Bitcoin draws attention from the public but U.S. officials took legal measures to stop virtual currency

Collectibles and Law column from the May 19, 2014, issue of Coin World
Published : 05/01/14
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This month’s column is about Bitcoin, which many readers will say is not a “coin” at all, and shouldn’t be discussed in Coin World.

The media hype accorded to every twist and turn in the Bitcoin universe has prompted at least one newspaper to quip that “Bitcoin is currently a more reliable store of value for journalists than it is for investors.” Nevertheless, it is my experience that some people who buy coins are also very interested in alternative currencies such as Bitcoin, and the past few weeks and months have been particularly eventful for Bitcoin enthusiasts. Besides, whatever one thinks of Bitcoin, it is being accepted as “money” in some places, and for that reason alone is worth knowing about.

Bitcoin is a virtual (digital) payment system that is not controlled or regulated by any central governmental or private body and, unlike PayPal, has its own units of currency (called “bitcoins”), rather than using U.S. dollars or other governmental fiat currencies.

No physical ‘bitcoins’

There are, strictly speaking, no physical “bitcoins” to collect.

Rather, Bitcoin transactions are online, and users store their bitcoins in a “digital wallet.”

Where does one obtain bitcoins? One way is to “mine” for them, a process that was never easy but now requires more computing power than anyone reading this is likely to be able to comprehend. 

Or one can buy them online with conventional currency from a Bitcoin “exchanger,” the largest of which was, until recently, Mt. Gox in Japan.

The value of bitcoins has grown spectacularly, but not without some serious ups and downs. In June 2010, a bitcoin was worth approximately 8 cents.

The value reached parity with the U.S. dollar in the period between February and April 2011.

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