What the heck is Bitcoin?

For all you experienced barter geeks reading this, there is absolutely nothing new about the concept of an alternative currency.  By that I mean a currency that is not government sponsored and appeals to a specific sub-set of the total global market; a currency that has plenty of value, however is not as liquid as traditional green-backs.  Bitcoins are an electronic alternative currency.  One of it’s developer’s main goals was for it to be totally decentralized so (in theory) no single organization or government controls it.  This currency is still little known other than in the geekiest of the Internet culture, however it is starting to catch on and there are a number of (mostly online) stores that accept bitcoins as payment.  What makes bitcoins different from barter exchange currency is that there is no organization to join to use the currency, no commisions to pay when transactions are made and (Wow) it’s easy to convert to cash for a minimal fee.  What makes bitcoins a lot like barter currencies is that there are a number of folks that have bitcoins and are looking to buy products/services exclusively using that currency.

So what are you supposed to do with this information?  Honestly I don’t know yet.  I think I’m going to see if I can sell a couple items for BitCoins (BTC) and see how easy it is to spend bitcoins or convert them into dollars.  Much like barter currency, if you can’t figure out a good way to spend it, there really isn’t any value.  Be forewarned:  This concept doesn’t come without risk.  Unfortunately an untraceable currency has a lot of value to an undesirable segment of society so there is a criminal element.  There also can be volatility in the value of BTC because it is not tied to the value of any traditional currency.  In the last week there was a hacking incident where some BTCs were stolen which caused confidence in the currency to drop.   BTC value dropped dramatically.  Everybody involved in the currency now is holding their breath and hoping that the value will rebound over time.  Of course, that could mean that it’s a great time to get into the game.

simple explaination of bitcoin:  http://www.weusecoins.com
official bitcoin website:  http://www.bitcoin.org
technical article in The Economist about bitcon:  http://www.economist.com/blogs/babbage/2011/06/virtual-currency

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