What Is Bitcoin? Everything You Need to Know
Stop asking yourself, "What is bitcoin?"—these articles have all the answers you need.
You’ve likely heard of bitcoin, the digital currency that’s recently been thrust into the spotlight. The baseline idea, despite layers of complicated, tech-y specifics, is simple: What if there was a standardized currency that could be “mined,” like gold, and used anonymously across the World Wide Web and in select real-world locations? Users keep bitcoins in digital wallets—perhaps not so different in concept than the PayPal account you keep dollars in—and spend them like any other money.
That bitcoins have suddenly received so much attention is important for several reasons. For one, it signals a strong desire felt by many to break free of traditional banking systems and “own” their money in a way that isn’t possible with, say, a credit card tracked by CHASE. If businesses take interest in this young currency, there could be an impact on the financial markets. Bitcoins also represent an interesting evolution of our lives in cyperspace: Who’d have thought, when they first hooked up a beige Mac to a dial-up modem, that their computer’s successor would one day generate intangible data with actual monetary value?
Of course, bitcoin isn’t quite the hot new thing mainstream media would have you believe. It broke onto the scene in 2009 after a Japanese programmer who uses the name Satoshi Nakamoto published a proof of concept, and it really gained steam a year later, when developers flocked to the project. By the end of 2011, bitcoin was established enough in certain circles to spark an expose on Gawker about people using the currency to buy illicit substances, and a Wired feature titled “The Rise and Fall of Bitcoin.” Then the hubbub died down—until early 2013, when Coinbase, a bitcoin “wallet service,” reportedly sold $1 million in bitcoins in a single month. That’s big money, and the real-world market took interest.
Now, fresh articles on bitcoin are commonplace, but without a filter, they can be a tricky mess to work through. Here’s what we recommend for readers who want to grasp the basics:
• Bitcoin Explained by Duncan Elms: This cool video does a good job summarizing the technical details of bitcoin in under 4 minutes and is an ideal place to start.
• The Bitcoin Boom by Maria Bustillos: Here’s a detailed look at the real-world ramifications of bitcoin, examining how some people flocked to the digital currency after financial shake-ups in their home countries. Bustillos also offers key insight from some of the people behind bitcoin.
• Will Bitcoins Make Me Rich? by Farhad Manjoo: A first-hand account of the somewhat sketchy process of actually buying bitcoins, this piece also glances at the risk behind this “digital funny money.”
• Meet the Bitcoin Millionaires by Max Raskin: They exist! But it’s probably too late for you to become one of them. Here’s what they have to say.
• Yes, People Are Hoarding Bitcoins by Zachary M. Seward: This is a visual look at the bitcoin market and how supply/demand works within it.
• These 7 Bitcoin-Mining Rigs Show How Far Some People Will Go For Virtual Money by Fernando Alfonso III: Curious to see what kind of equipment you need to actually “dig” for bitcoins? Here are photos with explanatory text.
• Fool’s Gold by Eric Posner: Finally, a cautionary look at bitcoins—Slate writer Eric Posner thinks the whole thing resembles a Ponzi scheme and predicts the collapse of the digital currency. Food for thought.
• Mt. Gox Files for Bankruptcy by Mark Memmott: Here’s what happens when one of the world’s biggest bitcoin exchanges goes down—people lose millions.