There's virtual money, and then there's Bitcoin. The super geeky Bitcoin is really a mathematically-derived currency that promises to change the way people use money. Bitcoins aren't real coins-they're strings of code locked with military-grade encryption-and those who use them to get and sell goods and services are difficult to trace. Along with anonymous drug dealers, Ashton Kutcher and the Winklevoss twins have reportedly jumped on the bandwagon. There's something to be said about using currency that isn't regulated by the government or banks, doesn't come with the usual transaction fees and is impossible to counterfeit. Bitcoin also promises to be disaster-proof, when you can't destroy numbers in the same way as you are able to destroy gold reserves or paper money.
What's Bitcoin?
Bitcoin is really a digital currency created in 2009 by way of a developer hiding beneath the pseudonym of Satoshi Nakamoto (supposedly a Japanese guy who has perfect command of American English). Bitcoin is decentralized, meaning it's not controlled by a main authority like a financial institution, country, government or individual. It is peer-to-peer and open-source, distributed across the web from computer to computer, without need for middlemen. Compared to U.S. dollars, Bitcoin is virtually untraceable, rendering it attractive to libertarians afraid of government meddling and denizens of the underworld. You should use it to pay for purchases online and off, from illegal drugs on the Silk Road to legit restaurant meals.
Where you should Get Bitcoins
You can get Bitcoins from friends, online giveaways or by buying them with a real income from Bitcoin exchange. Using a real income to get Bitcoins defeats the entire intent behind anonymity, however, because you will need to add your bank account to an alternative party site. You may also buy Bitcoins making use of your cellular phone or through cash deposit establishments. New Bitcoins are made by "mining." Mining is completed automatically by computers or servers-it's not real-world mining where you've to dig underground to unearth commodities, but the concept is similar. You've to exert effort to dig up gold, and you (or your machine) also have to spending some time and resources to verify and record Bitcoin transactions.
Among the coolest reasons for Bitcoin is so it gets its value not from real-world items, but from codes. Bitcoins are pulled out from the ether by machines (and individuals who run them) as a swap for solving complex mathematical problems linked to the existing amount of Bitcoins. These bulky and pricey supercomputers come with powerful encryption capabilities (and reportedly suck electricity like nobody's business). In a normal transaction, buyer A from location X pays seller B some Bitcoins online. Miners then race to authenticate and encrypt the transaction, logging Bitcoin codes in a main server. Whomever solves the puzzle first gets the Bitcoins. About 25 new Bitcoins are made for each and every 10-minute block, but that number can increase or decrease depending on how long the network runs.
How exactly to Use Bitcoins
Once you receive your practical some Bitcoins, you need to store them in an on the web wallet by way of a computer program or perhaps a third-party website. You feel the main Bitcoin network once you create your virtual wallet. To send Bitcoins to a different user or purchase online purchases, get that person/seller's identification number and transfer Bitcoins online. Processing takes about a few minutes to an hour, as Bitcoin miners across the planet verify the transaction.
How exactly to Make Money on Bitcoins
If you're still skeptical, one Bitcoin happens to be worth about $90 (as of 18 April 2013), with hourly fluctuations that may make a day trader dizzy. Volatile because it is, more and more people are just starting to milk the phenomenon for all it's worth-while it lasts. How to get your slice of the virtual gold rush? Some ways: Sell Bitcoin mining computers, sell your Bitcoins at crazy prices on eBay and speculate on Bitcoin markets. You may also start mining. Any person can mine Bitcoins, but if you can afford an efficient setup, it will require a typical PC annually or even more to solve algorithms. Many people join pools of other miners who combine their computing power for faster code-cracking.