Chapter 25. Bitcoin: Money Without Governments
I recently completed a six-part series examining alternative payment systems and comparing them to the PayPal X Platform. As I wrapped that up, I asked readers to weigh in on which topic they’d like to read about next. I received votes for several topics on the list, including a request for coverage of the eBay APIs (watch for more from me on that topic coming soon). But the one request that caught me off guard was for an article on Bitcoin.
Bitcoin is a relatively new digital currency. But there’s much more to it when you dig a bit under the covers. Shall we?
What Is Bitcoin?
Here’s the high-level description of what Bitcoin is and provides, taken from its Wikipedia page:
Bitcoin is a digital currency created in 2009, based mainly on a self-published paper by Satoshi Nakamoto. [It] enables rapid payments (and micropayments) at very low cost, and avoids the need for central authorities and issuers. Digitally signed transactions, with one node signing over some amount of the currency to another node, are broadcast to all nodes in a peer-to-peer network. A proof-of-work system is used as measurement against double-spending and initial currency distribution mechanism.
The Bitcoin site WeUseCoins.com provides a video overview of what Bitcoin is, how the coins are created, and what you can buy with them at http://www.youtube.com/watch?v=Um63OQz3bjo.
For more detail, you can also watch a short Ignite presentation from the current Principal ...
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