What are Bitcoins?
Can you get rich quick?
Your neighbor's kid just got a job at a local pizza parlor. He's being paid in BitCoins. Online job offerings offer work-at-home opportunities, but they are paying in BitCoins. It is a scam?
Yes, it's a scam. And no, it's not.
Before you invest your 401K in this hot new currency, let's take a closer look. Everyone else is.
Check the search engines
Google, Yahoo, and Bing will tell you more than you ever want to know about this new way of transferring wealth. They each report millions of hits:
# of hits (unverifiable)
None of these three 'services' will allow you to see beyond the first 1000 results: don't get too excited. There may as well be 1001 results.
All signs point to bitcoin.org
All three of our guiding lights list bitcoins.org as the first site about which you should be aware. It's a "dot org", implying that it's guileless and free of the lust for capitalism. We assume. Interestingly enough, the site is festooned with the MIT open source license. The authors pretty much release all claim to the content. You can do mostly whatever you want with it.
The first thing they want you to know
Break it down
Open Source : The programming is available for anyone to download, study, modify, and distribute. The source code is available at no cost. This is rarely considered a bad thing, even in the arena of data security. The more eyeballs focused upon a thing, the more likely that flaws will be identified and corrected. A fully disclosed system garners confidence from investing masses. If you know what's going on behind the curtain you are more likely to entrust your time and energy.
P2P: Peer to peer is a computer geek term meaning that all the computers on the network are independent contractors. No central hive-mind controls the system. If a peer crashes, the system can recover and continue managing our BitCoins economy. There is no Microsoft or Federal Reserve lurking in the background to set prices or influence supply.
Digital Currency: a digital entity consists of 1's and 0's that exist inside computers. All your photographs, emails, Facebook pages, and Hulu accounts are totally digital. There's nothing in the real world to clutch. There's no tangible property, unless you print a report, which is simply a snapshot of what you had during a single moment in time.
Therefore, your money exists only inside your hardware. You lose your computer and you will probably lose your investment. Your data is your nest egg. It's not scary, except when it is.
To be fair, you already live in a mostly digital economy anyway. If your bank burns down, your money is safely backed up at a regional data center. They don't keep your cash stuffed into the overstuffed furniture in the lobby.
Should you be nervous, yet?
Until Wal Mart begins accepting BitCoins, you can probably live without them. The pizza delivery kid will look at you funny if you want to tip him with anything besides cash.
Click on a few links and explore BitCoins.org just in case there's a Double-Jeopardy question you'll need to answer. Your neighbors will be impressed.
Take this simple poll, if you want to.
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