Bitcoin

April 02, 2013

John Lennon wanted us to imagine a world with no countries; when the European Union started happening in earnest, one of the first things they did was create the Euro. Having a common currency is a great way to bring down geographical barriers and create a shared economy. And with audacity that feels like it's drawn straight out of one of William Gibson's cyberpunk novels, that's what Bitcoin sets out to do. Bitcoin works like a peer-to-peer file-sharing application, only instead of transferring files, the nodes on the network transfer data about financial transactions. Each node on the Bitcoin network has its own unique identifier. To send someone money, simple use the client to specify an amount, paste in their ID, and the money is sent on its way. Of course, before you can do that, you need to get some Bitcoins to send. This isn't monopoly money: There are only so many Bitcoins in existence, and they have value that can be measured in more common currency (US Dollars, for example). The Bitcoin economy is still forming, so Bitcoins are being slowly created, or "mined" in Bitcoin parlance. Since one of Bitcoin's key tenets is that there should be no central issuing authority, the clients are doing the mining, effectively creating new money out of thin air. At first glance, that seems very much off--kind of like printing your own Dollar bills at home. But mining new Bitcoins is a temporary affair. The rate of mining is hard-coded into the application, and will slowly taper off until at last, no more coins will be mined and the system will stabilize at 21 million Bitcoins. To read this article in full or to leave a comment, please click here

Link: http://www.pcworld.com/article/234625/bitcoin.html#tk.rss_reviews