Bitcoin, a new virtual currency, is the complete embodiment of anonymity and can be used to purchase real-world goods. How does it work?
Bitcoin, a new virtual currency, is the complete embodiment of anonymity and can be used to purchase real-world goods. How does it work?
Lacking centralized control and regulation, Bitcoin implements a peer-to-peer open-source model in which users create and transfer value.
Bitcoins are a purely digital 'cryptocurrency' which uses increasingly difficult algorithms solved by computers in order to prevent fraud.
They can be minted by anyone who enables his or her personal computer to solve the problems, which contain the information that makes the currency work: from the rate of inflation to transaction verification.
Bitcoins' anonymity is a main attraction. One of the results is Silk Road, an website that allowed customers to purchase drugs with Bitcoins before it was shut down by the FBI this year.
Bitcoins allow users to circumvent traditional institutions, allowing for greater ease in international transactions. Others use it as a political statement to show that a currency can work without centralised control.
What does the future of Bitcoins look like? As a community currency, it will probably remain within a niche market until the general populace becomes more tech savvy. However, entities such as Dominos Pizza, Wikileaks and WordPress have started to accept Bitcoins as a form of payment.
