William Essex
William Essex

Is Bitcoin really such a big deal? Weighing up the evidence

When you buy a bitcoin, you are buying a record of the fact that you own a bitcoin. Nothing more, nor less, than that. The bitcoin itself is an inalienable record of its own existence (see the box: How are bitcoins stolen?). In the long, cumulative record that is the Bitcoin block-chain, your bitcoin has made its mark – or, if we’re being scrupulously literal-minded, the act of “mining” (generating) your bitcoin was the act of scratching the long-playing record, since its mark will remain in place, through successive iterations of the block-chain, for as long as that globally distributed network endures.

Nobody knows about the dollar bill in your wallet, but any “geek” (the term is fast becoming a compliment) can confirm the existence of the bitcoins in your e-wallet. The block-chain is an ongoing, regularly generated (every ten minutes) record of bitcoin transactions that does not require anybody ever to trust any intermediary ever again (but do see How are bitcoins stolen?). By buying your bitcoin, you have bought your own scratch on the record. This is pretty much the whole argument for bitcoin (and other crypto-currency) units as currency – but note that caveat: “as currency”. In the face of all the talk about cryptocurrencies as frictionless payment mechanisms, threats to the global banking system, et cetera, we need to ask a very simple question very early on: does Bitcoin work as a straightforward, plain-vanilla, transactional, in-your-pocket currency? And this is where we hit a complication. What is Bitcoin? What is this virtual but durable thing that has to be mined...continued

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