The advent of technology irrevocably creates lanes for new, futuristic ways for us to pay for items. Does anyone remember when MMORPG players were paying real earth-money for online currencies? Online ecosystems like Xbox Live and Nintendo’s Marketplace have made use of points to purchase digital wares like games and themes. Our modern society seems to be in a relentless pursuit of deals, and oftentimes a deal is easier to frame in the context of an invented currency. That’s where BitCoins come in.
What is a BitCoin?
Glad you asked! A BitCoin is not an actual coin; nor is it a bit. It is a unit of virtual currency used to pay for certain items online. What kind of items? Well, anything from “web design to alpaca socks” according to Slate’s Economy and Business reporter. What’s interesting is there is no intrinsic value to BitCoins. They don’t cost any thing to print and the value they do have is based on the number of vendors willing to accept it as currency.
Though BitCoins are used exclusively for digital purchases, the similarities to real life currency are chilling. All the exchanges are anonymous and confidential, much like another currency you may have heard of: cash. The anonymous nature of BTC transactions opens the economy up to potentially criminal activity. Theoretically, the sale of illegal items could not be traced over BitCoin and this has made it attractive to shady types.
Because there is still an element of supply and demand, the value of BTC fluctuates maniacally. The price of one BTC can go from $7 to $31 and back down again in less than 100 hours. People who bought BitCoins at low prices months ago could have multiplied their money by as much as ten times in the past few weeks when the price skyrocketed. It’s hard to identify what causes these fluctuations and that makes “investing” in BitCoins an extremely risky enterprise.
BitCoin’s primary interest seems to be creating a new currency that is purely digital, exclusive to online and adheres to the same rules as the currency we use offline. Some commentators write the whole idea off as a fad or Internet trend, but a quick glance at the BTC wiki makes it clear that the mysterious creators of the BTC want to see it expand into a full-fledged digital currency despite having no centralized agency to regulate the flow of currency. Whether this model can sustain itself is impossible to say, but the existence of an online-only currency holds incredible potential for the future of internet shopping. You may be shopping for deals and pay with BitCoins rather than earth dollars sooner than you think…