2013-02-22 – Edinburgh
During the last few years a truly online currency has come into existence. Still in its very early stages, the ideas behind Bitcoin were published in a paper in 2008, and was first introduced only in 2009. The current monetary base of Bitcoins globally is estimated to be well over US$300 Million (depending on the exchange rate).
Bitcoin is essentially a fully decentralised online-currency, with no centralised issuing authority, such as the Bank of England or the European Central Bank. It is a digital currency, completely segregated from government control and quantitative easing, which can be sent electronically to recipients in any country.
Bitcoins can be transferred directly from person to person without going via a bank or clearing house. Although exchange rates for Bitcoins have been very volatile, Bitcoins are internationally recognised – or rather, internet recognised.
Late last year, one currency exchange specialising in Bitcoins was granted the right to operate as a bank. Bitcoin-Central was given approval in Europe thanks to a deal with Aqoba and Credit Mutuel, two French financial firms. Thanks to the deal, Bitcoin-Central became a so-called Payment Services Provider, putting it on an equal footing with PayPal and WorldPay.
The BBC recently reported that a new Pizza for Coins service was set up by a couple of programmers to increase the use of Bitcoins.
The composition of the Bitcoin ‘network’ of millions of connected computers around the world means that there would have to be a total internet meltdown for the Bitcoin system to crash. This structure makes use of a strong, resilient, peer-to-peer network forming a so-called crypto-currency. It is proving especially popular given the current uncertain economic climate.
Bitcoins can be generated by anyone running a free application called a ‘bitcoin miner’. Mining requires a certain degree of computing power – and work – for each block of coins.
Only a finite number of Bitcoins are to be released, as the currency is mathematically limited in supply to 21 million units.
It remains to be seen whether such a relatively unregulated currency can indeed continue to exist as its share of the online-payments market grows.
