What Is Bitcoin Or Crypto-Currency?
Sep 28, 2017 03:39PM
● By Jim Farren
Bitcoin, the virtual banking currency of the internet, has existed since 2009 and yet there are still many people who don’t know what a Bitcoin is. So, what exactly are Bitcoins and where do they come from? Who uses Bitcoins? Is a Bitcoin a form of legal tender? If so, are Bitcoins the currency of the future?
Trying to explain Bitcoin currency is a little like explaining quantum mechanics. The fact is, as Richard Feynman, the noted physicist, said, “I think I can safely say no one understands quantum mechanics.” Yet it is very real and used every day. Bitcoin is a little like that.
What is a Bitcoin?
Paul Gil in his informative Lifewire.com article about Bitcoin and how it works, writes, “Bitcoins are electronic currency, otherwise known as ‘cryptocurrency’. Bitcoins are a form of digital public money that is created by complex mathematical computations and policed by millions of computer users called ‘miners’. Bitcoins are, essentially electricity, converted into long strings of code that have money value.”
In fact, the cost of the electricity required to ‘mine’ a bitcoin was used to calculate the value of the first Bitcoin.
Why Bitcoins are so Controversial
Over time several things have evolved to make Bitcoin currency a media sensation. What is happening now can be viewed as Bitcoin having reached “critical mass” on a global scale.
“From 2011 to 2013, criminal traders made bitcoins famous by buying them in batches of millions of dollars so they could move money outside of the eyes of law enforcement. Subsequently, the value of bitcoins skyrocketed,” explains Gil in the aforementioned article. Yet the claim that Bitcoin or crypto-currency poses a threat to global welfare due to use by criminals and terrorists is grossly misleading. The Wall Street Journal reports that 97 percent of such activity involves conventional fiat currency—mainly the U.S. dollar. So you might as well lobby to eliminate the dollar.
Ultimately, though, according to Gil’s article, “bitcoins are highly controversial because they take the power of making money away from central federal banks, and give it to the public.” Bitcoin accounts cannot be frozen or examined by tax men, and middleman banks are completely unnecessary for bitcoins to move, be traded or held; no wonder Jamie Dimon, the CEO of JP Morgan Chase Bank, doesn’t like it.
Jim Farren is the president of Protech Consulting Solutions, a division of Protech Enterprises, Inc. He can be reached at 760-670-3244 or [email protected].