For those of you unfamiliar with Bitcoin, allow me to explain in layman’s terms what exactly I am referring to. Bitcoin is a form of unregulated digital currency created by an open source software (accessible to and editable by anyone) developer named Satoshi Nakamoto in 2009. There is some speculation as to who exactly Satoshi Nakamoto is, and many theories focus on the idea of the name being a pseudonym for a group of developers, instead of an individual. How exciting and mysterious!
There are several ways to get Bitcoins. You can buy or sell them with real currency on a Bitcoin Exchange, transfer them from one person to another using mobile apps or computers, or “mine” for them by using your computer to solve intricate math puzzles. Every time the computer solves a problem, you are rewarded with Bitcoins, which then are transferred into your Digital Wallet (virtual bank account) for safekeeping. This process is referred to as “Bitcoin Mining”.
Bitcoin can be used by anyone in the world with internet access, and competes with other forms of digital currency like Dogecoin (Twitter’s version) and Reddcoin (Reddit’s version). Essentially, digital currency gains value as more and more people utilize it, like a stock, so some people choose to invest their money in Bitcoins, hoping the value will increase. Bitcoin uses no third party, so there are no transaction fees, which appeals to small businesses. Also, you are not required by anyone to verify your identity at any point during the transaction process, which appeals to anyone wishing for anonymity. There are many other reasons to use Bitcoin as well.
As novel and handy a system as this is, I have to wonder if it will cause some political issues down the road (if it isn’t already?). I can only imagine that with the ease of use of the Bitcoin exchanges, money transfers are happening stateside that involve criminal activities, probably on a daily basis. Because of the nature of Bitcoin – deregulated currency and highly anonymous transaction system – this must pose quite a problem for the governments of the world if they are trying to crack down on international crime. On the other hand, if any particular government decided to suddenly ban Bitcoin from use in their country, it could potentially create a steep decline in Bitcoin value. As long as politics and Bitcoin don’t come head to head, I think the value of Bitcoin will continue to increase as it becomes more popular.
At this point, having learned quite a bit about Bitcoin recently, I may choose to invest in it after a period of observation. I believe that at some point in the next 50 years or so we will have developed some form of global currency, and it will most likely be digital. Bitcoin may be its great Granddaddy, or it may be the Beast we’re all trading with 50 years down the road. Either way, if it continues to grown in popularity, and in turn, in value, I don’t see how it will disappear anytime soon. So…let the mining begin!