Bitcoin Coming Into Its Own

Bitcoin? It’s weird. It’s a trend, it’s a fad, and it’s a financial bubble waiting to pop. It’ll never last. At least that’s what most people who aren’t familiar this new-fangled digital currency would say. The ‘never last’ thing however is contrary to what’s happening today with the recent opening the first Bitcoin exchange in America, Coinbase as well as the recent acceptance of the digital currency in some major stores.

Bitcoin which began in January 2009 is a relatively new concept. The iPad just began in 2010 and now tablets are everywhere. But with Bitcoin, it’s kind of hard to readily accept especially with a lot of real money and resources riding on it. But that’s actually what gives it value, the actual money and resources behind it is substantial and continues to grow. Bitcoin has had its ups and downs. Since it’s basically software, subject to bugs and hacks but through its growing community, the currency has somewhat stabilized earning the confidence of many individuals, organizations and companies.

By December 2014, many large companies in the United States and other countries joined the Bitcoin bandwagon. High profile companies accepting this currency could only increase the confidence of others that Bitcoin actually has a future. Among these companies are major computer vendor Dell, publisher Time Inc., charter jet company Privatefly, software giant Microsoft, blogging website WordPress, travel company Expedia, satellite cable network Dish Network, tech merchant Newegg, online market Atomic Mall, comic book publisher Dynamite Entertainment and game publisher Zynga.

Another milestone in Bitcoin usage happened September 2014 when PayPal announced its acceptance of bitcoins for North American merchants. A Bank of America branch in Boston facilitates transactions and converts deposits to Bitcoin. Even nonprofit organizations such as Burning Man, Greenpeace, Wikimedia and Mozilla Foundation accept Bitcoin donations.

So how are bitcoins obtained? Like gold, bitcoins are ‘mined’ through a lot of distributed computer processing power thus giving it its value. Depending on supply, the actual value fluctuates much like real currency. Anyone can obtain bitcoins by partially or completely offering their computer’s processing resources in helping maintain its online distributed ledger or what is referred to as a block chain. The block chain is a record of transactions of each and every bitcoin created, transferred or spent between individuals and companies. The more bitcoins mined, the more transactions are recorded, then the more processing power is required to mine bitcoins which in turn potentially raises its value.

A much easier and simpler way to obtain bitcoins is by opening an online wallet and trading it for actual goods and services. Sounds simple enough.

Below is a simple history of bitcoin:

As you have read, you’re in for a roller coaster ride if you enter the world of bitcoin. Come to think of it, its behavior has much in common with the stock market. Each bitcoin is like a share in a large growing company except there are no brokers, only exchanges. It even acts like physical money with its banks or exchanges getting robbed, not by men with guns but by hackers. Will bitcoin go away? It seems to have stabilized for now and gradually coming to its own. If you’re familiar with the stock market and if you’re a risk taker looking for an investment, feel free to jump in. So far there does seem to be a future in bitcoin. Big business players are already cashing in, even the black market. It’s only a matter of time before others follow.