Bitcoins: The Future of Money?

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BitcoinsMove over credit cards and PayPal, there’s a new kid on the block. The future of online transactions may rest with a mysterious digital currency called Bitcoin.

What Is a Bitcoin?

Bitcoins, unlike dollars or pounds, are currency that can be used without the hassle of middlemen such as banks or government institutions. Bitcoin is a peer-to-peer system, making it very similar to music sharing programs where files are passed back and forth across a network of users. To accumulate bitcoins, your computer solves difficult algorithmic problems and earns bitcoins for every answer produced. Once you’ve amassed a collection of bitcoins, you can use them to purchase items by sending them to unique bitcoin addresses. Much like cash, bitcoins are anonymous and difficult to trace. Bitcoins and cash also share a disadvantage: They are stored in a wallet (in this case, a virtual one), so when a hard drive is lost, so are the bitcoins.

The Bitcoin Bubble

Since their 2009 launch, bitcoin has become the top performing currency in the world. Just last year, a bitcoin was worth half a penny. Today, it’s up 200,000%, worth $10.50. Their rise to the top, however, has not been without hitches along the way. This past month, bitcoin was the target of hackers and thieves robbing digital wallets, causing the currency’s value to plummet. The bitcoin bubble and crash has raised uncertainty, prompting a California advocacy group, which had been collecting donations in bitcoins, to return the coins.

A New Age

Bitcoin software developers are confident that the currency will bounce back from recent hiccups. With a growing trend toward alternative mediums of exchange, virtual currencies may grow to serve the needs of online traders, programming service providers and gambling websites. There’s no reason that bitcoins will be limited to the electronic world, though. Some restaurants, such as Meze Grill in New York City, are already beginning to accept bitcoins as payment. So, whether it’s a downloadable app or a tomato sandwich, bitcoins have you covered—and they could be here to stay.

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  • http://www.facebook.com/people/Ryan-Aydelott/100000846014771 Ryan Aydelott

    Bitcoins are like any new thing – and they certainly do have more then a fair share of detractors.

    Overall, I believe Bitcoins are great for the Internet economy as a whole. Right now, we are using the antique system of credit cards/paypal to handle online transactions. While it works, the fees associated (along with the complications/headaches of dealing with a third party) are costing merchants billions a year.

    I have personally convinced one business to accept Bitcoins, the main reason they did was to avoid the fees that credit card processing companies apply to them: http://babbletees.com/blogs/news/3494702-babbletees-now-accepting-bitcoins

    So far, they report the response has been great. I would encourage other businesses to do the same. This great technology is here, use it or lose it!

  • http://www.facebook.com/people/Ryan-Aydelott/100000846014771 Ryan Aydelott

    Bitcoins are like any new thing – and they certainly do have more then a fair share of detractors.

    Overall, I believe Bitcoins are great for the Internet economy as a whole. Right now, we are using the antique system of credit cards/paypal to handle online transactions. While it works, the fees associated (along with the complications/headaches of dealing with a third party) are costing merchants billions a year.

    I have personally convinced one business to accept Bitcoins, the main reason they did was to avoid the fees that credit card processing companies apply to them: http://babbletees.com/blogs/news/3494702-babbletees-now-accepting-bitcoins

    So far, they report the response has been great. I would encourage other businesses to do the same. This great technology is here, use it or lose it!

  • http://www.facebook.com/people/Ryan-Aydelott/100000846014771 Ryan Aydelott

    Bitcoins are like any new thing – and they certainly do have more then a fair share of detractors.

    Overall, I believe Bitcoins are great for the Internet economy as a whole. Right now, we are using the antique system of credit cards/paypal to handle online transactions. While it works, the fees associated (along with the complications/headaches of dealing with a third party) are costing merchants billions a year.

    I have personally convinced one business to accept Bitcoins, the main reason they did was to avoid the fees that credit card processing companies apply to them: http://babbletees.com/blogs/news/3494702-babbletees-now-accepting-bitcoins

    So far, they report the response has been great. I would encourage other businesses to do the same. This great technology is here, use it or lose it!

  • ssalex

    I remember a previous version of this called beans or some such online a long time ago. 

  • ssalex

    I remember a previous version of this called beans or some such online a long time ago. 

  • Anonymous

    Great article,I’m sad you didn’t link to any exchanges where your readers can actually buy/sell some bitcoins. Let me fix that for you:
    Most people use the main exchange (mtgox.com), but I personally use and recommend http://www.tradehill.com – they
    have lower fees and their website seems more professional IMHO.
    Also, I have a code that will get you 10% off your trading fees there for life: TH-R18118

    Enjoy!

  • Anonymous

    Great article,I’m sad you didn’t link to any exchanges where your readers can actually buy/sell some bitcoins. Let me fix that for you:
    Most people use the main exchange (mtgox.com), but I personally use and recommend http://www.tradehill.com – they
    have lower fees and their website seems more professional IMHO.
    Also, I have a code that will get you 10% off your trading fees there for life: TH-R18118

    Enjoy!

  • Anonymous

    Bitcoiner, you could at least change the wording of my TradeHill comments! I came here to post that exact comment, only to find that you copied my comment from another site word-for-word! The only problem is you mis-copied the code when you copied my comment. The correct code is: TH-R1168

    I’ll also add that a new U.S.-based bitcoin exchange just opened, and they are also offering a 10% discount on fees, if you register using this link:

    https://CampBX.com/register.php?r=mdslj19rhcD

  • Anonymous

    Bitcoiner, you could at least change the wording of my TradeHill comments! I came here to post that exact comment, only to find that you copied my comment from another site word-for-word! The only problem is you mis-copied the code when you copied my comment. The correct code is: TH-R1168

    I’ll also add that a new U.S.-based bitcoin exchange just opened, and they are also offering a 10% discount on fees, if you register using this link:

    https://CampBX.com/register.php?r=mdslj19rhcD

  • Anonymous

    Bitcoiner, you could at least change the wording of my TradeHill comments! I came here to post that exact comment, only to find that you copied my comment from another site word-for-word! The only problem is you mis-copied the code when you copied my comment. The correct code is: TH-R1168

    I’ll also add that a new U.S.-based bitcoin exchange just opened, and they are also offering a 10% discount on fees, if you register using this link:

    https://CampBX.com/register.php?r=mdslj19rhcD