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Thursday, December 5, 2013

Bitcoin


There's been tons of press lately about a kind of electronic currency known as Bitcoin. Bitcoin is unfortunately most associated with illegal internet trading. The currency is growing substantially, with its stock prices worldwide soaring. Its also become somewhat of a hassle around its relative infancy and some of the other problems that surround it. Here I'll explain a little bit about this interesting currency and some interesting stories surrounding it.

First, what is a Bitcoin? Its basically an address that is associated with a Bitcoin. That may sound confusing, but basically what are called "miners" find these addresses and amass bitcoins, which can be stored using multiple methods, all using a kind of wallet. At least wallet makes sense if nothing else. Bitcoin is very popular because it is thought of as very secure, all transactions are secure and there are no records to trace. This very useful attribute has led the currency to be widely abused by criminals. The first example of this is by thieves. Just recently, there was a Bitcoin heist of about a million dollars worth of Bitcoins. As secure as it is, it is also pretty young as an international currency. Another unfortunate example of the use of Bitcoins is what is known as the Silk Road. This was an illegal drug trade that couldn't be tracked very easily. They actually just recently caught the kingpin, who traded millions of dollars worth of drugs and even ordered the murders of seven rivals, pretty serious for an internet business. Aside from crime,the other benefit of Bitcoin is that there is only so much that can be mined. That makes it a short-term currency in terms of addition and also is thought to be protected from inflation.

Now to some of the good uses of Bitcoin. I'll start off by citing that a lot of shops now accept it, and it makes payments substantially easier. A University on a small island country even accepts tuition through Bitcoin. And finally for a funny story. There was a man who was into Bitcoin near the startof it, and mined about 7,500 Bitcoins before his significant other didn't like the time he was spending on it. He ended up accidentaly throwing away the hard drive with the codes needed to access his wallet. Doesn't sound too bad, until you see the conversion of the 7,500 Bitcoins he mined is today worth $7.5 million. That makes it a considerably worse loss for the guy.

Bitcoin is an interesting currency, and unfortunately a currency that is not likely to catch on due to the fact that the supply is limited. Still, its pretty cool and a huge step forward in terms of electronic currency that I believe is the future of commerce. Hope you enjoyed this post, and I wish you more luck than the man who lost $7.5 million worth of Bitcoins!


Bitcoin is being accepted more and more places









An example of a Bitcoin mining hardware set-up