Today a single Bitcoin is valued at $1044 up from $13.00 last January. Over 150 retailers like Virgin Galactic, CheapAir, OKCupid, and Gyft are offering deals for users who pay with Bitcoins for “Bitcoin Black Friday.” Don’t think those companies are that great? Gyft is selling gift cards to Target, Amazon and Marriot Hotels. What the hell is a Bitcoin?
Bitcoin,is a decentralized virtual currency and payment system. It was created by some cryptic scientist in response to the massive bank failures of 2008. This scientist is only known by the pseudonym Satoshi Nakamoto. Bitcoins are not backed or controlled by any central bank or country. That scares some people and excites others for the obvious reasons. For instance, there is no way for a central bank to issue a flood of new Bitcoins and devalue those already in circulation.
Bitcoins are controlled by the users, using a peer to peer network and a complex mathematical computer model. They are mathematically generated as the computers execute difficult number crunching objectives, this is called Bitcoin mining. The system is set up so that it’s progressively more difficult to “mine” Bitcoins. (You need faster computers to handle the complex equations that the computer must solve to generate new Bitcoins) The total number is fixed at 21 million. Given the current speed of improvements in computer power the last one will be mined around 2140.
Does your brain hurt yet? Here’s a YouTube video that answers your 99 questions. I heard some buddies chatting about Bitcoins back in March when they were valued around 30 bucks. In hindsight it would have been a smart investment to snap up $500 or $1000 dollars worth. What a nice return!
In the long term I am not so sure. There are many key points that make Bitcoins a better currency that many bank and credit transactions. However, the volatility of the currency value is what makes me leery. If people began to pay merchants in a currency that loses 1000 percent of it’s value in a day does this collapse economies? Obviously, all I understand is the simple stuff buy at $30 sell at $300 I have made a 270 profit which is a pretty darn good profit!