, rather sadly:
"I'm done with Bitcoin. It was easy money, but it wasn't worth the (literal) heat.
-had 4 machines with multiple overclocked 5850s in my bedroom
-fan speeds at 100%
-room was warm, but tolerable
-weather suddenly gets hotter one day
-get severe heat stroke while I'm sleeping
-get taken to the ER, get covered in bags of ice and drink tons of gatorade and water
-finally cool down after what seemed like forever
-find out I have permanent minor brain damage now because my brain was too hot and swelled a lot
I wish I was joking."
When other bitcoin miners doubted the story, he added some details on the Mining Accident site; he lives with his parents, he was sleeping in the day, he hadn't got around to turning on his air conditioning. We've seen other, less substantiated reports of bitcoin heat stroke that required cooling via brain stents. At the very least, you can expect an electricity bill that's likely to dwarf your bitcoin gains - and all that bitcoin mining isn't even doing anything useful like protein folding; it's either useless calculation or checking other bitcoin mining and spending logs, so it's the least environmentally friendly currency I can imagine. And it could fry your brain…