Bitcoin – What is it?

Frank C Jones ♦ October 26, 2011 ♦ Leave Your Comment

Image by TraderTim via Flickr

At it’s most fundemental level, Bitcoin is a digital currency. However, it is also an open-source project, transaction network, and client software. without getting into the specifics, I’d like to focus on the application of Bitcoin as a currency. If you would like more details about the inner workings of Bitcoin, there is a list of links at the bottom of this article which can point you to some great resources.

The basic idea behind any currency is that people place some value on an item that is a limited resource which can be traded for other things of value. Historically, people have devised currency systems using shells, gems, precious metals, specially cut stones, and even small pieces of paper with patters of ink on them. Now, Bitcoin proposes that we start using configurations of electrons on an magnetic disk, which is not so different from our present currency (see: Time to Cash Out: Why Paper Money Hurts the Economy & How Currency Works). Additionally, Bitcoin proposes that we move away from central banks and toward a more decentralized aproch to economic transfers using the BitTorrent network as a way of facilitating and recording transfers.

There are some benefits and some drawbacks to the Bitcoin currency, as there are with every currency. However, this is an interesting idea worth consideration. For further information and to dig into the particulars of the Bitcoin currency, check out the links and video below. Also, feel free to add other interesting links to the comments section further down the page.

Open-source Project

The basic outline of the project is best found on Wikipedia.

This project was started by Satoshi Nakamoto and was laid out in his own self-published paper.

Transaction Network