by Matthew Medland
Have you heard of Bitcoin and wondered exactly what it is? Or perhaps you have seen the new Bitcoin Store on Kingston Road?
I started there to try and get a better understanding of what it is.
The staff are friendly and helpful, and judging by their reactions to me, are used to puzzled and curious potential customers coming through their doors.
Here is what I was able to find out. Bitcoin and other ‘Crypto Currencies’ are a form of digital currency, created and held electronically. No Nation, or person controls its value. Bitcoin is the first example of a growing category of money known as cryptocurrency.
It has received a lot of buzz in the media because of its astronomical growth in value over the past year.
Who created it?
A software developer named Satoshi Nakamoto proposed bitcoin, as an electronic payment system based on mathematical proof. The idea was to produce a currency independent of any central authority, that could be transferable electronically, more or less instantly, with very low transaction fees.
How does it work? (this is where it truly gets confusing.)
The rules that makes bitcoin work dictate that only 21 million bitcoins can ever be created. However, these coins can be divided into smaller parts (the smallest divisible amount is one hundred millionth of a bitcoin and is called a ‘Satoshi’, after the founder of bitcoin).
Crypto Currencies are not listed on any stock exchange, and are not even permitted in several countries.
I understand a lot more about Bitcoin now, but still find it difficult to fully grasp. We will likely hear more about Bitcoin and other crypto currencies in the future. Nonetheless there is no absolute, or clear means of understanding what its value will be. Time will tell.
One thing I am sure of is that this means Bitcoin is not an investment for the faint of heart.
If you are interested in understanding more about crypto-currencies, or are considering investing, I strongly recommend heading to the ‘Bitcoin Exchange’ on Kingston Road, the friendly folks there seem capable and willing to answer any questions you have.