There’s a new currency on the Internet and it’s making quite a splash. The currency is called ‘bitcoins’ and it is currently the money of choice for pirates and other scoundrels. This is because bitcoins are secure, impossible to track, impossible to tax and extremely simple to use.
In a nutshell a bitcoin is a file on your computer that has a value. This value changes all the time but at the moment bitcoins are trading at about $7 per coin. Each coin is unique and created by a complex piece of software. If you were to try and create a bitcoin yourself it could take upwards of 5 years to make. Since they are trading at such a low rate it makes sense just to buy or earn them instead of make them.
A lot of people are opting to flat out buy bitcoins but you don’t have to. Instead you can offer a service or product in exchange for them. Many programmers will do small projects for them instead of money.
Why would you want them?
Why exactly would anyone want these coins? Can’t you just use regular money?
Sure, you could pay someone using PayPal or your credit card. The issue is that any kind of online transaction is easily traceable and taxable. Bitcoins are basically paper money that you can spend online.
This has caused them to get a bit of a bad name since people are using them to pay hackers, buy drugs and for other nefarious means. For us regular folks they are simply a great way to keep our privacy while still buying products and services online.
Are they secure?
It depends. As mentioned above they are a file stored on your computer. Meaning if you don’t encrypt them someone could easily steal your laptop and get all your coins. Also, if your computer needs to be formatted and you didn’t back them up you could lose them all.
You can store them online but again, this means you are trusting the owner of the server you store them on.
Each coin is unique to the computer who made it. Not only that, each transaction involving the coin requires that it be modified with a special code that basically transfers ownership. A great way to think of it is like a house. You transfer ownership of your house to someone else, but with bitcoins it can be done anonymously. So there is a record that a certain coin has been traded 5 times, but it is impossible to know who those 5 people are.
There are already predictions that people will start using these at real world locations like casinos but it will probably be a while before you can spend them at your local grocery store.
You can learn more here or just watch this video.