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BitCoins - The private Internet currency.

Level 15

BitCoins. Never heard of it? Me neither. What I did learn though is that it is a new private Internet currency based on torrent technology.

Torrent Technology

I'm sure many of you are familiar with how torrents work. For those who aren't, let me give you a brief lesson.

A torrent, literally means, flood. Torrent technology is a file sharing technology. Rather than have one person on one computer send you a file, torrents break apart a file into countless bits from countless users. These bits are spread all over the Internet and can be shared, collected, and reconfigured on a computer receiving a particular file. Therefore, no one person can be seen sending or receiving an entire file. Only the needed bits, like pieces of a puzzle, are sent and received throughout the internet. The advantage of this is no one person has total control. Anonymity, to a degree, is also an advantage.

BitCoins - The private Internet currency

BitCoins is the new private Internet currency based on torrent technology. Simply install the software and buy some coins. Now you can use your coins to buy and sell your wares, anonymously. Here's a simple example:

Let's say I have $100 worth of coins and I want to buy a widget. I go to a site that accepts my coins, make the purchase, then have the widget sent to any address I like. The seller now has coins totaling $100. The seller can choose to buy additional widgets with his coin money, or cash out. Cashing out means selling his coins on the open BitCoin market. Here, money and coins have their own exchange rate, much like stocks and precious metals do in the real world.

Why use BitCoins?

Sure, you can buy products over the Internet and pay by credit card, debit card, or PayPal. Those work fine (although my PayPal account was recently compromised and I was robbed of hundreds of dollars). So why BitCoins?

  • Privacy - What you buy and sell with BitCoins is anonymous. Only two transactions involve real money, buying the digital coins and selling them. That's it. Anything you do in between those two transactions remains completely obscured. Essentially, when you buy or sell something using these coins, all that's happening is the movement of a digital number from one place to another, obscured and encrypted by the clouds of the torrent sky.
  • More Privacy - Governments do not like this open currency market because they:
    • Cannot regulate it
    • Cannot tax it
    • Cannot stop the sale of questionable items
    • Cannot control you

BitCoins vs. Real Money

I think it's only a matter of time before paper money goes the way of the dinosaur and something similar to BitCoins takes its place, if not BitCoins itself. We're close to that already. Most of my personal transactions involve the movement of debit and credit card numbers from one place to another. Rarely do I have "real" money in my possession. (Although, I would like to see my numbers represent something tangible, like gold or silver.) Think about it. When you buy software, like SAM, you are digitally sending numbers from one place to another, then downloading digital data in response. Has physical cash left your pocket?

Money is a representation of how much we work. If I earn $10/hr for ten hours, I earned $100 (sans tax). Now I spend my $100 (ten hours of work) for something I deem worthy of my ten hours of work. Money is just a keeper of records showing how much work you have done, in one way or another.

For example, you can buy a steak and cook it yourself for about $10 and 30 minutes of your time. (In this instance, at earning $10/hr,  you've worked an hour and a half for that cooked steak). Or, you can go to a restaurant and buy the steak cooked for $25. In this case, you've paid an additional hour of your work to have others do the work for you. The restaurant in turn collects that additional hour of work in the form of a $10 profit.

I'm getting hungry...and I'm broke.

About the Author
Who am I? • I met Robert Frost at the end of the road less traveled, and then pointed him in the right direction. • Einstein asked me to define "Up," and I did. • I cliff dive from airplanes. • On Christmas, Santa comes to me for gifts. • I play three-cushion billiards with one hand. • Lions ask for my protection (I speak Lion). • Bobby Fischer and I came to a stalemate while playing chess. • I have literally given a woman the shirt off of my back. • I have also helped an old lady cross the street. • I know what a dangling participle is. • Mozart bequeathed his Requiem to me, and I corrected it. • I was thrown out of an Eric Clapton concert twice in the same night for drawing too much attention to myself. • I am a verbose minimalist. • I am Bronx. Who are you?