TechTheDay

A tech blog nowadays is hardly complete without having something about Bitcoin. So here’s what we’d like to share about this virtual currency you might find useful. Bitcoin is a curious topic on the Internet. Just recently, news stories were published about Apple dropping Blockchain, a top Bitcoin app, from its store. There are many things about this interesting topic you might want to learn about.

If you are new to Bitcoin, the following are things you should know:

Bitcoin Overview

The Bitcoin technology is essentially a consensus network that leads to a payment system involving digital money. It is like a sophisticated form of digital money. It is a decentralized peer-to-peer payment network that derives its existence from users and not from middlemen and a central authority.

How Bitcoins Are Produced

Just like real money, bitcoins undergo a process that ultimately leads to something deemed valuable. This process is called “mining,” wherein newly minted bitcoins are assigned value through the verification and recording of payments in exchange for transaction fees.

Using Bitcoin

Basically, bitcoins are more or less computer codes generated using a certain algorithm and traded between or among online wallets with the help of virtual keys. Bitcoin can be bought and sold for several currencies with individuals and business organizations. Currently, the fastest way to obtain them is to buy bitcoins in cash from someone.

When using bitcoins to pay for goods and services, the process involves some mobile device capable of running an app that supports the processing of bitcoin transactions.

Independent Currency

What makes Bitcoin appealing to many is the fact that it is not bound by government control. There is a higher level of perceived freedom. Nobody is controlling the Bitcoin network and the technology is open source. Anyone can access the source code to verify how it operates. Changes in the system are caused by the users of bitcoins themselves. However, this virtual currency is associated with illegal trades such as Silk Road and other online drug markets.

Case Matters

No, not that kind of case. It’s a case of uppercase vs lowercase. As a widely accepted convention, “Bitcoin” is different from “bitcoin.” Spelling it in title case or with the first letter capitalized usually means the technology behind this digital currency, whereas spelling it as a common noun or in lowercase is considered as a reference to the currency.

Total Bitcoin Value in Circulation

As of December 2013, it is estimated that the total amount of bitcoins being circulated worldwide is already around $12 billion.

Users

Despite the association with illegal online activities, Bitcoin is actually being used by a multitude of legitimate businesses. This digital currency is being used by small shops, diners, cafes, individuals, and others who need some medium of exchange.

Bitcoin Theft

Just like real money, bitcoins can be stolen.  There have been over 30 instances when millions worth of bitcoins were unauthorizedly transferred or stolen. In December 2013, an incident involving the theft of 96,000 bitcoins estimated to be worth $100 million was reported, reportedly taken from an online illegal narcotics market.

Bitcoin in the Global Economy

Bitcoin has received ample attention from mainstream economists, investors, speculators, and the finance media. The prevailing sentiment is that people and organizations are still cautious as bitcoins tend to have  high level of volatility that prevents them from becoming a completely acceptable medium of exchange.

The volatility of bitcoins is being attributed to its low liquidity and the lack of widespread use and acceptability. Many are supporting the intended purpose of Bitcoin but such support base is not yet enough to make this digital currency come close to serving as a real currency. Once bitcoins become more popular, proponents predict that the problem of volatility will be addressed. Timothy B. Lee of Forbes opines that the volatility is associated with the uncertainty of long-term bitcoin value.

Making Money with Bitcoin

Bitcoin was not created to enrich anyone. It was created to serve as an alternative medium of exchange and possibly a store of value as it becomes more popular. You can try running a business that uses bitcoins as the supplemental currency if you want to make money. By offering an alternative payment system, Bitcoin may indirectly help people in making money.
Bitcoin is envisioned to be a currency for the future. It may not gain universal acceptance yet but it is aimed at becoming a good alternative to traditional currency. Unlike unnecessary hardware upgrades in many tech products at present, Bitcoin is actually a promising form of upgrading the global financial system. It only needs more time to mature to be able to properly detect and rectify the defects and imperfections.