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What are Bitcoins?

Updated on April 23, 2013

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:

(click column header to sort results)
Search Engine  
# of hits (unverifiable)  
Google
3,790,000
Bing
1,630,000
Yahoo
1,300,000
Number of hits on the phrase 'bitcoins' (quotes added for clarity) from the three major search engines

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.

We will.

The first thing they want you to know

http://bitcoin.org/en/ -- money speaks every language.
http://bitcoin.org/en/ -- money speaks every language.

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.

BitCoins are

See results

Comments

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    • profile image

      BreakfastMom 5 years ago

      I love earning a few slivers of BitCoins by doing simple jobs online, but I have no idea how that will benefit me in the long run. Thanks for the interesting read.

    • profile image

      BitDude 5 years ago

      Bitcoins will eclipse fiat money very soon. The governments cannot prop up their currencies without massive tax increases. People will wise up and start moving away from state-sponsored money.

    • nicomp profile image
      Author

      nicomp really 5 years ago from Ohio, USA

      @drbj : It's all very mathy. The bitcoin system had spurred sales of computer hardware and electricity, but it will probably not be secure in the long run.

    • drbj profile image

      drbj and sherry 5 years ago from south Florida

      I must admit, nicomp, it is difficult for me to fathom how I've existed this long without the need for bitcoins. I may have to re-evaluate my entire investment strategy.

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