Bitcoin An Emerging Global Currency

The concept of virtual currency has been around for quite a sometime since the birth of the internet. There are may of them which came into existence in the period of time like Flooz,  Beanz and even Egold but they were unable to create a viable form of currency. Then in 1999 a person named Satoshi Nakamoto published a paper (All the links at the bottom of this article in Links section including video of interview with Bitcoin technical lead) on a true Peer-to-Peer global currency. And the bitcoin came into existence with Satoshi’s release of source code into the open source community. The currency has been described as, “Bitcoin is a peer-to-peer currency. Peer-to-peer means that no central authority issues new money or tracks transactions. These tasks are managed collectively by the network.” One problem with previously invented virtual currencies was that they were backed and supported by a single company, and everything is centralized to that company but Bitcoin is peer to peer meaning there is no centralized company controlling the flow of Bitcoins.

Bitcoin

Bitcoin

It is really hard to imagine how a currency can be independent of any government or banks or any financial institutions. The concept of Bitcoin is that anyone with enough computing power (meaning a super powerful computer) can generate Bitcoins using the software created by Satoshi which has eventually been managed by open source community. Bitcoin community says that this is one global currency which cannot be controlled or artificially inflated by any government  or financial institution.

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What are Bitcoins?

Bitcoins are the kind of files that are stored in your computer just like mp3 files or text files or word document etc. And they are virtual coins based on cryptography which can be used to trade with different commodities in the Bitcoin supporting markets.

How can Bitcoins be sent or received?

Currently there are three ways to sent or receive Bitcoins:

1) Send or receive Bitcoins directly using peer to peer software which can be downloaded from www.bitcoins.org

2) Using an escrow service like www.clearcoin.com

3) Using Bitcoin currency exchange

There is a whole list of merchants who has started using Bitcoin as acceptable currency for their daily transaction. Here is the list of them:

https://en.bitcoin.it/wiki/Trade

Who is creating Bitcoins?

Anyone can create Bitcoins with a powerful computer system by downloading free software from Bitcoin website. Currently the Bitcoins are created in blocks of 50 Bitcoins at a time. If you try to create Bitcoins with a normal laptop available in market these days, it will take about 1 to 5 years to create a block of Bitcoin which is not feasible to do because you will end up spending more money in paying for electricity than what you get from Bitcoins.

There are group of people using GPUs (graphical processing units) stacked up together to create needed computing power for generating Bitcoins. It is possible to buy out Bitcoins from these communities online instead of trying to make your own.

What’s the exchange rate for Bitcoins?

As of today May 16, 2011: 1 Bitcoin is trading for $7.92

Currently there are more than $6 million worth of Bitcoins in the circulation. And due to the complexity of the algorithm, only 21 million can be made by the year 2140.

Check here for exchange rates: https://mtgox.com/trade/buy

Who is involved in Bitcoin?

Bitcoin was invented by an anonymous person with Japanese name Satoshi Nakamoto but after submitting the project to the open source community, he has not been involved directly with the project. Currently the technical lead of the Bitcoin project is Gavin Andresen.

It might take a while before governments will start noticing this new currency and will start trying to stop it or ban it to some extent by making it illegal or try to find some workarounds. Success of this currency will depend on how fast people around the world will start adapting to it and importantly how soon businesses will start accepting Bitcoins as a valid entity of payment. This might create a powerful wave of troubles for countries with strong currency but at the same time it could be true independent self floating global currency.

Here is the video of interview with Bitcoin technical lead Gavin Andresen.

Links:

Official website: www.bitcoins.org

Get some FREE Bitcoins here: http://freebitcoins.appspot.com

Original Bitcoin concept paper: http://bitcoin.org/bitcoin.pdf

For trading Bitcoins: http://bitcoin-otc.com/

More info: http://www.weusecoins.com/

More on impact of Bitcoin in world economy: https://signnow.com/blog/2011/05/16/bitcoin-p2p-currency-ou-greatest-hope-for-liberty/

For businesses who wishes to use Bitcoin: http://bitcoinconsultancy.com/