Bitcoins, The New Gold?
Bitcoin is the first decentralized digital currency. Bitcoins are digital coins that can be sent through the internet. The coins are sent from one person to the other via the net, without going through a bank like normal currency, which enables instant payments to anyone in the world. In order to use Bitcoins a digital wallet must be installed, either on a computer or a mobile phone, which generates a Bitcoin address. Bitcoin addresses are similar to email addresses in that you must tell the person you are trading with your address in order to trade with Bitcoins.
The notion that money can be any object was the basis of Bitcoin. The internet currency was designed around the idea of not relying on central authorities, unlike most of today’s currencies. In 2009 the first Bitcoin concept was published in a Cryptography mailing list by a person under the pseudonym of Satoshi Nakamoto. The creator of Bitcoin left his invention to the world, not even revealing his identity. The motivation behind Bitcoin is still a mystery four years later.
These boisterous bitcoins don’t just appear out of nowhere (although it might seem like it). Similar to gold Bitcoins have to be “mined”. Bitcoins are mined using a computer’s CPU, completing complex problems and algorithms that are unique to each bitcoin Although hard to explain,(The terms can be found at bitcoin.org) Bitcoins have a mining goal in mind and that is to only allow a block to be discovered every 10 minutes. The way that Bitcoin accomplishes this is by increasing the difficulty to find the blocks. With more and more publicity about Bitcoin, more people are mining and blocks are being discovered at a rate faster than every 10 minutes causing the difficulty to increase. So with that in mind, it is now harder than ever before to mine Bitcoins. Another way the Bitcoin is similar to gold is how it’s finite, with a limit of about 21 million Bitcoins.
Bitcoins have became so popular that in the last couple of months has nearly quintupled. Bitcoins during 2010 were just a fad, costing around 10-15¢ USD. As it grew in popularity and with more websites and stores accepting it, many people have invested in the currency; it’s peak price reaching $266.