F0ul Thoughts

Mild mannered on the outside, Free thinker on the inside

Bitcoin – time for a new start

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Bitcoin – the crypto currency that has won most publicity for being a huge growth market, then a bigger crashing market is the future. It is a technical answer to how do you create online coins that can be used as currency.
The basics, are quite easy. A coin is actually a file. It contains the answer to a complex mathematical algorithm, and are stored in other files called wallets. When you spend a coin, its identity is confirmed by matching it on a publicly accessible database called a blockchain. This is how its possible to prove that the coin is valid, and hasn’t been spent by the person who gave it to you before. There are 21 million of these coins, and each coin can be split a million times down to a unit called a Satoshi.

Got it so far? Good. The next issue is to work out how to value it, and for that we use exchanges. The problem recently though has been that there has been one exchange that has been far more popular than others, leading to criminals blocking trading by attacking the exchange with DDoS hacking. This creates a lag, which means an honest trader doesn’t know if the price being quoted for their bitcoin is the current price, or the price 30 minutes ago. This confusion is what led to the prices finally crashing, as traders lost confidence in the valuations being given to them.

Finally, we need to have a way to actually buy and sell stuff using bitcoins. That part is quite easy, but due to the confusion over the price, as well as the legal implications of accepting bitcoins rather than local currency, not a lot of people are doing that bit yet. This means that you don’t have to own bitcoins to buy stuff online, meaning that bitcoin valuations are a little suspect!

Today, we are a step closer to making bitcoins more acceptable because I had an idea to offer a Fiverrr service which worked exclusively in bitcoins – that might work! 🙂


Written by f0ul

April 16, 2013 at 9:53 am

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