What is it? What happened?

Bitcoin

What is Bitcoin

Electronic money, began 2009 Most prominent digital currency Relies on network of computers that

use mathematics to verify and record details of transactions

No central authority governs supply and value

Value depends on people’s confidence

Volatility of the Bitcoin

Very volatile! In December, one of the online

exchanges (Bitstamp) spiked from $30 to $1100. However, concerns caused decline to $530 on Tuesday

Price varies greatly depending on exchange

How do I spend it?

Ideal for online. Some companies already ready to accept (Overstock.com, other stores)

Critics worry about volatility and potential to be used for illegal activity

Where do I store and trade Bitcoins?

Held in virtual wallets with unique keys

Transactions made by sending bitcoins from one wallet to a unique key associated with another wallet in a cryptographic process verified by computers

Wallets can be stored offline or online at exchanges such as Bitstamp and BTC-E

Creating a bitcoin

Known as bitcoin mining Rewards computers that do the work

of verifying transactions, rewarded in bitcoin

What happened to Mt. Gox

The Tokyo based site halted withdrawals this month after detecting “unusual activity” and on Tuesday stopped trading

More than 744,000 bitcoins missing due to malleability-related theft

Debts of Mt. Gox is over $65 million, surpassing the assets

Mt. Gox was formerly a website for exchanging trading cards

What could have helped Mt. Gox

Since bitcoins are software, any computer or server connected to the Internet that stores the files are vulnerable to unauthorized access. Similar to a hacker copying email.

Move the digital money off a web-connected computer. This is known as “cold storage”. Can go online to trade. (Online is known as “hot storage”

What is the future of bitcoins?

The Mt. Gox failure proves unregulated currency is not quite ready for widespread use

However, newer exchanges are trying to make it mainstream and are better supervised.

Where can I learn more?

Learn all about Bitcoin: https://bitcoin.org/en/

Sign up for a Bitcoin wallet: http://www.bitcoin.com/

More about Bitcoin in the free market: http://spectrum.ieee.org/computing/software/bitcoin-the-cryptoanarchists-answer-to-cash