Arguably one of the most disruptive, exciting and controversial new developments in global economics, the arrival of the bitcoin as a legitimate, popular currency has begun provoking intense debate as to the “future” of the world economy. That being said, many people simply haven’t been acquainted with this new, online-only financial resource, due in large part to its exclusion from the “real” world.
The origins of bitcoin can be traced back to 2008, when ‘Satoshi Nakamoto’, a pseudonym adopted by the creator of the currency, introduced his ‘peer-to-peer’ currency to the world. Bitcoin is defined as a ‘cryptocurrency,’ or form of money that is generated and transferred using an array of cryptographic tools as opposed to central government authorities. The bitcoin is designed to remain ‘independent’ from national interests and interactions, developing ‘worth’ out of its sovereignty and resistance to inflation.
Bitcoins are a virtual commodity that have many similar properties to traditional cash. Utilizing strong cryptography and a peer-to-peer network, they serve as the first currency without a central issuer. Bitcoins are not physical entities, but work in virtually the same way.
Originally, bitcoins were exchanged through the bitcointalk forums, becoming the property of audiences within the cypherphunk community, a group of enthusiasts who believe that cryptographic protocols can become a catalyst for political and social change.
Two years later, bitcoin has been embraced an increasingly larger proportion of the global community, allowing entrepreneurs to develop active trading platforms for the currency.
For those interested in using bitcoin as a vehicle for foreign exchange, a variety of platforms currently exist which allow for intra-currency trading. Some of the larger platforms are Kraken, Mt.Gox, VirWox and Intersango. Each of these exchange vehicles features a unique set of services and stipulations. Security plays an incredibly important role in bitcoin trading due to both the intangible nature of the currency and the lack of a comprehensive regulatory infrastructure for the exchanges. That being said, these currency exchange software platforms attract countless visitors, the vast majority of whom are able to engage in transactions without trouble.
The value of bitcoin is typically very volatile, due in large part to the fact that the currency is a popular tool for individuals exchanging illegal services who wish to remain anonymous. Recent government-backed seizures of bitcoin have caused the value of the currency to fluctuate greatly. That being said, the per-unit value of bitcoin has risen astronomically over the past two years.
For those interested in learning more about bitcoins, a variety of online resources and currency exchange software packages provide information regarding the basic.