What Bitcoin is, and why it matters

March 31, 2013

The Bitcoin, the digital currency that many either love or hate, has recently surpassed $1 billion in value. That mark, which was past by some combined 10.9 million Bitcoins according to TechCrunch, doesn’t mean the currency’s critics are wrong, but it does suggest that a digital “crypto-currency” can work.

Here’s how the Bitcoin works: the currency is purely digital and isn’t generated by any central banking authority. It changes hands digitally and can be transferred into cash if the need arises. The currency is created based on complex mathematical formulas solved by computers. As more coins are created, more mathematical problems are created, creating the need for more computational power and, as The Economist explains, setting a floor underneath the price of the currency.

The Bitcoin is typically used as an alternative to PayPal in order to avoid hefty fees, and has the additional benefit of making digital transactions anonymous (though this may soon change, but more on that later). But the currency is also used to buy and sell drugs in the Internet’s dirty, dirty underbelly. There are other problems as well: Bitcoin exchanges have been hacked before, and, as The Verge reports, has had damaging technical problems. Investors, too, are wary of investing in a currency which they perceive to be insecure and open to hackers.

But despite its problems, the Bitcoin is starting to look appealing to many operating in the virtual world. Expensify, WordPress, Reddit and others are now supporting the Bitcoin. Even the United States Treasury Department has jumped on the Bitcoin bandwagon and is seeking to regulate the virtual currently like a real one in order to fight against money laundering. (This development, despite the anarcho-libertarian background of the Bitcoin, may lend some stability and credibility to the fluctuating currency at the expense of the aforementioned anonymous transactions.)

So the $1 billion mark is, if anything, a signal that the currency is gaining more acceptance in the virtual world. The Bitcoin, as TechCrunch‘s John Biggs explains, wasn’t created with the intention of becoming a “real monetary exchange,” but rather an experiment to prove a virtual currency could work. The experiment, so far, has succeeded.

As of reporting, the currency is worth $97 to each Bitcoin, according to bitcoincharts.com.

Be Sociable, Share!

6 Responses to “What Bitcoin is, and why it matters”

  1. Rob Richards:

    Thanks for the article.

    Libertarians are very interested in honest alternate currencies from gold to time dollar systems.

    For more info on people using voluntary Libertarian tools on similar and other issues worldwide, please see the non-partisan Libertarian International Organization @ http://www.Libertarian-International.org ….

  2. Giftcoin.org - Free Bitcoins:

    Nice blog here! Also your website loads up fast! What web host are
    you using? Can I get your affiliate link to your
    host? I wish my web site loaded up as quickly as yours

  3. Fast Bitcoin:

    Hey, only changed into responsive to your own website by using Yahoo and google, and located it is genuinely insightful. I’m just just going to be careful with regard to brussels. I am going to appreciate if you ever continue this kind of in future. Many people are going to be helped out of your composing. Best wishes!

  4. Look here:

    Don’t buy the book – but read one Mike Geary the true about abs to do with acquiring those astonishing abs. Six plurality abs are commonly a part of men’s physical
    exertion hard-core verity about abss for men.

  5. gary:

    Hy guys, The Free Bitcoin Directory has the world’ largest list of sites that give-away free unlimited bitcoins. Go to http://freebitcoindirectory.tk

  6. mine bitcoins for free:

    We’re also a team of volunteers plus beginning a whole new design in our local community. Your website supplied us all using valuable facts to work upon. You’ve done a formidable job and our own complete collection could be pleased to you.

Leave a Reply:

Recent stories

Featured stories

RSS Windows news

RSS Mac news

RSS iPad news

RSS iPhone & Touch

RSS Mobile technology news

RSS Tablet computer news

RSS Buying guides

RSS PS3/Wii/Xbox 360

RSS Green technology

RSS Photography

Featured Content


Copyright © 2014 Blorge.com NS