Bitcoin virtual currency might be more than just a passing fad. In fact, it could be a worthwhile investment, according to experts. The virtual currency was launched in 2008 by an anonymous developer known only as ‘Satoshi Nakamoto’. The creator has since disappeared, leaving a trail of questions about his identity and motives.
Bitcoin is not issued by any government and is not controlled by a central bank or regulators. In contrast to conventional currencies, which offer a theoretically limitless volume, there can only be a specific number of Bitcoins generated worldwide. Critics say this limit is more representational of a commodity than any currency.
The total number of Bitcoins is limited to 21 million, however there are only 12 million Bitcoins in circulation today. The process of creating new Bitcoins is controlled by a mathematical algorithm that reduces the number of generated Bitcoins each year until the year 2040.
The value of a Bitcoin has nearly tripled since November 1st and today it hit an all time high of $358.00 on Mt. Gox, the world’s largest Bitcoin exchange. In June of 2010, one Bitcoin was worth $0.004
Earlier this year. Bitcoin attracted the attention of Tyler and Cameron Winklevoss, the brothers best known for their battle with Mark Zuckerberg over the origins of Facebook. After investing $11m in the virtual currency, they filed paperwork with the SEC to start a fund that would invest in, and track the value of, Bitcoins.
In order to get your hands on this shiny new currency you will have to start by getting a digital Bitcoin wallet, software that allows you to store and trade your Bitcoins. Your digital wallet will give you access to the Bitcoin network and works much like a peer-to-peer file sharing service.
Once you have a digital wallet, you can move on to the next step to get your first Bitcoin. You can purchase coins, “mine’” coins, or sell something for payment in Bitcoin. In order to purchase a coin you will need to find an individual or a currency exchange willing to accept your payment method.
If you aren’t concerned with anonymity, reputable Bitcoin exchanges typically accept credit cards or PayPal payments. If you want to keep your transaction private, you can meet with a local Bitcoin dealer who is willing to trade Bitcoins for cash, or something else of value.
A coffee shop in Vancouver went live last week with an ATM machine that trades cash for Bitcoin. According to Robocoin, the ATM manufacturer, the machine did over $100,000 worth of business and handled 348 transactions in its first eight days of operation. Jordan Kelley, CEO of Robocoin, said that an estimated 70 percent of the ATM users created new wallets — suggesting they were mostly first-time Bitcoin users.
Chris Dougherty is a grey hat hacker and online security expert. Please visit his blog, www.VirtualThreat.com, for more excellent news and information about protecting yourself in cyberspace.
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