For this week’s dose of techy goodness, we’re breaking down the intriguing story of digital currency and social phenomenon, Bitcoin.
In a nutshell, Bitcoin is a digital currency which uses a peer-to-peer payment style system to allow you to buy, sell, and transfer value, just like how you do with cash and electronic funds transfer.
The mind-boggling thing is that Bitcoin is a crypto-currency, meaning it’s purely virtual. So, ditch the notion that currency has to be held in your palm as a note or coin – so analogue!
Now, let’s turn back time to 2008, when the subprime mortgage crisis saw the world suffering the aftermath of the global recession and sovereign-debt crisis. Folk started questioning the security of government-issued currencies, and the value of money itself.
What emerged was the dream of a virtual currency – one that could be a faster, more secure, and a more efficient payment system. Then came Bitcoin, an experimental project by mysterious coder Satoshi Nakamoto (likely a pseudonym), which brought society a step closer to that idea.
The idea was simple – making virtual money transactions secure by programming a block chain (public ledger of transactions verified by an extensive, decentralized network of computers) which bypasses the issue of double-spending (where the virtual-ness of the digital money’s information is exploited to incur multiple transactions) that has impeded the success of virtual currency since the birth of the internet.
Since 2008, Bitcoin has had its share of challenges and setbacks like security breaches and crashes, but also its successes – now with its official exchanges, MtGox being the world’s largest and most established. Regardless of the critics, Bitcoin has proven itself a formidable technological phenomenon, that you should know about.
Wikileaks, Reddit, and WordPress, were early adopters and accepted Bitcoin for donations and subscription fees. Since then, Bitcoin has seen taxi services, medical practices and music albums paid with Bitcoin, Bitcoin lawsuits, and its first Bitcoin class taught in public school. Virgin Altantic has even recently announced that it would accept Bitcoin as payment for space travel!
What started out as an experiment has manifested into a market capitalization of billions of dollars, exchange value of around $1000 (when it just started out as $0.30) to 1 Bitcoin, and a growing pool of supporters.
Although its future is not known, it’ll be smart to keep a look out on how Bitcoin progresses – for better or worse!