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As Stilgherrian writes at ZDNet, Bitcoin has a certain appeal. The digital currency claims to be almost untraceable. That makes it great for people who want to avoid paying taxes.

In practice, it isn’t impossible to trace Bitcoin transactions, but it is difficult enough to make life easier for legally dodgy purchases. There’s a website called Silk Road, which is like TradeMe for drug dealers. Silk Road transactions are all in Bitcoins. Last year the Economist reported some US$1.9 million a month passes through the site.

Bitcoins turn up elsewhere in the underworld. Mind you, only the bravest or most suicidal of souls would pay a mob hitman in Bitcoins and sleep soundly at night.

Bitcoin is as much a political idea as a currency. It makes it easier to bypass bankers and governments. If it takes off it will challenge government’s ability to govern. It is meant to disrupt.

That’s all well and good. But I’ll leave financial disruption and the dismantling of human civilization to others. I want money I can trust and use. There are three huge disadvantages for practical day-to-day transactions.

First, you can’t use it in many places. BP won’t accept Bitcoin when you want to fill your car’s petrol tank. New World won’t let you buy a litre of milk with Bitcoin and it won’t get you far when shouting a round in the local pub. To be fair, all currencies were like this at one stage and it is possible the commercial world will accept the currency one day.

Second, that hard to trace feature which some see as part of Bitcoin’s appeal, makes it less safe in practice. If a transaction in dollars goes wrong, you can trace the money and put things right. A screwed Bitcoin transaction probably means you can wave your money goodbye. The currency, by its nature, is attractive to crooks.

Third, the currency is inherently risky. In mid-2011 the value of one bitcoin reached US$30 by the end of year it was down to US$2.

As Juha Saarinen writes at iTnews, earlier this week the value rose sharply to US$147 before dropping to US$126 in an hour of trading.

Bitcoin: More ideology than trustworthy currency.


Companies large and small are decommissioning information technology infrastructure as they move to cloud computing.

That’s not news. Cloud and as-a-service offerings have been discussed for years. They are the new normal.

Cloud is often cheaper and more efficient than owning and maintaining infrastructure. This is especially true where technology isn’t strategic.

Yet it isn’t always clear which approach has the lowest total cost of ownership because IT TCOs are hard to measure. Few businesses can tell you how much specific self-hosted applications cost to run.

Cloud costs are easier to gauge – you get a bill each month. There is nothing to depreciate.

No depreciation

Few understand the financial and strategic implications of not having large IT investments on balance sheets. Tax laws mean companies depreciate installed systems over several years. Traditional technology is capital expenditure.

Cloud subscriptions are service payments. You can write them off as operating costs.

A switch to the cloud frees capital for investment elsewhere. It also changes how people, especially at the top of businesses, think about technology. The implications of this aren’t yet fully clear, but most likely companies will become more nimble in their thinking.

There will be less sunk cost thinking – that’s where people argue “we’ve paid for this stuff we need to get a return on what we spent” – and more “what technology makes the best sense now” thinking.

This will give business owners more agility – they can better respond to changing conditions. This works just as well when expanding a business as when cutting costs.

Which could mean turbulence. That’s not always a bad thing, change means opportunity, but it can also mean greater business uncertainty and more risk-taking.

Australia’s government wants technology companies to explain why Australians pay more for technology products than US customers.

Our government seems unconcerned that New Zealand gets the same raw deal.

This week Canberra summoned Apple, Microsoft and Adobe to appear before an inquiry.

To be fair, Apple’s hardware prices in Australia and New Zealand are close to US prices. After taxes we pay fractionally more. That’s reasonable given our market size and currency fluctuation. Likewise, most of Microsoft’s NZ prices are roughly in line with the US.

Adobe is something else completely. Some products sell for twice their US price in New Zealand. That’s hard to justify when you realise they are sold as downloads – Adobe doesn’t need to move boxes around the world.

Australia’s government can’t force companies charge reasonable prices – and anyway even attempting that kind of market control would be dangerous. That doesn’t make the inquiry pointless,  getting this information out in the open is good. The publicity puts pressure on companies to behave.

Of course, when they have monopolies – like the one Adobe has on design software – companies don’t have to behave.

Should New Zealand have a price inquiry? I’d say it falls into what Finance Minister calls the “nice to have category”. We particularly don’t need the expense and distraction of holding one when Canberra has already gone to so much trouble. Any benefits the Australians get from the shining a light on international prices will probably rub off on us.

After all, most of these multinationals don’t even recognise New Zealand as a separate market from Australia.