Some of you reading this posting may not know what a Bitcoin is. It's an alternate currency - an experiment in basing value of currency off of a share of work toward solving cryptographic algorithms. Is it nerdy - yes, on the face of it, it's very nerdy and at the same time, interesting. You see, Bitcoins are not created by a government, their value is set entirely through free market, and it is possible to trade Bitcoins anonymously. A Bitcoin is an experiment in the ultimate barter system, out of reach of 'the man' - and the only value is dependent upon what someone else will decide to give you for it.
There are a lot of things that make Bitcoins cool.
- The complete lack of a centralized authority. This makes Bitcoin automatically useful on a global scale as soon as there is a an acceptable market for the currency in other countries. And now, the country with the largest population is on the Bitcoin ride.
- The ability to create a Bitcoin 'wallet' anonymously and exchange coins between wallets without involving third parties in performing the actual transactions.
- This takes some care, since all transactions are essentially traceable through the blockchain from creation to current wallet. It is important that one does not just register with a website, buy some coin and then promptly spend those on something that will get you into trouble. To be truly anonymous, one needs to put some space between your name and the spending of the bitcoin. Logically, sending the bitcoin to a vendor of some sort that handles a large number of clientele, without care for their identity, that will be willing to send the bitcoins back to a new address will be enough to break the link. But I am not a lawyer, a policeman or an expert in money laundering.....
- The free market value of the bitcoin is linked to important economic indicators - such as how expensive it is to create/mine a bitcoin, how many vendors will actually take a bitcoin in payment and how liquid a bitcoin is (until EVERYONE will take bitcoin, you'll still need to be able to cash it out in your native currency). A list of bitcoin vendors comes in handy and is growing quickly. I was frankly amazed at the number of physical product vendors that are on the list - and now a University in Cyprus will let you pay tuition in bitcoin.
- There are numerous ways to store your bitcoin - with an online wallet service or exchange like coinbase or blockchain.info. Probably the most famous exchange is Mt.Gox although they've had some problems in the past like the DHS freezing their funds at Dwolla. If you run the Bitcoin client (effectively becoming part of the bitcoin network), you can create a wallet on your own and will only need to get someone to send bitcoins to the created wallet address. You can also back up your wallets to paper copies of the public and private key associated with it. This is normally done via QR code to make them easier to input.
- Since bitcoin spending can't be controlled by anyone - spending them on things that would normally be against a government's desire is a very simple process. (although still traceable if not done properly to protect your anonymity!!) This means there are a lot of casinos popping up online that take bitcoins. Of course, I can't leave out the fact that some markets exist for the drug trade and that the creator of said marketplace is alleged to have arranged at least one hitman on that marketplace.
Of the many bitcoin sites I've seen today when poking around, most remind me of the early days of the web. Horribly designed sights aimed at enticing the user with garish images and offers of FREE BTC!! If you've got a bitcoin wallet and would like some free bitcoin (less than a pennies worth on average) to start you off, go ahead and click there and give it your wallet address.
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