Recently, there has been a lot of hype about the growing crypto-currency known as BitCoin. First, it is important to understand that BitCoin and bitcoin are two separate things: BitCoin describes the overall system, and bitcoin refers to a single unit of the currency. Exchanges have begun cropping up where people trade bitcoin for goods and services, and there have even been newspaper articles that talk about people who have made hundreds of thousands of dollars by trading bitcoin.
Some claim that it is a baseless currency with no chance of survival, while others claim that it is the future of all Internet exchange. Still others make the claim that this is the start of a new technology, but much progress is needed before there is any crypto-currency that can survive. There are a lot of different ideas floating around about the sustainability of a system such as BitCoin, but how exactly did it start?
Bitcoin is relatively new, as it was just introduced in January of 2009. Unlike a normal currency, which is backed by a mint or government entity, BitCoin is open source software, which means that anyone can influence it. The original credit for the BitCoin system goes to Satoshi Nakamoto, who has since left the project.
How to Get Bitcoin
There are a variety of ways to obtain bitcoins, but the easiest is to purchase them using an existing currency. To do this, the individual must first buy a virtual wallet, which has several encryption keys in place as protection, and make the purchase. This is not the only way though.
Another method of obtaining bitcoins is to set up what is known as a bitcoin miner. This requires special software and hardware, and virtually this sets up the equivalent of a payroll processing system. Whenever other users exchange bitcoins, the bitcoins miner actually gets paid in newly created bitcoins for facilitating the transaction, much like every time a restaurant uses a credit card terminal, the terminal company gets a cut.
Using a public ledger, bitcoin mining is the process developed to add transactions to this public record. Because of the way bitcoins are created and traded, bitcoin mining is an important part of the process. Without users there to facilitate transactions, there really would be no accountability or integrity to the system.
With bitcoin mining programs in place, transactions are public record and it becomes much more difficult to falsely create or reuse bitcoins. Anyone can get started with bitcoin mining, but it is not an easy task, and users would need the proper hardware and software to get started.
Is There a Future?
The future of BitCoin may still be somewhat uncertain, but there is no doubt that it is growing and becoming more and more influential. New websites are beginning to accept bitcoin as opposed to a more standard currency. At the same time, many countries are beginning to take anti-bitcoin stances, and not supporting the exchange between currencies. Whatever the future holds for BitCoin, it is certainly a novel idea, and whether or not it survives, it has opened up the world to the possibility of a decentralized currency.Ib Laursen