Ransomware is to bitcoin as the Internal Revenue Service is to the dollar. Just as the taxman forces you to use dollars to pay your taxes, electronic ransom demands have been set in bitcoin, forcing companies, individuals and even some governments to use the cryptocurrency if they wish to regain control of their computer systems.

If this sounds wacky, bear with me. Before getting into the full explanation, we need a brief tour of theories of money. The most widely accepted is that money was created because early humans found it so inconvenient to barter with pigs, llamas or berries. It would be much easier to swap my llamas for widely accepted items—cowrie shells, fancy feather boas or carved stones—and then swap those items again for grain than it would be to find someone with grain who happened to want llamas.

Money was also a means of accounting for debts; easier still than using cowrie shells would be to take the…

Read more…