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Bitcoin 101: The Digital Currency Revolution

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The editors at Online Accounting Degree Guide decided to research the topic of:

Bitcoin 101: The Digital Currency Revolution

The currency that's decentralized, digital, and destined to revolutionize the world economy.

Every currency has two things in common:

- 1) something of real value (like gold or silver) to stand behind the coins and notes,
- 2) a centralized government to control it. For decades, throngs of internet insiders have worked to establish a digital currency of its own, but the big problematic question has always been twofold:
- What will back the currency?
- Who will control the system?

Bitcoin is the first currency of its kind to show true potential to become much more than just an Internet sensation (which it definitely is). Bitcoin is developing into a major player in the world economy at large. Here are some of the facts and figures that show how bitcoins (BTC) will give dollars and yen a run for their money.

The essence of bitcoin

- A bitcoin is a basic unit of currency, mined not from gold or silver but instead from code.
- Free of all governmental oversight, the bitcoin economy is monitored by a peer-to-peer internet protocol.
- All bitcoin generation (or mining) and every single bitcoin transaction is tracked by the P2P network.
- In short, a bitcoin is an encrypted string of data, or a hash, encoded to signify one unit of currency.
- With a code of 33 or more characters, it is virtually impossible to randomly reproduce.
- A bitcoin is also extremely expensive to track and verify
- The vast P2P server network checks every string of code for uniqueness by bruteforce comparison to ensure no coin is reproduced or double spent.
- It is this digital capital, the huge computer investment rather than gold or silver, that gives the bitcoin its value.
- $3,126: the amount the average P2P member (or miner) has spent on computer rigs to create or mine new money and monitor the bitcoin economy. [4]

What's in your wallet?: with no banks and no cash or debit cards, managing bitcoins is a personal affair.

- An array of client software and wallets allow users to manage their money and their transactions securely and easily. [9]
- Bitcoin wallets are available online {Blockchain and Coinbase) as desktop apps (Armory and Multibit) and mobile apps (Bitcoin Spinner and Instawallet). [10]
- The bitcoin was introduced in 2009 by Satoshi Nakamoto, essentially the Keyser Soze of digital money. No one knows who he is (or who they are), other than that his innovation is a stroke of genius.
- A bitcoin is divisible by up to 100 million smaller units (satoshis).
- Why 100 million? Unlike inflation, which causes the dollar (let alone the penny) to lose value, the growth of the bitcoin in value will eventually cause even 1/100 millionth of a bitcoin to have worth.
- Total Number of Bitcoins in Existence (Mined): 10,834,075.00000000 [2]
- 21 million: as defined by bitcoin rules, there will never be more than 21 million BTC in circulation with new mining ceasing by the year 2140. [8]
- Value of 1 BTC in US Dollars in Sept 2011: $5.35 [8]
- Current Value of 1 BTC in US Dollars (Feb 2013): $31.15 [1]
- Laszlo Hanyecz, a programmer in Florida, used bitcoins to purchase two pizzas from Papa John's (technically paying someone in England to order the pizza for him, but the guy got pizza for 10,000 BTC). [3]
- Number of Papa John's pizzas that could be purchased with 10,000 BTC today: 28,318
- Bitcoins are mined regularly and distributed among participating miners. They are then exchanged, bought, and sold like commodities through a mercantile system that spans the globe.
- There are 54 active markets where BTC are traded [7]
- Market Cap: $341 million+ [1]
- 64,000 BTC trades per day
- Over 74,000 bitcoins are exchanged every hour (Over $2.3 million) [1]
- An estimated 95% of bitcoin users are male. [4]

Well-known merchants currently accepting bitcoin:

- c-Panel Host Domain Registration [5]
- Reddit [6]
- Acceptance of bitcoin is still largely restricted on the consumer level to internet and bitcoinrelated merchants.
- More and more "real-world" merchants are beginning to accept bitcoin as standard currency.

Current Uses for Bitcoin

- Investing
- Gambling
- Tech Services
- Gaming
- Kosher Diet
- Dentist in Finland
- Charity
- Church
- Advertising
- Politics
- Activism
- Restaurants [5]

There are dozens of sites and services that enable bitcoin newbies to get into the game - but it's not a game. It's an active and thriving market that could revolutionize the economy, not just of the world, but of your own financial well being. It's definitely worth further investigation - and investment.

[1] [2] [real-time current value displays perpetually on this link] [3] [4] [5] [6] partnership-with-coinbase/ [7] [8] [9] [10]