Lately there is something that is gaining relevance in the network: the so-called Bitcoin. Services like Reedit or the still young Mega have adopted them as a payment option in addition to continuing to pay as we have always done so far, and although it is an initiative born a while ago, it is receiving more attention these days. But what exactly is Bitcoin and what is it for? What differences do you have with conventional payment?
Two adjectives to define Bitcoin: free and decentralized
What is a Bitcoin? Bitcoin is a coin, but completely digital . That is, it is considered a currency such as the dollar and the euro, but it focuses on being used entirely by the internet. No physical transactions. Its code is completely open and based on a P2P protocol it is a completely decentralized currency. It does not depend on a government or a central bank.
What does that mean? That Bitcoin does not depend on a single entity and enjoys complete anonymity unlike the payments that are currently being driven by credit card, NFC chips or through user accounts of services by companies that have our personal data. Basically Bitcoin is as anonymous as money in cash: nobody knows why hands have passed and why hands will pass. And since Bitcoin is not printed, we avoid the phenomenon of inflation.
The official abbreviation of Bitcoin is BTC , and its symbol is a B traversed with one or two vertical lines (฿) similar to the dollar line, although without a middle part. 1 BTM can be divided into 1000 BTMs or mBTCs , which come to be thousandths of a BTC; or one hundred million Satoshis in honor of the Japanese coin creator Satoshi Nakamoto.
Like any other currency, the value of Bitcoin varies. As I write these lines, a bitcoin is equivalent to 21.92 euros , so a BTM equals almost 0.22 cents.
A virtual wallet and protected
My Bitcoins purse synchronizing. Yes, it is an application made in Java, but for the moment it is the only thing that exists if we do not want to use web applications. Hopefully, this will improve in the future.
To be able to have Bitcoins, first we have to create a virtual wallet . This can be achieved with native applications of each system such as the official one (available for OS X, Windows and Linux) or with web services such as Coinbase . In a virtual purse we can save our Bitcoins balance and send money with that currency to the purses of other users and companies.
To be able to do it, each purse has an address that consists of a code of figures and letters, more or less with this aspect:
We can simply use the code that gives us the wallet or generate as many codes as we want, in order to give different codes to several people and thus know who has given us bitcoins (remember that the transfers are completely anonymous).
How do I get Bitcoins? The concept of “mining”
To introduce Bitcoins in our virtual wallet, we can buy currency by exchanging it from euros or dollars, and we can also do the inverse step of exchanging Bitcoins for our usual currency so that they can deposit it into our bank account. But there is another way to get Bitcoins: through the so-called Mining .
In order for the transfers with Bitcoins to work and to avoid the phenomenon of double spending (or to use the same digital transaction to buy more than once), data blocks are needed that register and insure each and every one of the transactions that are perform. Generating those data blocks means having a computer working at maximum performance, so the deal is the following: use your computer to generate those blocks of data and get Bitcoins in return .
It is, for those who remember it, something very similar to what the Seti application offered us: it uses the power of your computer to decipher data collected from outer space, but in this case instead of collaborating in the search for intelligent life in other planets the benefit is a bit of digital currency.
In this way it is the user himself who helps take the currency forward and not a central bank or government. Bitcoin can not be manipulated for the benefit of a few , and the fees that transaction services demand are much lower than those currently demanded by banks. To avoid inflation, the amount of Bitcoins that will be generated has a cap of 21 million, an amount that will be released on a regular and controlled basis until the year 2140.
The future of this type of currency depends on the adoption of the users and, above all, of the companies . But there are already some like Reddit and Mega that dare to offer this type of transactions, and I would not be surprised to see how little by little more services opt for these alternative payments. The fees are much lower and therefore there is benefit for the seller and for the buyer, and if the purchases are international we save trouble with a universal Bitcoin.
It is early to bet on Bitcoin as the future of currencies, but it is an interesting proposal that has all the ingredients to make its mark among Internet users. And in these times, where an economic crisis is shaking the foundations of the financial system, ideas like these are more than welcome.