Bitcoin: Global Currency of the Future?

Written by Mike Awada on . Posted in Business, Social Media, Technology

what-is-bitcoin

Bitcoin is a form of digital currency that’s dramatically shaking up the way goods and services are exchanged on the global stage.

Bitcoin is an experimental form of global currency that was formed in 2008 by an anonymous cryptographer under the pseudonym Satoshi Nakamoto.

Bitcoin is the most unique form of currency in the world; it’s based on a peer-to-peer system with no central authority to issue new money or track individual transactions. Instead, the collective network of Bitcoin traders themselves manage the network.

Crypto-Currency

Global corporations like PayPal and Visa charge huge fees and have a large number of restrictions on countries and businesses where their service can be used. Because of this, individuals have sought to create a crypto-currency, a transcendental form of payment based on a complex code that could exchange hands anywhere at anytime.

There have been countless failed attempts at this end goal because the systems weren’t secure enough to prevent essentially ‘printing’ or reusing the same money over and over. Bitcoins are the most successful form of crypto-currency ever created, but the jury is still out as to whether Bitcoin is the end-game, or just another stepping stone towards an ‘unregulated’ global currency in the future.

Community Cash

Bitcoins are slowly released every year via a complex ‘mining’ process that’s open to the public. Users from around the globe can offer up their computers’ energy and computational power to process global Bitcoin transactions in exchange for more Bitcoins.

Early adopters of this technology faced little competition in mining, and were rewarded with a great number of Bitcoins. The systemic algorithm is designed so that over time, and with more players in the game, the coins become harder to mine, and the Bitcoin reward becomes smaller and smaller. Despite these limitations, there are a number of individuals and organizations dedicating large sums of capital towards mining Bitcoins.

crypto-currency

How are Bitcoins exchanged?

Bitcoin transactions require complex public and private codes to be sent across the network, along with a destination address. All of this information is then verified and recorded by the collective community.

Due to the fact that there’s no one regulatory third party, each transaction costs very little to complete, just fractions of one Bitcoin. Bitcoins can actually be broken down to eight decimal places and exchanged!

What’s a Bitcoin worth?

The Bitcoin infrastructure was designed with an ultimate future cap of B⃦ 21 million. That is 21 million Bitcoins, not dollars. No one is quite sure why that’s the number, but it is what it is. Approximately one third of that final amount has currently been released to the free market.

Initial estimates believed the total number of Bitcoins would be slowly released through 2140, but that estimate has been adjusted to somewhere between 2030-2040. Unlike most world currencies where governments can print new money at will with little to no oversight, Bitcoins are deflationary in nature.

Though the value of the currency has fluctuated between $.03-29.57 since it’s inception in January 2009, the going rate of one Bitcoin today is about $13.35 (~$80 on 3/27/13). Spikes in the exchange rate have been due to media hype, and drops have been due to security breaches compromising trust and reserves. Due to it’s inherent deflationary nature, savvy investors are speculating on the currency long term.

Where can I get Bitcoins? 

You can mine Bitcoins at Bitcoin.org, or you can purchase them like stocks on various exchanges. You can also set up your business to accept Bitcoins as a form of currency for free.

Where can I spend Bitcoins?

The community of Bitcoiners has established a wiki site that answers a lot of questions about the disruptive currency. Leading web publishing service WordPress announced last month that they would be accepting Bitcoin as a form of payment!

If you have experience using Bitcoin, please share with us below!


Inspired By: MIT Tech Review

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