​

BITCOINS:

​

THE EVOLUTION OF MONEY!

Written by Leonard Hall

​

​

Money was invented to facilitate trade and Bitcoins fulfills money's destiny better than any currency since the first gold coin was minted some 3000 years ago in Mesopotamia.

​

​

In 2009 a pseudonymous developer named Satoshi Nakamoto created Bitcoins often called a cryptocurrency because it incorporates cryptography at its heart. The cryptocurrency has no central bank nor any specific company that controls it. The currency’s software is open sourced and stored on the computer’s of those who would mine it and even buy, sell and trade it. This description is also called peer to peer. There is no need for trust as the algorithm and the cryptography required for creation and transaction in bitcoins solves a mathematical problem not easily solved by harnessing large amounts of computing power. Utilizing the peer to peer network the system rewards individuals and pools of individuals with Bitcoins as they contribute their computers to solve these problems. An individual so engaged is said to be a miner of Bitcoins. Anyone, anywhere in the world with internet connection and the means to buy or mine Bitcoins can become an owner of Bitcoins. Currently Bitcoins cannot be taxed simple because of the anonymous feature it uses.

​

​

However this feature could fade as regulation require the exchanges that allow the trading of bitcoin to proliferate on the internet is then forced to collect and transmit the names of account holders to say the irs or some other regulatory body.

​

​

This anonymous feature of Bitcoins is accomplished by the use of a private and public key. Where the private key is not given but referenced by the public key which is used once. For subsequent transactions a new public key is used. The reference confirms that the seller either has the Bitcoins intended for sale or confirms that the buyer has Bitcoins to make the purchase they wish. In either case there is no need for trust. Which is required by fiat currencies the world over. Which in almost, if not every case is abused. As witnessed by inflation, hyperinflation and death in examples of affected and unnamed fiat currencies throughout their history.

​

​

Transaction Cost with Bitcoins are much lower than traditional Visa, Mastercard, Western Union or wire services. These companies charge in the range of 2 to 3.5 percent where Bitcoin charges a fraction of one percent. This charge is passed on to the miners of Bitcoins.

​

​

Organizations: supporting the trading of Bitcoins has risen among those: Mtgox, Coinbase, Bitinstant and others serve as exchanges for the buying and selling of Bitcoins. It must be noted that there are legitimate uses for Bitcoins and many engage in these uses. As more business start accepting the currency its usage will not doubt rise as its prices already portend.

​

The years of massive growth in usage and acceptance

appears to be upon us with approximately 12.15 million

Bitcoins in existence and 8.85 million more to be mined and a total of 21 million coins to be created. the race is on to acquire the currency and the free market will determine the price.

​

In Early 2013 Bitcoins traded for as little as $15 by April 2013 they reached $200 + In October 2013 they were trading for over $520 and now in November they trade Above $1000 and have traded as high as $1213.

​

The main risk to Bitcoin is regulation, currently the government is unwilling to give the cryptocurrency a death sentence but rather to allow for the discovery of the means to manage it and allow for the innovation to thrive without endorsing it.