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Bitcoin, and digital currency shenanigans

"A decentralised, electronic cash system".

Simple, right?

Even when explained, in a brilliant video infographic by Duncan Elms (voiced by the intensely Australian Mark Fennell), it's a little hard to get to grips with.

It's been a viral topic recently, especially with its massive rise and subsequent system crash, fall and stock market apocalypse, so just in case any of you were as oblivious about it as I was, this should help.

Bitcoin is a digital currency that is now around four years old, created by the person (or group) Satoshi Nakamoto. Probably a pseudonym.

Essentially, the process of 'purchasing' Bitcoins is actually one of 'mining' for data, and by proxy, for a stash of coins.

A complex mathematical formula generates a 64 digit number, and 'cracking' this algorithm allows you to 'mine' 50 coins.

This process becomes more and more difficult, similar to actual factual mining, as there are just 50 new Bitcoins created every 10 or so minutes (only half of the Bitcoins that can exist have been mined at this moment in time).

The real thrust of this movement, so to speak, is in Bitcoins' lean against the current accepted economic system, and in its fearful and Web 2.0-styled approach to privacy.

Firstly, it aims to self stabilise – purely because of the gradual release of the coins themselves (although, clearly, they hadn't put PR and marketing into the stabilisation mix).

Secondly, the 'Dark Web' has really welcomed the privacy and digital cloak that using Bitcoin as currency (and using Tor to hide your identity) allows you to shield yourself with – as the other half of Newsby (Adam) says:
"Drugs is like, the most legal illegal thing they're (Bitcoins) used for, and when drugs is the most legal, there's some scary shit going on."
The security of storing Bitcoins, as a result of the illegal nature of them, is incredibly risky – they're brilliant for hackers to target, and are essentially never a physical item.

Which means you can lose your details, have your computer hacked or, basically, have your laptop blow up, and irretrievably lose your stash of Bitcoins.
And effect the entire market of Bitcoins, because of the finite amount.

Apparently, Tyler and Cameron Winklevoss have $11 million in Bitcoin (which is around 150,000 Bitcoins according to the math in this graphic- 0.7% of the total 'mine', although with recent price fluctuations, that percentage could vary – that technically means they own ~2% of all Bitcoins currently in existence).

They'd better keep them in a safe place.

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  1. Pingback: News by Design | Who invented Bitcoin?

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