Top 10 Bitcoin Facts

Otherwise referred to as ‘electronic money’ or ‘virtual currency,’ bitcoin is a peer-to-peer payment system that offers a 21st century alternative to regular brick-and-mortar banking. A bitcoin is something that most users will never see and never touch beyond their computer screens. Exchanges are made via wallet software – rather than the traditional wallet in your back pocket – and there exists no central bank or authority, so the value of your bank balance is set entirely by the supply-and-demand of the market.

As with all money, it’s best if you’re able to spend it! It’s been gradual, but there are more and more commodities becoming available to bitcoin holders. Perhaps the most high-profile acceptor of the currency is Virgin Galactic – their upcoming space-tourist flights are purchasable! If you prefer your transport a little more traditional, then Lamborghini is the first motor company to give the go ahead. And what car stereo would be complete without Spice Girl, Mel B? She was the first musician to recognize payments for her music.

The bitcoin supply is finite. Production of bitcoins is romantically called ‘mining,’ with millions of dollars-worth mined or exchanged electronically each day! Every bitcoin transaction is verified using an extremely complex algorithm and these verifications are done by a large network of mining computers competing against each other. When a “miner” successfully verifies a transaction, he or she is rewarded with a small amount of bitcoins. This is also how new bitcoins are introduced into the system. And mining is a lotta work! Globally, the network of mining computers is now over 250-times more powerful than the world’s top 500 supercomputers combined!

With no ‘thing’ to hold in your hand, the bitcoin’s value might seem indecipherable. And as a new concept, it does tend to fluctuate. However, in general, the value seems to be increasing. In November 2011, after a crash, a bitcoin was worth US$2; in November 2013, a bitcoin topped $1,000 in value, and – briefly – was worth more than an ounce of gold, though its value has since fallen. Just imagine the level of security when the first bitcoin cash machine opened in Vancouver, Canada the previous month!

An old saying says, “you have to speculate to accumulate” – and there are speculators aplenty when it comes to bitcoin. While there are winners, there are inevitably losers too. In February 2014, Mt. Gox, the onetime largest bitcoin exchange, was forced to file for bankruptcy protection due to possible hacking, theft or mishandling that cost them in excess of $450-million! Bitcoin is a currency that can lose up to 80% of its value in seconds, so Mt. Gox was in very big trouble, very quickly!

Probably because it subverts the traditional banking system and works outside government regulation, bitcoin is outlawed in many countries around the world, and is heavily frowned upon by many others. In July 2013, Thailand became the first country to completely ban the currency – though they later relaxed the ruling. And China, with its higher global profile, banned banks from trading bitcoins in December of the same year. The U.S. Treasury has also flexed its monetary muscles by shutting down a ‘physical’ bitcoin production company in 2013!

The number of bitcoins that can exist is limited to 21-million – and the production rate is scheduled to be halved every four-years, to ensure that the value of a bitcoin is not lost. This means that supply will run out around 2140, and although miners will no longer be rewarded with new bitcoins, they will still be paid for their efforts through transaction fees. As it stands today, over a century before the deadline, roughly 64% of bitcoins sit unused in their respective accounts – appreciating and depreciating with time.

The notorious organization ‘WikiLeaks’ relies very heavily upon this futuristic form of finance. In mid-2011, the non-profit whistle-blower group began using bitcoin as a method of processing donations, because other money transfer companies wouldn’t deal with them! To become so dependent on something so unpredictable is perhaps not the wisest of moves, but so far it using the cryptocurrency hasn’t done a lot of harm to the media profile of Julian Assange and company.

The equally infamous ‘Silk Road’ website used bitcoins as its form of currency. A black-market trading site that specialized in illegal drugs and goods (as well as some more reputable products), it provided browsers with anonymity, and made its money using bitcoin. When alleged site-founder Ross Ulbricht was arrested, his estimated fortune was so inconceivable that it’s believed that well over half remains unaccounted for. As a side-note, the name of Ulbricht’s alter ego, Dread Pirate Roberts, was lifted from the movie “The Princess Bride” – go figure.

Before we unveil our top pick, here are a few honorable mentions:
- Only 0.003% of the world (250,000 people) is estimated to hold at least 1 Bitcoin. Only 24% of people know what a Bitcoin is.
- There are girls who will strip for Bitcoin tips on Reddit via the “GirlsGoneBitcoin” sub-forum.
- In 2013, James Howells accidentally threw away a hard drive that contained 7,500 Bitcoins. When he realized their worth had grown to $7.5 million, he scoured the dump but never found it.
- The Winklevoss Twins invested in a Bitcoin-related venture.
- In 2010, a man paid 10,000 Bitcoins for 2 pizzas. In 2013, that same amount of Bitcoins was worth millions of dollars.
- A Bitcoin rival called Coinye was involved in a trademark dispute with Kanye West, who claimed the coin infringed on his image.

Satoshi Nakamoto is the person, or persons, behind bitcoin. Launching the software in 2009, Nakamoto passed majority control onto scientist, Gavin Andresen in late-2010 – and Andresen’s comments capture bitcoin perfectly: he says it’s ‘like better gold than gold! Nakamoto’s believed to be in possession of one million bitcoins, equivalent to US$1.1 billion! But his name is probably a pseudonym – the real identity of Satoshi Nakamoto is unknown. It’s been suggested that electronics companies ‘Samsung,’ ‘Toshiba,’ ‘Nakamichi,’ and ‘Motorola’ are the founders, but there’s been no confirmation. It’s a mystery for the modern world!

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