Bitcoin: No longer just the Wild West for nerds

Bitcoin: No longer just the Wild West for nerds

Bitcoin is still the Wild West of currency, but its reputation is spreading outside of its community of users, perhaps because of the recent news about Mt. Gox, the oldest (and previously, most popular) platform to host Bitcoin exchanges.

Bitcoin (abbreviated to BTC, like dollar would be $) is an unregulated and decentralized digital currency. The anonymous creator (or creators, for all anyone knows), goes by the incognito Satoshi Nakamoto, and created the cryptography-reliant currency in 2008.

Bitcoin can be traded like any commodity, like gold or pork bellies.  The system is built on a peer-to-peer network and every user has the public record of each transaction’s code to eliminate the need for a central governing body and to prevent double-spending. It also eliminates the fees that would normally be associated with a bank transfer. Transactions are pseudonymous, uninsured and irreversible.

Most bitcoin traffic is from buying and selling but they originate through mining. There were 21 million created in 2009, and roughly half have been mined. Bitcoins are mined through complex math formulas that are released in batches.

When the formula is worked out, the miner receives the bitcoins and the community ledger reflects the transaction. Because of the complexity, some miners work in groups to work out the codes, which they can then sell or trade into the market.

Every time a batch is unearthed, the math equations are further complicated, to control the pace of the release.

Bitcoins are bought, sold and stored in digital wallets on exchanges like Bitstamp, BTC-e and until recently, Mt. Gox.

In February, Mt. Gox discovered a bug that threatens all transactions. They responded by suspending all withdrawals, deleting their Twitter feed and replacing their website with a message explaining their decision to close transactions.

Bitstamp and BTC-e have both been attacked by hackers as well, who flood the websites with information attacks and cause a denial of service.

Contrary to calls of doom from some corners, bitcoin value has settled in the $500 range throughout February. It is down from its peak of $1,155.25, which it hit in December 2013 when the currency was oscillating most magnificently, but has seen less drastic changes in 2014. Bitcoin passed the $100 mark for the first time in April 2013 and the total Bitcoin value passed $12 billion in November 2013.

UVU doesn’t accept bitcoins as payment on tuition or in the bookstore. If they ever wanted to, a proposal would have to be taken to the Board of Regents and probably be approved by the state.

There are a handful of businesses in Utah Valley that accept bitcoin, including Sweeto Burrito. Christian Faulconer, a franchisee in Provo, has been set up to accept bitcoins since his first week of business but hasn’t used it much.

“It’s fun and the people who use it are committed to it. Bitcoiners are very loyal,” said Faulconer.

Justin Williams, a UVU graduate and General Manager of Station 22 Café, has seen a similar trend.

“We have seen a couple big groups use it, but it’s still pretty rare- about once a month,” said Williams. He says it’s not very easy to use because it requires additional transfers.

Black Sheep Café used to accept bitcoins, but they no longer do.

 

Tiffany Frandsen
Tiffany is the Deputy Managing Editor for Spring 2015. Follow her on twitter @tiffany_mf

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