If you haven’t heard of Bitcoin yet, then you really need to get with it.
Confused already? You will be. Read on..
What is Bitcoin?
Bitcoin is a crypto-currency based on mathematic equations. Bitcoin is the most widely used open-source peer-to-peer "cryptocurrency" that you can send over the Internet without a bank or a middleman. Today, you can buy near enough anything with Bitcoin and websites exist to buy most things using Bitcoin.
Bitcoin is a virtual currency and as such it doesn't exist in the physical world (although you might also want to have a look at Casascius..)
Bitcoin is decentralised and therefore has no central bank such as the Bank of England or the Federal Reserve to regulate it. Unlike Sterling or the USD (which in fact is no longer backed by anything intrinsic such as gold and therefore can be printed over and over again) Bitcoin has a finite amount of coins that can be produced and so the supply of 'money' in circulation will be fixed.
So is Bitcoin is going to take over from ‘real currency’?
Bitcoins are bought and sold at a variable price against the value of other currencies and recently Bitcoin has appreciated rapidly in relation to existing "fiat" currencies including the US dollar, euro and British pound.
In January a unit of Bitcoin cost around $15 (Bitcoins can be broken down to eight decimal places for small transactions). By April 11th, it had settled at $179, taking the value of all Bitcoins in circulation to $2 billion.
According to Reuters, banks such as Morgan Stanley and Goldman Sachs visit Bitcoin exchanges as often as 30 times a day while employees of international banks and other major financial organizations are also now showing interest in the Bitcoin markets as well.
What are the other mathematical and crypto-currencies?
Bitcoin is currently the leading mathematical currency and whilst it crashed badly recently, many ambassadors of Bitcoin are quite sure that it’ll rise again very soon. Some of the more common alternative crypto-currencies in existence are:
BTC Bitcoin - The first, strongest and most accepted
LTC Litecoin - The next closest competitor to BTC; it claims to be faster than BTC
NMC Namecoin - Used for alternative peer2peer domain system
PPC PPcoin Compatibile with BTC miners
Ripple BitCoin alternative developed by OpenCoin
If you really want to understand it, read about Bitcoin here and the impact that mathematical currencies may have on the financial world in the future here!
