What are Bitcoins?

What Tech :: What Are Bitcoins?

I was recently told about Bitcoins, and admittedly, even after reading the above article, I'm still a bit confused by it all. While it's not something I'd personally get involved with, I do think it's an incredible technological idea.

"In simple terms Bitcoin is to paper money what email is to paper mail; basically Bitcoin is cash for the internet."

Okay, sounds simple enough.

"It’s a form of currency that exists only in digital form and the underlying software is drawn from the world of cryptography and IT security."

Uh... okay...

"Bitcoins are created by setting a computer to solve complex math problems. This is referred to as 'mining.' Every time a problem is solved a Bitcoin is released and it’s release is recorded to the Blockchain network. As more Bitcoin are created the problems automatically become more difficult to solve."

This is getting complicated.

But even though Bitcoins is a complicated concept, the implications are quite interesting. It's an expensive little hobby; as the article explains, the average household computer couldn't do the 'mining' without using a ridiculous amount of electricity. This calls for specialized equipment, which is where the expenses really start to add up.

What's really interesting about Bitcoins is that once they run out (there will be approximately 21 million), that's it. That's the end. They can't just decide to print more. Now, of course other organizations are coming up with similar but different Bitcoins, but they are still limited. As of right now, one Bitcoin is equal to about $770.00. And Bitcoins are starting to be accepted by online retailers.

Though Bitcoin is about 4 years old, the concept is just now getting a lot of recogition because the US Senate had a hearing about it. A pretty positive hearing. Going forward, I'm sure more people will get involed with Bitcoins. But for now, the above article is a great way to learn all you need to know.