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Bitcoin: A New Monetary System?

inno_donationMy ears perked up when I first heard about Bitcoin on CBC TV’s The National. Bitcoin is virtual money or internet currency. It’s been around since 2009, but there was a flurry of news reports this week when the company installed its first ATM machine at Waves Café on Howe in Vancouver. Here’s how it works. You set up an account (your bitcoin wallet) on your cellphone or computer. You can accept bitcoins as payment for goods and services or by buying them from a friend or colleague. You can make transactions with your friends, your babysitter, you get the picture. You can also buy them directly through an exchange with your bank account. With the ATM it’s easy, you just feed in some regular money and you get bitcoin back in your virtual wallet. Then you can shop with the bitcoin money anywhere that accepts the method of payment. The network includes restaurants and businesses from around the world. According to the website, “at the end of August 2013, the value of all bitcoins in circulation exceeded US$ 1.5 billion with millions of dollars worth of bitcoins exchanged daily.”

Now here’s the cool part, and why I got excited, “Bitcoin uses peer-to-peer technology to operate with no central authority or banks; managing transactions and the issuing of Bitcoins is carried out collectively by the network.” The software is open-source, which means “its design is public, nobody owns or controls Bitcoin and everyone can take part.”

Could this be the beginning of a new economic system, one that will break the banks, so to speak?

Of course the technology is still evolving and the website warns you not to convert your life savings into bitcoins. It’s gotten a bit of a bad rap because drug dealers discovered it and started using it for money laundering. There are some security and privacy issues too, but for my money, it’s worth experimenting.

The website is full of information and a thorough FAQ section, so check it out.

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