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Author Topic: dailylounge.com: How the Online Money Bitcoins Are Taking Over IRL  (Read 279 times)

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How the Online Money Bitcoins Are Taking Over IRL
(By: Nicole Capo)



Don’t trust the banks? Consider investing in Bitcoins — it's the online digital currency of the future and it's gaining in popularity.

Although it's status as a currency was a bit rocky when it started getting mainstream attention in 2011, due to the low amount of transactions and currency circulating the Internet, Bitcoin is now poised for a takeover. Popular websites Wordpress and Reddit have recently decided to start accepting the coins for their transactions, and some banks are also looking to start getting involved. The money is even making a leap into the real world with the promise of an upcoming debit card launch. Want to buy minutes for your wireless device? It can help you out there too. That, coupled with the fact that one Bitcoin is currently worth about $40, only goes to show how popular the intangible currency is quickly becoming.

The coins are not associated with any government or cleared through a central server. Instead, they’re distributed through a peer-to-peer network, similar to the way torrents work on BitTorrent. To generate new coins, users also run algorithms that solve puzzles. Each time a puzzle is completed, the user is rewarded with Bitcoins — but, don’t think you can just start churning out money. Each new puzzle is significantly more complex than the last meaning they take plenty of time to solve, there's also finite amount of Bitcoins that will ever been produced, and these Bitcoin “miners” can end up spending tons of their own dollars on the necessary equipment, just to break even.

The allure of such a system can also be a pitfall. Because there’s no real regulation over the money, hacking into the personal “wallets” of the people who use the system isn’t an entirely tough nut to crack. Just last September, one operator had 24,000 Bitcoins stolen from them. Bitcoin has also garnered notoriety for being the currency of choice on the underground drug marketplace Silk Road. Some critics worry that the lack of regulation will lead to money laundering.

But, as long as the value continues to rise — and more and more legitimate organizations and businesses accept the digital cash — it doesn’t seem like Bitcoins will be disappearing any time soon. In fact, part of their recent leap in value the occurred within the span of just a few days.

Leave it to the computer geeks of the world to figure out a way to generate wealth without ever having to leave their caves.

[Pic via Flickr - Zach Copley]

http://dailylounge.com/the-daily/entry/bitcoins-taking-over-irl

 

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