By: Bengt Saelensminde 17/09/2014
Like it or not, the bitcoin cryptocurrency is going mainstream.
I’ve already shown you how PayPal could soon make bitcoin available to the masses, and how, with wider adoption and greater understanding, the public may come to love it. As I said, such a change could spell danger not only for the banking system, but for the regulatory authorities and the taxman too.
But there’s one point I didn’t really cover, and it’s a big one. Should you actually put your faith in such a thing as bitcoin?
There’s an ever-growing band of followers that not only has faith – they also reckon that bitcoin is a vast improvement on the current financial system.
What exactly is so good about it?
It’s bigger than the top 500 supercomputers combined
As I’m sure you know, cryptocurrencies essentially replace notes and coins with code.
The code is called the block chain. Essentially, it’s an encrypted message that includes a register of not only all of today’s current owners, but of all past owners too. As you can imagine, such a registration list quickly becomes very large, and once you add in the fact that all the information is encrypted, it becomes a seriously complex thing.
So complex, in fact, that creating a new bitcoin takes a considerable amount of computer processing time – and that means energy too.
My brother is a bit of a computer geek, with access to a load of computer capacity, and he’s been ‘mining’ these things for years. I wouldn’t know where to start, myself. I take the stance that, as with gold, I don’t have to get involved in the mining of the thing, I can just buy it.
It’s difficult enough to mine new bitcoins, but trying to fake them is impossible (or at least, it has been to date). A bitcoin is inherently registered to the owner, that is fundamentally what it is – a registration document that not only registers your own ownership, but everyone else’s too. It’s as if your car tax disc not only held a record of your own registration, but that of everyone else in the country too!
And this registration system, effectively a network of computers, is now the largest supercomputer network in the world – by far. In fact, it’s eight times more powerful than the top 500 supercomputers, combined!
The whole idea is quite brilliant. The more of the currency is created, the more difficult it is to create more.
And you know what this all means?