Bitcoin, the New Decentralized Digital Currency, Demystified in a Three Minute Video

They sound like some­thing out of sci­ence fic­tion, but Bit­coins are get­ting just a lit­tle bit more real every day. They’re intan­gi­ble and invis­i­ble, but bit­coins recent­ly attract­ed some real invest­ment cap­i­tal from the Win­klevoss twins, who first dreamed up the idea for Face­book — or so their law­suit argued.

A bit of back­ground: Bit­coins are a vir­tu­al cur­ren­cy sys­tem. They were pro­grammed by an anony­mous programmer(s?) in 2009. There are a lim­it­ed num­ber of pos­si­ble bit­coins that can ever be traded—21 million—and the “coins” become avail­able incre­men­tal­ly. That process is crowd­sourced (any­body can mint bit­coins) but it requires solv­ing com­plex encryp­tion prob­lems. Most bit­coin min­ers have an army of com­put­er hard­ware to do the work for them.

What can a bit­coin buy? It depends. The currency’s val­ue has been gyrat­ing wild­ly in recent weeks, from a val­ue of just a few dol­lars up to $266 and then back down to about $100. So far bit­coins are accept­ed as cur­ren­cy by some­what shady elec­tron­ics web­sites that claim to be send­ing a mes­sage to big retail­ers: start accept­ing the vir­tu­al cur­ren­cy or miss out on a big mar­ket share (that hasn’t devel­oped yet).

Last week came the announce­ment that Cameron and Tyler Winklevoss—former rivals to Mark Zuckerberg—own one per­cent of all the bit­coins in cir­cu­la­tion, the biggest stake so far. That news inspired debate over what, exact­ly, bit­coins are and whether they’re impor­tant.

They aren’t the first vir­tu­al cur­ren­cy and they aren’t being used wide­ly in com­merce. Some econ­o­mists have weighed in to say that unless peo­ple stop hord­ing bit­coins as an invest­ment and start spend­ing them, they are mean­ing­less. The bit­coin exper­i­ment may show the way to a dig­i­tal cur­ren­cy of the future. But, until it pans out, we rec­om­mend that you hang onto your dol­lars. And if you’re still try­ing to get your arms around the whole con­cept of the bit­coin, we sug­gest spend­ing a few min­utes with the video primer above.

Kate Rix writes about dig­i­tal media and edu­ca­tion. Vis­it her web­site: .


by | Permalink | Comments (2) |

Sup­port Open Cul­ture

We’re hop­ing to rely on our loy­al read­ers rather than errat­ic ads. To sup­port Open Cul­ture’s edu­ca­tion­al mis­sion, please con­sid­er mak­ing a dona­tion. We accept Pay­Pal, Ven­mo (@openculture), Patre­on and Cryp­to! Please find all options here. We thank you!

Comments (2)
You can skip to the end and leave a response. Pinging is currently not allowed.
  • LW says:

    An inter­est­ing con­cept. But, does the world real­ly need more of the mar­ket econ­o­my?

  • Gene Engene says:

    Unfor­tu­nate­ly, due to the speak­er’s dialect, some­times too soft deliv­ery, and the con­stant, need­less, over-bear­ing audio track, too much of the detail of this ‘expla­na­tion’ gets lost.

Leave a Reply

Open Culture was founded by Dan Colman.