What is Bitcoin? | Weekend Watchlist

It has been an exciting week for the anonymous, fledgling, digital currency Bitcoin. The market’s up! The market’s down! The market’s up! Mt.Gox is suffering a DDoS attack! No, it’s not! Yes, it is! The Euro is dying, buy Bitcoin! People are buying Bitcoins, sell now! Whew!

Feeling left out of the loop with all the the hoopla going down (And up! And down!)? Never fear, your buddies over here at Growing Up Otaku have dedicated this edition of the Weekend Watchlist to get you up to snuff on the digital dollar that has everyone asking, “What is Bitcoin?”

As with most things dealing with computer, a Bitcoin is the answer to a really hard math problem. So… there you go. See ya next time on Weekend Watchlist!

Okay, okay. There’s a bit Laughing out loud more to it than that. It’s not simply about what Bitcoin is, but how Bitcoin works. Let’s start with the official word.

…And now for The Wall Street Journal’s interpretation.

Why does Bitcoin have value? Because people think it does. As true today as ever before.

And now let’s grant equal time to folks whose jobs aren’t threatened by Bitcoin.

Yeah, they’re just going to keep harping on the drug connection. Funny, I never heard of a drug dealer being picky about any type of currency. I also seem to remember several years ago when Bitcoin was what you used to rent time on a botnet. I guess shouting “Drugs!” is better for headlines.

Times change. Bitcoin was $6 USD then, a whole ‘nother world from last week’s peak of $260. And we’re still very far from where Bitcoin may end up. Ironically, but perhaps not surprisingly, the future of Bitcoin may lie in the collapse of conventional monetary systems, much like what is unfolding in Cyprus.

TWiT network’s Security Now did a fantastic episode on the A to Zs of Bitcoin last year. Here is the relevant segment of that program.

Just as the gold standard had it’s gold miners, Bitcoin has it’s algorithmic miners. Bitcoin miners have racks of computers cranking away on the fastest processors around in the hopes of computing the next undiscovered answer to that really hard math problem. What does a good Bitcoin mining operation look like? Here’s a taste from two years ago.

Of course, not everyone is into LED lit cases. Besides, when doing this level of number crunching 24/7, you can use every bit of ventilation you can get. Here’s ripkingpin’s Bitcoin mining rig from last year, featuring six ATI HD5870s video cards turned computational engines, to pull real money out of thin air.

Then there’s always making other people do the dirty work for you. Yup, it’s our old friend Trojan botnets.

Before you get any bright ideas, you’re too late for this party. The odds on mining enough Bitcoin to cover your hardware and power costs are pretty slim. Bitcoin mining has already moved past the stage of panning in a river for gold and is now in the realm of massive strip mining operations.

Where does Bitcoin go from here? No one really knows. Frankly, I’m a little surprised that there is a growing popular support for these little digital doo-dads. When I first discovered Bitcoin, it was a Darknet currency used by those who couldn’t afford to be tracked; A digital dollar for ‘Evil Nerds.’ In my shortsightedness, I saw Bitcoin for what it was, not what it meant. The change is inevitable. As we push headlong into a digital future where more and more of our media doesn’t exist in a physical form, why wouldn’t currency follow suit? No control. No borders. Is Bitcoin the currency of the future? Maybe. But even if it isn’t, the currency of the future will probably look a whole lot like Bitcoin.

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