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Bitcoin: Currency 2.0

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Vincent

As far as money is concerned, much of the headline press over the past five years has focussed on how little of it is floating about these days. But despite the headlines something else has been happening in the world of money, something more fundamental is being engineered and entirely new models for the representation, storage and transfer of currency are being proposed, prototyped and adopted. A new paradigm is fast emerging with potentially profound implications, offering opportunity and risk in equal measure. Welcome to Bitcoin.

Born in 2008, and representing a new generation of digital currency, Bitcoin enables people anywhere to store and transfer payments though a global decentralised peer-to-peer network. Transactions do not pass through any financial institution and Bitcoin is not owned or controlled by any company or government; it is opensource, borderless, and accessible to any internet user. Transactions are processed near instantly at close to zero cost and cannot be blocked, seized or interfered with.

Bitcoin 101 - your 30 second introduction!

Bitcoin is a decentralised virtual currency; it lives on the internet and can be stored or transferred between users without relying on the processing infrastructure of any third party. User accounts are held as digital wallets on smartphones/computers; each wallet is represented by an address, and holds the key to access funds linked to that address. Bitcoin is a crypto-currency, with simple but extremely secure encryption techniques controlling the ability of users to access and move currency. There are around 12 million Bitcoins in existence today and only 21 million will ever exist, new Bitcoins are released gradually through a process designed to reward network users for validating and processing transactions, which are then stored within an ever growing public ledger known as the blockchain and which contains every transaction ever processed. Each Bitcoin is divisible into 100 million units, at all times each unit is allocated to an owner (or wallet address) within the blockchain, and can only be moved when authorised by the owner using a unique private key. Bitcoin is a deflationary currency: this is radically different from most traditional fiat currency models which typically experience consistent inflation as a result of new monetary supply. For more info on the basics of Bitcoin, just check out some of the infographics on Twitter. Five years on, the fledgling currency is...

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