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| ("MovieWallpapers.net") |
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| (The Bitcoin symbol: "Bitcoin.org") |
But this is not the truth. The Bitcoin is real. In fact, it creates jobs and has global exchanges. Bitcoin is an industry.
Before I take this discussion further, it helps to understand this: What is a Bitcoin? Let's start with what might be a credible source: The Bitcoin wiki.
"Bitcoin is an experimental, decentralized digital currency that enables instant payments to anyone, anywhere in the world. Bitcoin uses peer-to-peer technology to operate with no central authority: managing transactions and issuing money are carried out collectively by the network."
Bitcoins were first released in 2009 by a mysterious individual named Satoshi Nakomoto, who has been tough to formally identify. In a quote from the wiki, we find that Satoshi had political motivations:
" 'Yes, [we will not find a solution to political problems in cryptography,] but we can win a major battle in the arms race and gain a new territory of freedom for several years. Governments are good at cutting off the heads of a centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own.' "
Whatever Nakomoto's motivation for writing the software, it is clear that the movement has spread beyond his (perhaps) original intent. When I first read about Bitcoins over a year ago, my first thought it was, "How can this odd currency could spread to a global level without any physical commodity backing it up?"
What makes these coins valuable is that they are traded online in exchange for products and services. Exchanges have been setup to convert your Bitcoins into your local currency.
Companies like BitPay, a Bitcoin exchange located in Georgia, work with online retailers who have decided to enter the BitCoin market. Many online retailers are fearful of one traditional risk associated with accepting credit card payments online: The dreaded charge back from fraudulent purchases. Someone across the globe has access to someone else's credit card, the former party then purchases a good or service online, and then the latter party notices the purchase and calls the credit card company.
This risk is eliminated by the Bitcoin, or so the claim goes. Using BitPay is not free, but the company markets itself as a cheap alternative to other traditional online merchants. According to its website, BitPay has raised $2.7 million in angel and venture capital funding. They have a team of at least ten employees and claim to be growing in client base.
Bitcoins also reinvigerate the pioneer spirit in many developed societies. According to a Wall Street Journal article, many have decided to devote time and money to Bitcoin mining.
People literally mine for bitcoins. They spend thousands of dollars on specialized computer equipment that is designed to solve complex mathematical problems when, upon solving, will mint new Bitcoins. The hope is that the investment will eventually pay off: They will be able to mine enough Bitcoins to eventually trade them for a profit. The race is underway as it is said (Scroll to "Economic aspects") that there will only be 21 million Bitcoins awarded.
Of course, controversy surrounds the Bitcoins industry, as it is something that is not yet regulated by any goverment. In theory, the task of laundering money through Bitcoins is easy, as there are no personal identifiers (as far as I have read) associated with the coins.
However, the ability to launder large, criminal enterprise, Breaking-Bad-style amounts of money is difficult because there is a public record of all Bitcoin transactions, so, theoretically, any suspicious activity could easily be monitored by governmental agents or by Bitcoin traders themselves.
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