They sound like someÂthing out of sciÂence ficÂtion, but BitÂcoins are getÂting just a litÂtle bit more real every day. They’re intanÂgiÂble and invisÂiÂble, but bitÂcoins recentÂly attractÂed some real investÂment capÂiÂtal from the WinÂklevoss twins, who first dreamed up the idea for FaceÂbook — or so their lawÂsuit argued.
A bit of backÂground: BitÂcoins are a virÂtuÂal curÂrenÂcy sysÂtem. They were proÂgrammed by an anonyÂmous programmer(s?) in 2009. There are a limÂitÂed numÂber of posÂsiÂble bitÂcoins that can ever be traded—21 million—and the “coins” become availÂable increÂmenÂtalÂly. That process is crowdÂsourced (anyÂbody can mint bitÂcoins) but it requires solvÂing comÂplex encrypÂtion probÂlems. Most bitÂcoin minÂers have an army of comÂputÂer hardÂware to do the work for them.
What can a bitÂcoin buy? It depends. The currency’s valÂue has been gyratÂing wildÂly in recent weeks, from a valÂue of just a few dolÂlars up to $266 and then back down to about $100. So far bitÂcoins are acceptÂed as curÂrenÂcy by someÂwhat shady elecÂtronÂics webÂsites that claim to be sendÂing a mesÂsage to big retailÂers: start acceptÂing the virÂtuÂal curÂrenÂcy or miss out on a big marÂket share (that hasn’t develÂoped yet).
Last week came the announceÂment that Cameron and Tyler Winklevoss—former rivals to Mark Zuckerberg—own one perÂcent of all the bitÂcoins in cirÂcuÂlaÂtion, the biggest stake so far. That news inspired debate over what, exactÂly, bitÂcoins are and whether they’re imporÂtant.
They aren’t the first virÂtuÂal curÂrenÂcy and they aren’t being used wideÂly in comÂmerce. Some econÂoÂmists have weighed in to say that unless peoÂple stop hordÂing bitÂcoins as an investÂment and start spendÂing them, they are meanÂingÂless. The bitÂcoin experÂiÂment may show the way to a digÂiÂtal curÂrenÂcy of the future. But, until it pans out, we recÂomÂmend that you hang onto your dolÂlars. And if you’re still tryÂing to get your arms around the whole conÂcept of the bitÂcoin, we sugÂgest spendÂing a few minÂutes with the video primer above.
Kate Rix writes about digÂiÂtal media and eduÂcaÂtion. VisÂit her webÂsite: .