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Send me some Bitcoins! 1H76GsGpfkyg2PtwnsZnTYgED3NinWgsG6 | by Electric-Eye
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Send me some Bitcoins! 1H76GsGpfkyg2PtwnsZnTYgED3NinWgsG6

You may be asking yourself, why you would want to do that. Then again, you may be asking yourself, "what are bitcoins?"

 

My bitcoin address:

1H76GsGpfkyg2PtwnsZnTYgED3NinWgsG6

 

Bitcoins are a new kind of electronic money. You can trade money for them, use them to pay for things, and trade them for money. This is one technology, that in the late 90's many people speculated about, but which had not manifested until recent years.

I am studying computer programming, but I'm only the barest beginner, so I'm not qualified to explain every detail about how bitcoin works. But I've been aware of it for some time, at least several months, and I've had some time to watch it go from being unknown, to being relatively valuable against the US Dollar, and accepted as a form of payment worldwide.

 

Bitcoin is described as a crypto-currency, but as far as I can see, encryption is not really the main reason why it works and is secure. The real strength of bitcoin is its distributed ledger. While most electronic funds rely on a central, highly trusted institution to keep a ledger of transactions, like a bank, to ensure that people don't spend the same dollar twice, for instance, bitcoin instead relies on a peer-to-peer network to verify transactions, and keeps a ledger distributed across the network. This means that if someone tries to spend a bitcoin twice, the second transaction will not be recognized by the network. This system is secure enough that it enables people holding bitcoins to make a backup file of them, so that if their computer went down they would not lose their money. This backup can even be kept on permanent portable media, like a flash drive or cdROM. Ledgend has it the identifiers for your bitcoins can even be printed out on paper, and buried in the backyard in an old shoebox. I haven't been using bitcoins long enough to know if that is true or not, so if some folks will send me some, I plan to try it out.

 

There are two other keys to the value of bitcoins, that the amount of them is capped at 21 million. Therefore they remain scarce. Unlike the US Dollar, which can be created at will as electronic bank entries, they will not become worthless, through over-production.

 

However, note this well, so that you don't appear foolish in arguments on your favorite web forums: Even though the quantity of bitcoins is fixed, bitcoins are divisible into extremely small fractions. This means that the quantity of bitcoins in existence, and the value of each "bitcoin unit" is irrelevant to their ability to function as a medium of exchange. If one bitcoin were worth 1 cent, or if it were worth a million dollars, you would still be able to use them both to buy a house in a lump sum, and also buy a cup of coffee.

 

One caveat about bitcoins, followed by an observation of why it is of limited relevance: To date, the price of bitcoins has either been very low per unit, or has swung wildly between $40 per Bitcoin up to $266. per Bitcoin. The lesson here is that we should be cautious about considering bitcoins to be a stable store of value, which is one of the functions we are used to thinking of as necessary for our money. However, note that with a little creative pricing and wary understanding of common risks in the market, this need not prevent bitcoin from serving the other major function of a currency; its role as a medium of exchange.

 

Since bitcoins are no more intrinsically valuable than any other monetary unit, the only way they have value is if people want them. (And I DO!) So, in that sense nothing is backing them but people's desire to have them, either to keep or to use. The same is true of Gold, Seashells or Dollars. The price of any commodity, even those commodities we decide to use for money, always tends to fluctuate relative to other commodities. In your RPG you may be able to exchange silver for gold at a fixed rate. You may exchange Euros for Dollars at a fixed rate during your vacation abroad, but if you look at the finance pages you'll notice that the exchange rate is always changing. Slightly if you're lucky, perhaps in your favor. But which is more true? That the dollar is falling or rising? Or that the Euro is falling or rising? Is Gold falling or rising, or is it the dollar? Did the price of gas go up at the local station, or did the Dollar go down relative to the world economy? I think it is accurate to say that most of the time it is at least a little bit of both, or all of these. And so it is with bitcoin.

 

But so long as people are willing to trade you bitcoin for dollars or vice versa, you can use bitcoin to facilitate transactions without having to hold onto it as a store of value. You could see an item for sale on the internet, its price is listed in dollars, but bitcoin is given as the preferred method of payment. You convert your money to bitcoin, at whatever the current rate is, pay in bitcoin, and perhaps the person on the other end does the reverse, converting bitcoin to their local currency, and neither of you take any losses (or gains!) due to the fluctuating price of bitcoin. Someone out there, however, will be willing to risk those losses or gains, just as there are with any commodity or currency in the world. They are sometimes willing to hold payments in escrow, ensuring both parties to a transaction are pleased with the bargain.

 

In these ways it is possible to separate the unit of account (store of value) function of a currency from its function as a medium of exchange.

 

Bitcoin is valuable because it is useful. It is useful for some of the same reasons that email is useful, or web publishing is useful. Because it helps things move more quickly, with less friction, at a lower cost, and makes things that in the past only a few people could do, something that many people can do.

Its adoption is being fueled by the fact that it is the native currency of the internet. And like the internet it flows wherever information flows. It crosses borders frictionlessly. It helps people build small things, and it helps small things become big things.

At last we have a realization of a mechanism that allows those long dreamed-of micropayments, because bitcoin is extremely divisible, and because transaction fees in it are extremely low, or sometimes absent. Merchants who are used to credit card processing fees are quickly taking notice of the gains that can be made by switching to a payment method without fees. Not to mention that it is a payment method without reverses or charge-backs.

This is the currency you can send someone in an e-mail, or pay in person using a smartphone.

 

One other benefit of bitcoin is that it enables anonymous transactions. The astute reader will realize from my earlier description of the strengths of bitcoin's workings that all bitcoin transactions leave a trail that is retained in the distributed network, so great caution should be used before one assumes that their transactions are safely anonymous. However, with the ease of creating bitcoin addresses, the fact that they need not be associated with any identifying information, not even email, that they could potentially be purchased from any Joe with bitcoins that you meet by chance at the park, psudonymity is a very real, very strong possibility.

 

So I hope that I've piqued your curiosity, and that you will try Bitcoins. And if you want to give me some, that's cool too. The above QR code should work out to my newly created bitcoin address:

1H76GsGpfkyg2PtwnsZnTYgED3NinWgsG6

And if you would rather exchange value for value, give me bitcoins only if I give you something, well, I am a pretty good logo designer, I know lots about 3D animation, can sculpt in ZBrush and import meshes and textures into SecondLife. I can create custom seamless textures, I'm a decent photographer, and enjoy portrait work, and sports photography, and would love to do weddings. I'm also learning Java, and have a slew of other interests.

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Uploaded on April 22, 2013