In the technological world of 2014, the concept of currency without a central bank, a controlling government, or third-party fees and regulations is a reality. Bitcoin is a peer-to-peer payment network that utilizes a digital crypto-currency known as bitcoins. Originally developed by an unknown person under the alias of Satoshi Nakamoto in 2009, bitcoins are bought, sold and exchanged on a system run by a network of contributors in order to eliminate middlemen and prevent double spending or the cyber-counterfeiting of funds.
These contributors, known as miners, dedicate the system resources of their personal computers to process Bitcoin transactions — an average of 60,000 transactions per day — and are rewarded for their part in securing and synchronizing the network. Mining, much like a centralized government pumping paper money into an economy, provides a means of distributing new wealth, albeit at a depreciating rate, and serves to validate and relay transactions while protecting the neutrality of the network.
“Bitcoin follows all of the proper paths to bring about a stable currency,” said Casey Trujillo, a computer science major at Weber State University. “Bitcoin follows strict principles which allow it to retain its value, such as the limited number of bitcoins, unlike the U.S., where the Federal Reserve prints out billions of dollars and pushes it onto the U.S. market, which results in a devaluing of the dollar.”
Currently the number of new bitcoins mined into the market is set at a predicable rate, which is halved automatically over time, until new distribution ceases at 21 million coins.
“I’m not a big fan of cutting out the middleman myself,” said Stephen Cogan, a WSU journalism major. “As much as I’d like to save a few dollars from the bank, those few dollars go to real people, and we already have enough job loss in our economy.”
With the ability to send and receive money instantly and anonymously to any part of the world with an Internet connection, and without the bank fees or government interference that can occur through traditional digital transfers, Bitcoin has quickly emerged as the world’s leading digital currency. However, with an increase in consumer awareness and demand, as well as rising instability in the global market, the current supply of coins has caused a volatile fluctuation in the digital currency’s value.
“From a business standpoint, it’s sketchy,” said Jeff Lange, entrepreneur and owner of Fanbuild.com. “Right now, with values rising and falling daily, I don’t think it’s stable enough for many businesses to accept.”
While the future of Bitcoin is uncertain and its acceptance on the global market remains to be seen, not everyone is keen on its offerings, including Russia’s prosecutor general, Yury Chaika, who has declared the use of the digital coinage illegal, as other countries, the U.S. included, seek to regulate the innovative and controversial currency.