Last week, the Academy of the Impossible hosted the Toronto Bitcoin Summit. In case you didn’t make it—or have no idea what the heck a bitcoin is—here’s an overview of the world’s newest currency.
The world’s first digital currency, bitcoin is transferred directly from person to person online. The concept was first proposed in 2008 by an anonymous developer who has since disappeared (seriously). While bitcoin use hasn’t exactly exploded, its popularity and value have steadily increased over the past half-decade. Two years ago, one bitcoin was worth approximately $30. Today, it’s around $200.
The “bank” pays you service fees.
Get ready, because this is the part that makes our brains hurt. Each bitcoin is initially obtained by completing a mathematical formula. Because there is no physical banknote to keep track of, the currency uses what’s called a “block chain,” a publicly distributed ledger that anonymously stores every transaction. This ensures no one is simply copying and pasting their bit-code. Anyone can update and maintain the block chain, and people who do so are called “bitcoin miners.” Mining takes a lot of know-how and leg-work, so miners are rewarded in—what else?—bitcoins. For everyone else: Once you download the free software, you can exchange any currency for bitcoins online.
Yes, they work IRL.
You can spend bitcoins on physical things like music, videogames, clothes, and books. A number of websites already accept them, such as WordPress, Reddit, OkCupid, and most recently, Baidu (China’s version of Google). Bitcoin ATMs are already a thing, and could be in Toronto as early as December.
How soon until P.Diddy is “all about the bitcoins”?
Bitcoin is the only currency that is not controlled by a central bank or government. It is completely decentralized, and is self-governed by the bitcoin community, which anyone can join. Some think it will revolutionize how we see money, in the same way email transformed the way we communicate. It’s too early to say whether bitcoin will be as universal as Facebook or merely relegated to the Friendster bin of history—but it wouldn’t hurt to start being nicer to your IT guy in case you ever need to borrow a couple of bits.