Bitcoin: A far cry from glass and metal.
In 2008, a curious term first surfaced on the pages of a paper published by one Satoshi Nakamoto.
Nakamoto, of whom it is yet unknown whether he or she is a person or a group, introduced this curious term: the concept of the Bitcoin.
Now, for those unfamiliar with the Bitcoin despite its massive surge in popularity these past few years, the concept is, well. Kind of simple. Kind of. Essentially, a bitcoin is a unit of, well, currency, created through a peer-to-peer cryptographic system. To “create” this virtual coin, you have to have a powerful computer capable of “mining” bitcoins – or solving complex algorithms in order to generate them.
Their value has fluctuated immensely, from being around $0.30 per coin, to reaching staggering price tags of $1100 per coin, yet there are businesses here and there accepting bitcoins as a form of payment, and exchanging them for local currency is possible.
They’re a curious and interesting concept that’s still taking on new forms and shapes, constantly changing to accommodate any problems. To begin with, the biggest problem was the currency’s susceptibility to cyber-theft, and the exploitation of its non-regulatory status as a means to do illegal business with online.
Bitcoins began as a peculiar little project – an experiment of sorts, to see whether its concept would truly be viable. In a short period of time, although nowhere close to replacing the fiat currencies that are the blood of today’s economics, bitcoins went from something not even conceptualized in the real world, to an actual, working thing (albeit barely working).
Someone who benefited from almost unwittingly catching onto the bandwagon before it really caught fire, was Jed McCaleb, who in 2007 founded the “‘Magic: The Gathering Online’ eXchange”, with the domain name MtGox.com, in an effort to give Magic: The Gathering Online fans a place to trade virtual cards in. After seeing that the concept was a dud, he let the domain lay dormant until catching wind of Bitcoin, and deciding that people possessing bitcoins would need an exchanging point.
From then on, the site was stylized as Mt. Gox, yet as Bitcoin grew, it outgrew Jed’s capabilities in maintaining the site, leading to him selling the company to Mark Karpelès. By April 2013, 70% of all Bitcoin exchanges in the world were being facilitated at Mt. Gox.
Mt. Gox was eventually shut down for allegations of fraud and due to the volatility of Bitcoin. After a tumultuous return, the company eventually filed for bankruptcy, its assets seized. Yet months before this happened in February of 2014, the FBI seized the infamous drug and erotica exchange Silk Road, eponymous to the historical European/Asian trading routes, among which a chief export/import was silk.
But that didn’t stop Bitcoin from growing. Nay, the opposite – bitcoins started integrating with the mainstream world at faster levels. The Chinese internet giant Baidu began accepting Bitcoin as a valid payment for security services, while the Chinese exchange BTC China overtook Europe and Japan’s exchanges to being the biggest Bitcoin exchange in the world.
In December 2013, Bitcoin soared to $900, and was then traded for $1100 in China after being called a legitimate financial service in the US Senate, and was its use as a currency was subsequently banned in China.
Just a few months prior, Canada installed a Bitcoin ATM in Vancouver, and today, the incredible potential and worrying implications of Bitcoin is testament to the dizzying speed at which we’re capable of changing.
Personally, although I’m not sure whether I have a proper opinion on the concept of a world-wide virtual currency, I am interested in seeing how Bitcoin could potentially grow into a force capable of overthrowing the traditional asset-backed and fiat currencies, or whether in the end, government mandate and the power of gold will maintain their rivalry atop the Olympus of money.