A New Kind of Money
Posted on Aug 3, 2011
For the past two years, a new kind of digital currency has been gaining in popularity. Bitcoin is used to make supposedly anonymous direct transactions between buyers and sellers of goods and services online all over the world, without the oversight of regulators or the mediation of banks, and can be exchanged for traditional currencies. Organizations like WikiLeaks use Bitcoin to accept donations.
To learn more about Bitcoin, click through to its official site. —ARK
Founded in 2009 from a self-published 2008 white paper by developer Satoshi Nakamoto, whose actual identity still remains a mystery, bitcoin’s peer-to-peer virtual currency has gone viral, from WikiLeaks to Google and beyond. It’s a fascinating experiment in economic evolution, where goods and services can be exchanged using an opensourced mobile currency mostly outside the reach of regulators, speculators and central bankers. There are over six million in existence, pegged between $14-$17 per unit—although their actual price can fluctuate wildly in a given day—with a tentative cap of 21 million. Bitcoins are stored in a digital wallet, and can be used in any country to barter with a massive and growing list of sites that accept them.
Here’s how it works: A public peer-to-peer transaction ledger, called a block chain, is stored on every computer running bitcoin and records every transaction ever made. The ledger weighs hundreds of megabytes in size, and is validated every 10 minutes by a computer working to secure the network, called a bitcoin miner, which wraps blocks of broadcasted message transactions in cryptographic hash functions. Transactions are entirely public, while those who transact are nearly private. The result? An emergent digital economy for the iGeneration.
Flickr / zcopley