Bitcoins: The Future of Currency

3 May

If you’re a semi-avid Internet browser, then it is rather likely that you’ve heard the term ‘Bitcoin’ floating around the web–especially within the last five years. The term Bitcoin is a clever and appropriate name, amalgamating the words ‘Bit’ and ‘Coin’ to represent its digital and economic components respectively. So what is Bitcoin? Simply put, Bitcoin is the future of money.

Essentially, Bitcoin is electronic cash. Unlike credit cards or Paypal, which are ostensible digital currency, Bitcoin lacks intermediate institutions that financially ground it with tangible, paper currency. Instead, Bitcoin can be considered more of a “Peer-to-Peer, electonic cash system” (Satoshi Nakamoto). Bitcoin was created as a way to circumvent corporations, who have become integral components regarding the process of electronic payments, shifting the responsibility from intermediate corporations into the hands of the user. Lacking a central bank, Bitcoins transactions are instead mediated through a complex algorithm that monitors and ledgers the creation of Bitcoins, generating a continually up-to-date archive. According to Nakamoto, the flow of Bitcoins generated will reach a trickle–capping at 21 million Bitcoins.

Bitcoin is an unprecedented form of “crypto-currency”, designed to upset the centralized power that current insitutions exert over the transaction of contemporary currency. Bitcoin has been met with critical reception–the future promise of this new e-currency is the subject of much dissent. Bitcoin has been criticized for its fluctuating values, volatile market, and limited capacity (21 million Bitcoins). Obviously, Bitcoin also has a limited demographic, available only to those with a steady Internet connection, higher-end computers, and proficient tech & net skills. There is already a stratification in wealth distribution with paper currency–with the majority of power and influence wielded by those who can afford it– yet will the exclusion of central figures be sufficient enough to prevent select entities from acquiring vast amount of Bitcoins? and subsequently digital affluence?

Currently, Bitcoin is a burgeoning economic asset that is surrounding in controversy and infamy. Deep Web sites–sites unaccessible by traditional browsing methods– are hubs of illicit activity and have adopted the Bitcoin as their primary method of currency. Bitcoins are being used for myriad illegal activities, ranging from the exchange of narcotics and weapons to contracted killings and illegal game trading. While I do not support illegal activities, it is difficult to argue that organized crime syndicates are  not particularly skilled in proliferating furtive commerce; savvy to the newest and most efficient methods of surreptitious money-making.

The future of Bitcoin can be considered either bright or grim–but there is indeed a future. If Bitcoin is able to regulate its volatile market and successfully integrate computer-challenged consumers, Bitcoin may very well establish itself as a permanent, yet alterative form of electronic currency. There are huge benefits and risks to such a massive shift. We’d eliminate our growing dependence of paper money and simultaneously ease environmental strains, however, how do we protect consumers from people who dedicate themselves solely to developing computational prowess (i.e., hackers) that would relish the opportunity of what essentially is a massive, unregulated, online wallet.

Physical manifestation of Bitcoins. Currently 1 Bitcoin = 48 U.S Dollars (March 2013)

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