What You Need to Know About Bitcoin
Remember Bitcoin? It’s still a thing, but we haven’t seen it in the news a lot lately – except for the possible “unmasking” of its creator, Satoshi Nakamoto. That can only mean one thing: Bitcoin is becoming ordinary. The idea of a digital currency operating outside the banking system doesn’t seem so strange anymore. In fact, we’d better get used to it.
So what is Bitcoin, exactly? It’s a peer-to-peer network, running on open-source software since January 2009, that’s used to perform triple entry bookkeeping. Okay, maybe that’s the real reason we don’t hear about Bitcoin anymore. When it comes to cold, hard cash, most people aren’t interested in how the financial system works – they’re all about the Benjamins. You can’t hold a shiny new bitcoin (BTC) in your hand. You can’t go to the store and ask for 100 million satoshis in change. Out of sight, out of mind.
What you can do with Bitcoin is make transactions with anyone anywhere on the network, instantly, with no fees required to receive bitcoins (merchants can charge a fee at their end). Since every transaction is logged and visible to everyone on the network, it’s a lot harder to get away with fraud. Plus, no one person or government controls Bitcoin; it’s like the Internet itself, or at least the open-source parts.
Here are five more facts about Bitcoin to help you get brushed up on what might be your currency in the near future:
- You can “mine” for bitcoins: If you’re into accounting, or you have a whole lot of computers to do the work for you, the network awards you fresh bitcoins for processing new transactions into “blocks.” Don’t quit your day job, though – unless you have access to the first wave of quantum computers.
2. Bitcoins have doubled in value since August: At press time, a single BTC could be exchanged for US$439. That’s up from $209 on August 24, but still well below the currency’s peak of $1,147 on December 4, 2013.
3. There are Bitcoin ATMs: As of this summer, there were 400 Bitcoin machines operating worldwide. The first one was installed at a coffee shop in Vancouver in October 2013.
4. Bitcoin may be tax-free: Depending on your jurisdiction, you might never have to pay any tax on your Bitcoin transactions. Europe and Hong Kong have ruled the sale of bitcoin exempt from taxes.
5. Banks are moving in: Not wanting to lose their shirts, bank executives are touting the virtues of the peer-to-peer network, while brushing off the digital currency itself. No doubt they hope you’ll end up using CitiBucks instead, while still paying the usual banking fees.