By Kirsten Allen
Created in 2009, bitcoin is a digital currency that essentially allows the exchange of goods and services instantaneously. Bitcoins can be bought and sold at online exchanges, and are also transferable via smart phones, tablets, and computers, much like sending cash digitally.
Forgive us if you already know this: the currency, still in its infancy, blossomed overnight from discarded sci-fi motif to genuine economic game changer. People have taken advantage of the relative overnight status to cash in big, and it’s still in a “wild west” phase of its growth, with new millionaires, hacks, and crashes reported nearly weekly. It seems like people are either invested in it themselves or have no idea what it is.
Bitcoins are completely decentralized and aren’t printed. Instead, they’re created and verified by “miners,” which are just computers using extremely involved mathematical algorithms. It’s an open-source banking system that isn’t run by the cigar-chomping, top hat-wearing banker of yesteryear. It may sound like an anarchist’s dream—and it is—but there are some rules. One of them is that a maximum of 21 million bitcoins will ever be created. Each can be broken down into increments as small as one hundred millionth, an amount referred to as a “satoshi.” While not currently a stable market, with its value constantly fluctuating, one bitcoin is worth roughly $621.39; tomorrow the value could either skyrocket or plummet. The market is still small and volatile enough that it can be cornered, or crumble, at any time. But with great risk comes great reward, and those willing to risk it have seen their personal fortunes explode.
Anthony Veltri, the coordinator of the Corvallis bitcoin enthusiasts, began mining bitcoin out of curiosity. Although he no longer mines, he has gained significant knowledge on how the system operates.
“You can be 100% responsible and have full control of your assets with no third-party involvement,” he said. Veltri believes even if people don’t intend to use bitcoin, they should at least be aware of what it is and what it can do.
To start with bitcoins you can either accept payment with them or buy them from an exchange with your bank account. You can also buy them from someone locally or a friend.
There are a few companies in Corvallis that accept bitcoin, such as Kattare Internet Services, Acupuncture Ecology, and Dr. Carpet and Air Duct Cleaners, with Acupuncture Ecology even offering a 5% discount on bitcoin payments. I spoke to David Yeh of Acupuncture Ecology, and asked why he decided to begin accepting bitcoin.
“I like the concept of it, and I just wanted to experiment a little bit and support a new technology,” he shared. He says nobody has paid in bitcoin yet, but he is interested to see where it will go. He believes once people start to gain a better understanding of how to use it, it will become more popular.
Ethan Burnside of Kattare Internet Services said that bitcoin comes in especially handy when interacting with international clients.
“Kattare has always been an international hosting service. We have clients from all over the world. Not all of them had an easy time getting a Visa or MasterCard to pay us with, so we’re aware that there are very real barriers to international commerce out there. Our hope in adding bitcoin as an option for payment was that we’d expand our potential client base. It had the added benefit that we were able to get involved early with something I believe will be a world-changing technology.” There are only a couple customers paying with bitcoin, but he expects that number to rise. “As bitcoin grows, I am certain the number of bitcoin accounts at Kattare will grow. I’m excited about the potential because the merchant fees we pay on rewards card and international card transactions have grown out of hand over the last several years.” As far as the complexities associated with novice users go, Burnside believes learning how to use bitcoin is similar to figuring out the banking system, although he urges people to use reputable websites. “Be careful about what websites you store your bitcoins on. There have been many exchange sites and ‘online wallet’ sites that have been hacked, or collapsed, or were just outright frauds. Find one that is reputable, insured, and preferably is within the US where you have recourse if something goes wrong.”
Big companies are starting to catch on, too, with Expedia being the most recent giant to start accepting bitcoins for purchases.
One of the main benefits users enjoy is the peer-to-peer interaction. Without a bank being in the picture, transactions are conducted immediately and with miniscule fees. Small family or startup businesses would have a way to compete with large companies that are backed by banks and corporations.
It is important to note the not-so-wonderful aspects of bitcoin. There are security vulnerabilities—however, they are constantly being improved upon. Also, the market is very unstable, but as more people begin to use the technology, the stronger it will become. And, like anything else we humans get our hands on, there is the potential for activities that may be legally hazy.
This part should be obvious to anyone who thinks about it: bitcoins allow you to buy and sell anonymously. A website sprang up called Silk Road, which operated on the hidden Tor network. And people basically used it to buy and sell things a person would only ever buy anonymously, like drugs, murder for hire, and Katy Perry albums. The site was shut down and its proprietor arrested, but a new version quickly filled the void. If there’s one thing the conventional banking system and law enforcement agencies fear, it’s the anonymous power of the bitcoin to purchase potentially illegal goods. If there’s another, it’s the currency’s potential to make them irrelevant.
That’s what’s so exciting about this time and this technology.
The Corvallis Bitcoin group can be joined by visiting their page: www.meetup.com/Corvallis-Bitcoin-Meetup/; they encourage new members. Like many of the game-changing technologies of the last decade, bitcoin is by the people, for the people. Veltri is just one of many people bridging the knowledge gap between digital currency mavericks and regular Joes hoping to become online gajillionaires.