Bitcoins this week have been in the headlines and talk in
all my news and social apps. I’m not sure if what bitcoins are is common
knowledge but I didn't know. I looked up the basics, since most articles being written about the topic now assume you know what they are:
What are Bitcoins?
Bitcoins, capital B, is used to talk about the software while bitcoin is referring to the currency. Bitcoin is a peer-to-peer virtual currency that only exists
in a user’s online “wallet” (or bank account) and is not controlled by any
central authority and the users are untraceable. Your “wallet” can be accessed using personal
computers, mobile devices, or a web application. Russell Goldman explained it
perfect in his explanation,
“If hard currency is like a record, then a bitcoin is like an MP3”.
A Bitcoin Wallet
Where can you use them?
You can use bitcoins to buy anything you want, as long as
the business accepts bitcoins. Like cash, they are untraceable and they are
legal as long as they are used to make legal purchases. Companies that do take
them like the 2-3% lower fees than the ones imposed by credit card processors.
Where did they came from?
Satoshi
Nakamot, a Japanese programmer, outlined the process in an academic paper
and then disappeared in 2009 shortly after the first bitcoins were released. Little
is known about him before or after the 2009 launch of the first bitcoin
software.
Where do they come from?
Bitcoins are gained by users by “mining”. Bitcoins are
hidden in a complex encrypted computer program and users’ computers are working
constantly to UN-encrypt them in order to get new coins (“mining”). 11 million
bitcoins have been found and only 21 million total exist. Today a bitcoin was
worth about $546 at the time of publishing this blog. Available bitcoins are moved around the market
by users through a kind of stock market with people buying and selling bitcoins.
This is really just the basics. This topic had more information
than I knew about and Bitcoin stories are developing quickly. Just a few hours before I wrote this article Mt. Gox (a marketplace host for bitcoin) admitted
their site was hacked
and the users’ money is gone. Hopefully
this article will help in at least one other persons understanding of what
seems to be the topic of a lot of headlines still to come.
Bitcoins boggle my mind. While I think it is awesome that someone has found a way to emulate cash on the web, I am still thoroughly confused as to what a bitcoin actually is. I think that the possibilities for such an untraceable currency are endless, however. I was very interested by your post and I look forward to following what becomes of this mysterious currency.
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