Since its creation in 2009, Bitcoin has slowly been gaining popularity as a revolutionary new peer-to-peer online currency. The apparently anonymous, decentralized currency can be transferred through the web and used to buy a plethora of goodies including gifts, books, movies and video games, and even computer servers.
And thanks to an app developed by Brandon Iles, Bitcoin is now migrating from internet-based transactions to in-person transactions made from your smartphone with several midtown Manhattan stores already accepting Bitcoins – with many more sure to follow.
The currency also claims to be perfect for small or startup business as there is no initial start up fee, and no charge backs. There are also several online currency exchanges where your Bitcoins can be exchanged into dollars and other currencies, which makes it a useful way to transfer and withdrawn money in different countries.
Image Credit: Trader Tim, 2011.
Said to be untraceable, although that claim is disputed by some, Bitcoin has earned even more notoriety after Gawker published story on how the currency is being used to buy illegal drugs from a website called Silk Road.
The Bitcoins currency works by first being mined, or created at calculated value so as not to disturb the market. Users can then buy these Bitcoins using a service like Mt. Gox Bitcoin Exchange. Once the currency is transferred, it receives an online signature and any transactions are encrypted and stored anonymously.
Bitcoin offer several advantages over traditional currencies and banking including:
Direct Transfer Peer-Peer
Much lower fees
Transactions can be made worldwide
No prerequisites or limits
Can be stored in digital wallet, similar to online banking.
Current value of Bitcoin fluctuates between 7 to 15 dollars; however its market value has been even more unstable thanks to a number of recent problems.
In mid-June, the value of the currency fell from $17 USD to less than $1 when millions of stolen Bitcoins were dumped on the Mt.Gox main exchange. Although the market has almost recovered, there is a new threat of a Trojan Horse virus that steals money from users’ account circulating the web.
Following these security mishaps, Iles, said his smartphone app will receive some more features in the very near futures, including PIN code security and an in-app currency convertor.
But the Bitcoin saga does not end there, in amongst these ups and downs; there is also speculation as to whether Bitcoin is legal as TITLE 18, PART I, CHAPTER 95 of the Prohibition of unlicensed money transmitting businesses act, 1960, states that:
(a) Whoever knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business, shall be fined in accordance with this title or imprisoned not more than 5 years, or both.
However, as the transference of Bitcoins does not necessarily indicate that a business transaction has taken place the currency is already loop holing its way to popularity.
Check out this overview of the Bitcoin currency and how it works in this informative video clip.
Despite the legal and security issues the currency is facing, it definitely seems to be on the up and up. I wonder how long it takes, or if it ever will replace traditional currencies as the new decentralized way of trading.