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Business, Social Media 17

We Don’t Need Your Money: Bitcoin and the Future of Digital Currency

By Elizabeth Hunter · On August 10, 2011

In my last post, we got a glimpse into the way new digital media may affect our interpersonal relationships in the future, through Aritifical Intelligence and conversant robots. This post explores another potentially game-changing technology: digital currency.

We are all familiar with digital payments, from PayPal to iTunes accounts, direct deposits and online bill payment—but all of these are tied directly to actual fiat currency, or governmentally regulated, internationally compatible money. In Second Life, players use Linden dollars in daily activities, but these are also for purchase through US dollars. Digital currencies such as Bitcoin, however, operate independently from any national government. Bitcoin is “a currency by the people, for the people,” according to NPR’s Planet Money reporter Jacob Goldstein. It exists only digitally, essentially a computer program designed and implemented by a reclusive and mysterious man named Satoshi Nakamoto—which may even be a psyuedonymn for the actual creator.

Graph of Bitcoins over timeIt took me a while to figure out exactly how Bitcoin functioned, but here is the gist. Bitcoin is a peer-to-peer monetary system actually capable of purchase power. There is a finite amount of Bitcoins, “mined” by users who download the computer program, run it, and are hopefully fortunate enough that their computer discovers the hidden bitcoins by solving a complex mathematical equation. Bitcoin took off over a year ago and experienced a rush of interest—now very few Bitcoins are available for download. At this moment, one Bitcoin is worth fourteen dollars. But currently the only way to obtain Bitcoins was through an online trade, Mt Gox, purchased at the market rate using traditional currency. As of July 1 this year, the Mt. Gox trade has collapsed.

Bitcoin is experiencing a rocky start. After the gossip blog Gawker ran a story about linking Bitcoins to a website selling illegal drugs, the Bitcoin exchange rate went berserk. After Bitcoin was hacked and people were allegedly “robbed” of Bitcoins, the rate plummeted. Despite the ups and downs, Bitcoins are still exchanged and sold for cash. Aficionados and proponents of Bitcoin have developed a video shown in both English and Spanish. Interested? MyBitcoin.com allows you to sign up and open your own new wallet.

Once you start collecting, don’t be surprised if your Bitcoin bank account looks something like this: 4.56739002. Bitcoins can be divisible down to multiple decimal points—tiny fractions that seem ridiculous but may translate into real money should Bitcoin ever gain substantial value.

The Planet Money podcast on Bitcoin points out a major advantage: they are essentially online cash, which doesn’t actually exist. Every payment online is either made through credit card or lengthy bank account-linked transactions that can be expensive. I admit that when the podcast mentioned that one user had already made over five thousand dollars trading Bitcoins, I was intrigued.

If Bitcoin isn’t the future of digital currency, I am convinced something else will take its place.

BitcoinCurrencydigital cashdigital currencyInternetmoneythe future
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Elizabeth Hunter

I love to write about things that make people say WHUT! And I can officially break news, scour the Twitter/Internet, and put out some coherent information in less than a day. Ask me, dudes.

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17 Comments

  • ag420 says: August 10, 2011 at 7:45 pm

    This one been in the works for a while? FYI, MyBitcoin has also collapsed!

    Reply
  • Daniel Drake says: August 10, 2011 at 8:48 pm

    I actually think BitCoin is very similar to other currencies.

    All money is “worth” something because people agree that it is worth something. People agree on the value by buying and selling on a currency exchange.

    The difference is how BitCoin’s value is regulated. Instead of having a government regulate the value—like the US Dollar—BitCoin’s value is regulated by scarcity. There’s only so much to go around, and it’s hard to find more. That form of regulation has been done before; gold.

    BitCoin is mostly a technological breakthrough. It was never possible to trade data-files as currency because data could always be easily copied. (Imagine if you could stick a dollar bill in the copier and get an identical bill back.) Using BitTorrent to handle transactions presumably makes it impossible to tamper with your own wallet, because everybody is watching.

    Reply
  • Krom says: August 11, 2011 at 3:39 am

    Your impartial take on this new tech is much appreciated, and refreshing.

    Reply
  • » Blog Archive » We don’t need your money: Bitcoin and the future of digital currency – Flip the Media says: August 11, 2011 at 4:01 am

    […] We don’t need your money: Bitcoin and the future of digital currency – Flip the Media 0 Posted on : 11-08-2011 | By : admin | In : Bitcoin Buzz […]

    Reply
  • graingert says: August 11, 2011 at 10:16 am

    @DANIEL DRAKE: This does not use BitTorrent.

    Reply
  • Steven W says: August 11, 2011 at 10:42 am

    Would love to see an update to this article. Its the ‘father currency’ fallacy that bitcoins will give birth to some other currency. Its more likely that bitcoin is in fact the future currency because it can be easily improved as needed. Mybitcoin.com was a total scam, you may want to add a note about that to your readers. Also, you didnt mention how to get them. I like this exchange, https://www.exchangebitcoins.com/en/r/stuffexists

    Reply
  • KBundy says: August 11, 2011 at 7:30 pm

    HELLLLLLLLLLOOOOOOOOOOOO 🙂

    THANKS for posting this!!! LOve bitcoin, and freedom, and peer to peer sharing, and new age fun things like that.

