Bitcoin, a Currency of the Future

BitcoinSomewhere back in 2008, a person or group of people under the pseudonym Satoshi Nakamoto published a white paper which detailed the proposal of a global currency that is not
controlled by a single country, government or organisation.  The  system would involve the transfer of digital units from person to person through the internet through a peer to peer network (Skype is an example of this type of network).  Each sender or receiver of this digital money would possess a copy of a  log detailing every transaction that took place.  This ingenious idea developed, initially on a very small scale with a small number of coins being exchanged.  As of today, there are approximately 10 million coins that exist !!

Many have argued that the currency is worthless as it is not backed by anything with value, that it is just a number.  However, a currency holds value based on a society’s perception of that currency.  In actual fact, most of the world’s currency is also not really backed by anything with intrinsic value.  It used to be, in the times where most of the world’s currency was closely tied to gold, but those days are long gone.   Those dollars and Euros have value because of the confidence in that currency.

Bitcoin has seen a big surge of interest due to the ongoing issues in the world economy, most recently in Europe.  When the decision was made to literally take money from people’s savings account in Cyprus, in order to save the Cypriot economy and the Eurozone, the view that your money is always safe in the hands of the bank has changed in the eyes of many.

The Bitcoin system has the  potential to become a trusted independent global currency, with no central regulator !  Although at the moment, the number of shops and other online retailers that will accept the coins is very low (A google search for places accepting Bitcoin I made recently  returned a handful of gambling websites !),  this is likely to grow as more people become aware of the technology.  And as for those who argue that Bitcoins are worthless, various online exchanges would disagree !!  A Bitcoin can currently be bought and sold for approximately $100.  With those 10 million coins currently in existence, that makes the global worth close to a billion dollars !  Not bad for a cryptograhically protected number on someones computer.

In upcoming posts, we’ll explore the Bitcoin system some more, from ‘how it works’, what a Bitcoin actually is, to its potential as a widely accepted currency.

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