I must confess that I’ve been struggling to understand the bitcoin concept – exactly what it is and how it came to be. I know that it has significant value because they are being exchanged for goods and services on the Internet. Aside from it being called a new digital currency – some call it a crypto-currency – it’s most interesting features are:
- It is a peer-to-peer means of exchange;
- Currently, it is not regulated be any government agency;
- Transactions require no middle men, no banks, and no transaction fees;
- It can be exchanged without being taxed;
- Your personal identity (i.e. name or physical location) is not associated with any purchase.
Here is what I have learned about bitcoins:
Where did they come from? The bitcoin was created in 2009 by an unknown person using the alias Satoshi Nakamoto; of 21 million existing bitcoins, 11-14 million are currently in circulation. Once all 21 million are in circulation, no more will be available. Today’s value of one bitcoin is approximately $1,300.
How are they produced? – Bitcoins are generated through an on-line mining process by solving computationally-intensive math problems, each having a possible set of 64-digit solutions. Individuals can work alone or in networking groups, however, it is most profitable when running multiple computers to solve the problems.
How are they tracked? A Bitcoin holds a very simple data ledger file called a blockchain, in which the information of every digital wallet it touches is identified. Personal bitcoins are stored in a digital wallet which does not reveal personal identity.
So, is this the beginning of a cashless society? Or, just a diversion? While I’m not sure where this digital currency is headed or what will prevent other digital currencies from being created, bitcoins are gaining in popularity as a legitimate means of exchange. It should be noted that bitcoins carry their fair share of risk – both human and technological.
“Whoever has ears, let them hear.” Revelations 13:9 NIV
In all you do, B. Lifted…