    PS: your the first girl I’ve seen on any bitcoin related forum thread or blog I’ve read, way to represent for the double X chromosome community

    Reply
  • » Blog Archive » We don’t need your money: Bitcoin and the future of digital currency – Flip the Media says: August 12, 2011 at 4:10 am

    […] We don’t need your money: Bitcoin and the future of digital currency – Flip the Media 0 Posted on : 12-08-2011 | By : admin | In : Bitcoin Buzz […]

    Reply
  • dacoinminster says: August 12, 2011 at 7:15 am

    Nice article! I have a couple corrections:

    1) MtGox recovered from the “flash crash” caused by the hack attempt. Very few coins were lost, and it is running fine at this very moment.
    2) Bitcoins are not worth $14 anymore, they are now under $10, and have been around that price for several days now. Bitcoin prices fluctuate wildly, so any price quoted in an article is quickly obsolete

    I agree with your conclusion that bitcoin (or something like it) is the future of currency. I recommend that everyone read up about bitcoins. If you are interested in buying/selling bitcoins, I personally use and recommend http://www.tradehill.com – they have lower fees than the main exchange (mtgox), and their website seems more professional IMHO.

    Also, I have a code that will get you 10% off trading fees there for life: TH-R1168

    Enjoy!

    Reply
  • » Blog Archive » We don’t need your money: Bitcoin and the future of digital currency – Flip the Media says: August 13, 2011 at 4:04 am

    […] We don’t need your money: Bitcoin and the future of digital currency – Flip the Media 0 Posted on : 13-08-2011 | By : admin | In : Bitcoin Buzz […]

    Reply
  • Elizabeth Hunter says: August 13, 2011 at 5:15 pm

    Hi all,

    Thanks for the feedback!

    At the time I was writing the post, mybitcoin.com was still functioning. If you visit the site, there is a pretty lengthy explanation as to why it collapsed, and although I lack the extra dollar bills to buy some Bitcoins myself, it looks as though the link posted by @DACOINMINSTER (tradehill.com) is a reliable site should anyone want to invest themselves.

    I look forward to watching Bitcoin’s progression over time. Its current incarnation seems to fluctuate dramatically but I agree with @Daniel Drake that the technology behind Bitcoin is sound. However, @Steven W, I think there is the possibility that other digital currencies will pop up, even if Bitcoin endures. If that happens, you can be sure I’ll post about it.

    Until then, maybe I’ll just have to start saving up for some Bitcoin bucks myself! 😉

    Reply
  • Dan C says: August 14, 2011 at 2:06 am

    Other currencies will pop up (they already have – Ixcoin started this week – basically a clone of bitcoin with some different rules governing it).
    But it doesn’t matter as they can be traded with each other immediately (an independent exchange appeared within 24 hours of the IXcoin announcement).
    If immediate exchange is possible between digital currencies then it is easy to shift one to the other while still maintaining the value of whatever you hold – this means that any digital currency is as useful as all the others, since you can flip them when you need them (a potentially automated process). There can be thousands of digital currencies – our stored value will naturally move to the most useful, secure and stable by normal market forces.
    Bitcoin has a big head start, so it will be interesting to see how it deals with the competition.

    Reply
  • » Blog Archive » We don’t need your money: Bitcoin and the future of digital currency – Flip the Media says: August 14, 2011 at 4:04 am

    […] We don’t need your money: Bitcoin and the future of digital currency – Flip the Media 0 Posted on : 14-08-2011 | By : admin | In : Bitcoin Buzz […]

    Reply
  • » Blog Archive » We don’t need your money: Bitcoin and the future of digital currency – Flip the Media says: August 15, 2011 at 4:03 am

    […] We don’t need your money: Bitcoin and the future of digital currency – Flip the Media 0 Posted on : 15-08-2011 | By : admin | In : Bitcoin Buzz […]

    Reply
  • Steven W says: August 18, 2011 at 1:57 am

    Other digital currencies will and have indeed popped up, there is certainly no restriction on anyone attempting. Experimenting is healthy. But there is no practical purpose or advantage for thousands of different types of digital currencies. No flaws have been found in bitcoin, and if there was, bitcoin could likely be patched. The idea that we will need to have multiple digital currencies is like saying that we would need to have multiple Internets. The internet works well for everyone, and bitcoin is going to be the financial web protocol for the world.

    Reply
  • bitcoin bank says: September 9, 2011 at 5:24 pm

    Bitcoin took a big hit this week. I still believe the technology has a great potential. New US legislation making prepaid credit cards traceable will propel new folks to bitcoin.

    Reply
  • Bitcoin currency says: July 4, 2016 at 5:17 pm

    This post was published 5 years ago, indeed the article was in the correct prediction.

    Reply
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