Here in Brazil a great part of the history is related to the gold rush. what a good opportunity to speak about Bitcoin, the crypto-currency created by the mysterious and still unidentified Satoshi Nakamoto. Let's try to wrap-up a summary of what is BitCoin, both on the economical and technical side.
Most of the transactions we make these days are electronic - through credit card - we hardly use cash anymore, apart for buying bread and butter... If payment is already electronic, then what's the deal with Bitcoin?
Electronic cash you can keep by yourself
Today, even though almost all of our transactions are electronic, banks don't keep much "real" cash inside, it simply records a line in your account, hoping that no more than 3 to 10% of their clients would ask to withdraw it at the same moment. If we want to keep cash at home, then we need to get it in the form of metallic or paper cash. On the contrary, Bitcoin is 100% electronic, in the form of a unique file containing a large and unique number. Anyone can keep Bitcoins on his own computer or mobile phone, just like cash in a pocket. It won't exist in your bank account. (but if you loose your computer, you loose your cash too...). It is also "peer to peer", meaning that to transfer Bitcoins, you don't need a bank as an intermediary, it will flow directly from one person to another through the internet.A regulated increase of money in the system: the mining process
To avoid inflation that usually happens by artificially creating money without control, a smart mechanism was created inside Bitcoin's algorithms. A controlled random reward (in Bitcoin) is distributed to anyone willing to dedicate computing power in order to to validate transactions. ( an intensive cryptographic process ). People taking part in this process are called "miners". the more computing power they dedicate, the more chance they have to get a reward. To avoid being catched-up by Moore's law, the algorithm smartly reduces the chances of gain with time. As of today, it is getting harder to earn Bitcoins while mining with a simple computer. Some people work in pools and share the results (check here world's Bitcoin mines comparison), others invest in large dedicated computer farms: see this funny video on the largest bitcoin mine in activity.New concepts / ideas around Bitcoin
Beside its most common use as an alternative for cash, permitting to pay and receive payments, there are plenty of ideas to be explored with Bitcoin, its algorithms, or the fact that it is not controlled by banks or countries. Here are some emerging ideas/concepts I found on the web:- Reduce currency transfer fees using a P2P foreign exchange platform: Ripple.com backed by big names including Google ventures [embed]https://ripple.com/[/embed]
- Develop a "Bot" to benefit from arbitrage opportunities on the young Bitcoin International market. Here, a commercial bot and an open-source one.
- Create a loyalty programme reward system using Bitcoins or points based on the Bitcoin protocol, to benefit from a strong ecosystem of apps as well as a strong interoperability. See for exemple: [embed]http://www.gyft.com/[/embed]
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