Non-nerds be forewarned: I’m taking a deep dive into geekville.
I’m talking about Bitcoin, which, until this weekend, I had never heard of.
Mind you, I had heard rumors of a digital currency.
But I thought that they were talking micropayments, like buying coins in a Zynga game.
I never thought that there was an actual digital currency.
And people were using it for real life transactions.
So you can imagine my surprise Friday, when I read about Bitcoin in Techcrunch and realized that it was real.
Not only is digital currency real, Bitcoin transactions have eclipsed $1 billion.
That’s billion with a ‘B’.
Bitcoin is a decentralized digital currency based on an open-source, peer-to-peer internet protocol.
It’s been likened to PayPal, in that it’s an alternative money transfer system, which enables you to place secure transactions online.
Payers and payees send transactions to and from their wallets or Bitcoin websites without any intermediate financial institution.
Bitcoin’s transactions are secure because they use cryptography, the same technology used by larger online banking institutions.
Cryptography is just a fancy word for encryption.
But Bitcoin’s encryption technology utilizes an extremely complex mathematical formula that ensure the authenticity of each Bitcoin transaction.
Essentially, Bitcoin looks at a block of sequential transactions to determine if they are valid.
Bitcoin’s software records transactions in a log or “blockchain” stored across the peer-to-peer network every 10-minutes.
Subsequent transaction records make preceding transactions permanent parts of the blockchain.
Bitcoin’s protocols makes it virtually impossible for cats to get over.
That means zero fraudulent transactions.
The reason Bitcoin is newsworthy is because it passed that billion dollar mark and now the Feds are trying to determine how to regulate it.
Bitcoin does not involve any traditional banking institutions and is completely exempt of regulations of any kind.
It is an ecosystem unto itself.
Whole communities have sprung up, transacting solely in Bitcoins.
In fact, you’ll find several sites sporting the Bitcoin logo, advertising the fact that they accept Bitcoin payments.
At this point, I’m sure many of you are scratching your heads, thinking, “what’s a Bitcoin?”
Recognizing the limited intellectual capacity of many of my readers, I’ve included a visual aid.
Next time we’ll examine the psychological implications of the blue pill red pill dilemma.
Please bring your marble notebooks.