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 Bitcoin... it sounds like something out of a video game, a currency created for a virtual world and a virtual economy. But the Bitcoin economy is very real, and and has been since 2009. It says a lot about the very technological and digital age we live in. To truly wrap my brain around the bitcoin, I decided to ask a few fundamental questions about its existence:
What exactly is it?
Bitcoin is a virtual currency, meaning it takes no physical form. It isn't printed like the dollar or euro, and isn't molded like a penny or quarter. It exists solely in the form of electrons, or data on an electronic device. Like dollars in your online bank, you can purchase things online with bitcoin or use an electronic device to spend bitcoin at a physical store. But you can't physically withdraw it like you would a dollar from an ATM.
Similar to the dollar though, the bitcoin is not based on a physical standard such as gold, silver, or other precious metals. It has value simply because the people who use it believe it does. And as I write this article, one bitcoin is currently valued at $326.85
So how are bitcoins created?
Bitcoins are created by a system called "mining", which awards the money in a lottery-type system to computers which run specific software to solve math problems. These math problems are used to maintain the network's ledger and confirm transactions, which is essential to how bitcoin works (more on that shortly). The original coder of the bitcoin program was an unidentified person who went by the alias Satoshi Nakamoto. Nakamoto wrote the code to limit the maximum number of bitcoins generated to 21 million. There are currently over 14.8 million in circulation.
 Where can one acquire and store bitcoin?
The easiest way to acquire bitcoin is by buying it on a marketplace called an exchange. The exchange rate for bitcoin fluctuates with its changing value. Once bought, bitcoins are stored in a digital wallet, either via cloud storage or on a person's computer.
Where can I spend bitcoin?
Bitcoin can be spent anywhere it is accepted. The number of online and real-world stores accepting bitcoin has grown significantly over the years, particularly in California and in areas of Europe.
What prevents someone from counterfeiting bitcoin or cheating the system?
As mentioned above, what is unique about bitcoin is its "general ledger" system. Instead of having one governing entity to track and control where money is made and prevent counterfeiting, the responsibility rests on the bitcoin community. Everyone who participates in "mining" bitcoins helps to build the ever-increasing trail of bitcoin transactions. Miners essentially use their computers to create unique IDs (called "hashes") for every "block", or group of transactions, in the bitcoin network. Once a block is created, it is stored in the system, and any attempt to change its code would be instantly flagged as false by every computer plugged into the network. The same goes for subsequent blocks, which build on the unique code of previous ones, preventing counterfeits.
 What are the advantages of bitcoin?
Bitcoin was built on the premise of being a straight peer to peer currency that was unregulated and uninfluenced by governments and institutions. That face of bitcoin is changing since governments around the world are beginning to officially recognize the currency. And the anonymity that bitcoin touts (not needing your real name to buy and trade bitcoin) is also an illusion, since network IDs are recorded (and can be tracked) for every transaction made.
Still, bitcoin maintains the advantage of providing fast transactions with few to no fees. And bitcoin's public ledger system has proven to be very secure and largely unhackable, which is why the technology has caught the attention of many big banks.
Will it last?
That's a big question isn't it? I certainly believe that the networking concepts and security features behind bitcoin will last. And bitcoin's robust system, passionate community, and recognition around the globe will certainly contribute to its staying power. Bitcoin is still not as widely adopted in the marketplace, and that has contributed to a lot of volatility in its value, and consequently a lot of fear and hesitancy surrounding its use. But even if bitcoin crashes sometime in the future, I think cryptocurrency in some form or another is probably here to stay.
References:
Coindesk.com - What Is Bitcoin
Bitcoin.com
IEET
Softpedia
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