A Study on Bitcoin: the Future of the Currency?

Upon hearing a conversation about Bitcoins, it seems they are talking about a mixture of mining in Starcraft with virtual coins you buy to pay a little farm on Facebook. But do not be fooled by the air game and futurism: the Bitcoin has evolved from the status of “nerd item” to “counting unit” in Germany, where it is possible to pay for your beer using Bitcoins.

In a close Europe with the economic crisis, some even invest the inheritance of money converting it to the new digital currency. Fortunately, it was a nice balcony. Heidi Leyton, interviewed by the Guardian explains that these heirs who are known her, managed to turn 30 000 pence at 600 thousand pieces in a period of about 3 and a half years to invest in Bitcoins. Not bad, huh?

 

And to help the reader of TB to understand what it is and to serving Bitcoin, we will try to unravel the subject kids and without much ado to you finally understand what this revolution that the virtual coin can bring.

independent money

The great banner of Bitcoin is a currency that is independent of government control and allows transactions “semi-anonymous”. The rates linked to Bitcoin are very low, generally associated with exchange houses, but its value market today is quite high – the price on the site Preev shows that 1 Bitcoin (abbreviated as BTC) equals $ 123.

Digital currency would have been created by a programmer Satoshi Nakamoto name, but the history of its appearance resembles science fiction films. After bringing this good for the world (even if virtual), Satoshi simply disappeared, becoming completely untraceable in the network – much to ask if you are Satoshi Nakamoto is a nerd joke commonly answered with “no, but if it was also not say”.

Some believe, however, that Satoshi would not be a real person but a pseudonym used by a group of developers to be the persona creator of Bitcoin. There are theories that assume that Satoshi is actually an economist of Finland, an American financial speculator, a student from Dublin or even a pseudonym created with the acronym of four major global corporations – Samsung, Toshiba, Nakamichi and Motorola.

Satoshi identity aside, this character described in a scientific paper as would be the operation of Bitcoin, presenting it as a solution to the financial problem of the modern world, since it is a currency that does not need to rely on trust – of governments, banks, political stability – but at cryptographic evidence, and that has the potential to become a global currency.

Thus arose the idea of a virtual currency in which transactions are irreversible and is guaranteed the suitability of transfer via cryptographic security. With a complex mathematical algorithm, Bitcoins are generated in a limited way. It takes the effort of machines that solve complex problems and produce the coin, in a process known as mining, an allusion to the dedicated effort of the machines to get the money virtual.

Thus, financial transactions become basically a bit exchange. A number of bits going from one side to the other, with an encrypted authorization from the owner, and presto, you become a happy owner of some Bitcoins. Fast, practical, with a verifiable process, since the number of Bitcoins generated is limited and public knowledge, and without having to worry about political or economic stability of the country regulating the currency, since it does not exist.

Charlie Hall, site Polygon , made ​​an interesting analogy of the operation of a transfer Bitcoins, which explains well what the system of grace. The basic principle is that everything is open and everyone can see all Bitcoins, but only their owners can access them and do what they want with them, making the highly controllable system. “Imagine the Bitcoins not like a pile of physical things, but as a huge ocean of code. Private keys [of each owner of Bitcoins] allow people to achieve this ocean and catch only the coins that they have, and then transfer the properties to them who they want, “he explains.

The problem, says Hall, is that unregulated ocean and little trackable offers a unique opportunity for cybercriminals act, receiving Bitcoins and then making the exchange in real-world money without account of how, when or with whom managed such values.

 

underworld wébico

Given the anonymous nature of the transactions, Bitcoin is widely used for those working in the illegal Internet context. In web deep, payments for purchase of drugs and illegal requests, as hired killers, it is always made ​​via Bitcoin. After all, no criminal wants to be caught offering their services on the web and Bitcoin offers anonymity to these transactions.

The media has often associated with Bitcoin with illegalities that happen in the deep web , such as payment for purchases made ​​through the website Silk Road, an online store that sells illegal drugs. Just as you do not expect to make payments in a mouth of smoke with a debit card, the Silk Road also would not expect you to give them the number of your credit card or make payment of a ticket. The safety of anonymity that provides Bitcoin is not currently offered by any other type of payment.

Although work on the margins of what is socially accepted, even the Silk Road has its ethical limits – the site sells drugs but refuses to expose the sale of “any item that has the purpose of harming or causing fraud, such as cards stolen credit, provision of hired assassins and weapons of mass destruction.” Not to be illegal for the Silk Road aims to become amoral. For those interested, the Wired has a very cool article on the site, and Forbes suggests to who would be its main competitor, a site called Atlantis, which just also receive a report of INFO.

Good coin, bad coin

Associated with illicit drugs and activities; anonymous; without government regulation. All this makes the Bitcoin seems the chaos of currency, but it is not the case. Cleverly created so that it could be verified publicly, through the processing power of the machines involved in mining, Bitcoin is concerned to maintain its basic principles and political independence of instant transaction.

The value of a Bitcoin, however, is highly variable, and the currency appreciated peaks in recent months, attracting the attention of economists. Today, BTC 1 equals about $ 120, but in high moments, one Bitcoin has come to be worth 146 doletas a vertiginous leap compared to $ 13 worth earlier this year. Despite all the interesting theory, in practice the Bitcoin still faces some challenges.

The first is that buying is complicated, made ​​by a few companies and in a way that does not pass security for many people. You can not make payments by credit card, as this is a type of transaction that may be canceled or suspended by the operator, which would cause a serious problem in the operation of Bitcoin, which does not allow “undo” financial transactions – after being transferred, one Bitcoin handful can only be reversed, so to speak, if the other side you have the kindness to authorize the return value.

Another challenge is to increase the spread of currency for various segments, especially within the law, to take the stigma of “currency of the deep web.” Gradually, more merchants and service providers start to accept payments in Bitcoins, but adoption is still slow, especially the character “marginal” of the currency, which many believe to be modinha. Other betting on a bubble, which can devalue the money invested without being accountable to anyone.

Meanwhile, governments try to anticipate the problem and find ways to regulate the currency, which is posing rebel market laws.

In the second part of our study on Bitcoin, we will cover the practical use of this virtual currency – including in Brazil for merchants who accept it. It will be published later this week.

 

Gallery

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