Thursday, 21 August 2014

A Bit Better?

You may remember in my Sky Sports post a couple of weeks ago, I mentioned media Law firm Sheridans. I was recently doing some research on the firm and discovered that Sheridans is the first UK media Law firm to accept bitcoin payments.

What are Bitcoins?

As ABC news put it, “if hard currency is like a record, then a Bitcoin is like an MP3." The Bitcoin is a type of virtual currency. It is not controlled by a central authority, and transactions do not have to go through banks so are cheaper and easier to transfer globally.  Bitcoins are stored in virtual 'wallets' and can be transferred anonymously between individuals. Bitcoins were created by an individual (or possibly group of people) know as Satoshi Nakamoto, although nobody knows exactly who Satoshi is. 

How do I get Bitcoins?
Bitcoins can be unlocked by a process called 'mining' – solving increasingly complex mathematical problems to release new coins. “The system is designed to require more work to get coins as time goes by, that makes the currency's growth rate, also known as inflation, steady and predictable.” Only 21 million Bitcoins exist, and of those, around 11milion have already been found. Slightly easier than mining is trading Bitcoins online and in real life. If you happen to live in Shoreditch or Brighton you can also pop down to your local Bitcoin ATM.

How much are Bitcoins worth?  
In 2011, one Bitcoin unit was priced at $1. Today it is worth over $500. While this seems like a massive increase, Bitcoin's price has actually been falling since its peak of $1,147 in  December 2013, with its drop in value partly blamed on a clampdown on the currency by Chinese authorities. (The Week)
Source: Google 20/08/2014
How do I spend Bitcoins?
Bitcoins are stored in a virtual ‘wallet’. Each wallet has an anonymous identification number attached to it, allowing individuals to transfer Bitcoins to one another. This has led to the use of bitcoins in the illegal trade of drugs. Patrick Murck, general counsel for the Bitcoin Foundation has acknowledged that "Bitcoin can facilitate private and anonymous transactions, which are resistant to oversight and control… This by no means implies that using Bitcoin can or should provide anyone immunity from the law."

Are Bitcoins the future of currency?
That is the million dollar - or rather, million Bitcoin - question. Currently, Bitcoins have a relatively small consumer market. Marshall Swatt, the chief technology officer at Coinsetter, a Bitcoin trading platform for institutional investors, has expressed that he would love to see this "extremely well-crafted device" adopted by Google, Amazon, Facebook and Apple. However, there is still a lot of distrust in the currency. Economist and academic Simon Johnson predicts a "backlash from governments and regulators... who are used to having tight control over currencies" (Mashable).
What do you think? 

I highly recommend watching this video - Bitcoin Made Simple for a short overview of the Bitcoin.

Read more:
Coin Desk - ‘Still Don’t Get Bitcoin? Here’s an Explanation Even a Five-Year-Old Will Understand’
Bloomberg - ‘Bitcoin Exchanger Must Face Charges Related to Silk Road’

The Nation - 'Is Bitcoin the Future of Money?'
Forbes - 'Bitcoin: The Currency of the Future?'


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