a.k.a. bit coin, digital cash, digital currency, virtual cash, virtual currency
Bitcoin is not managed like other currencies: it is decentralized and therefore has no central bank or organization. Instead, it relies on an Internet-based, peer-to-peer network. The money supply is automated and given to servers or bitcoin miners that confirm bitcoin transactions as they add them to a decentralized and archived transaction log approximately every 10 minutes.
Bitcoins are exchanged through a computer or smart phone locally or internationally without an intermediate financial institution. Introduced in 2009 by Satoshi Nakamoto, one bitcoin is subdivided into 100 million smaller units called satoshis (defined by eight decimal places).
Historical perspective: As of April 2013, the monetary base of bitcoin was valued at over $2 billion USD. However, the large fluctuations in the dollar value of bitcoin has evoked criticism of bitcoin's economic suitability and legitimacy as a currency. Bitcoin is considered the most widely used alternative currency and is accepted by various merchants and services around the world. Is Bitcoin the currency of the future? asked Paul Ford in Businessweek.com. Invented in 2009 as a form of virtual cash used to buy goods and services online anonymously, Bitcoin has become “bigger than anyone expected.” Since the beginning of 2013, the value of a single Bitcoin has skyrocketed to more than $100. At first glance, Bitcoin seems like a terrible idea or even a recipe for disaster. In essence, it is “a totally decentralized currency without a central authority, where semi-anonymous parties exchange meaningless tokens.” Bitcoin relies largely on trust—something that’s “hard to earn” and “an easy thing to squander.” Usually it’s up to governments to create value from nothing, but obviously, it doesn’t always work. Just look at Cyprus, where a failed banking system caused “an entire country to suddenly realize that the value of their deposits, the fundamental integrity of their financial selves, was arbitrary all along.” So don’t dismiss virtual currencies like Bitcoin out of hand. They may be just the solution for people who “have lost faith” in real-world institutions. Bitcoin may look like a hilarious parody on our shaky global economy. But “as a currency for the disenfranchised and distrustful, it’s as serious as can be.”
NetLingo Classification: Online Business
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