Ever heard of Bitcoin? A lot of  folk haven’t yet, but now is the time to know! Bitcoin is a new digital currency with low transaction fees, designed to challenge and compete with existing the currencies we already use. Unlike our dollar and pound though, there is a finite supply of bitcoins and so the currency won’t devalue through printing more notes, bailing out criminal bankers, etc!

How does it work? Well there’s some fancy cryptology happening around something called a block chain, which records all the financial transactions. According to those who’ve examined the workings of the software (it’s completely open source), it’s beautifully designed and works really well. We don’t need to know how, but it’s good to know.

So where can we spend bitcoins? Well apparently more and more people are strarting to accept bit coin, and of course IT is one of the first industries that are helping bitcoin gain traction. There are even hosting companies who accept all payment in Bitcoin! And BitPay, who are a payment provider for either Amazon or eBay (I can’t remember which) have started accepting Bitcoin. So it’s starting to hit the mainstream.

So how much is a bitcoin worth? Well, that’s the crazy thing. Bitcoin has been designed to act like Gold! There is a finite supply of the stuff, and you need to mine it! So how does that work in a software sense? Like the SETI project (Search for Extra Terrestrial Intelligence) connected computers join forces to perform some mega calculations in order to mine the next block in the chain. With every block mined, the next block’s encryption becomes even more complex and takes even more energy to decode. Overall there are 21 million bitcoins in existence, and so far only 10.5 million have been mined. The remaining bitcoins are expected to be mined by 2030, based on computers becoming faster and the encryption algorithm becoming more complex.

But back to what we were asking: How much are the darn things worth? Okay, brace yourself. Right now the current market price for 1 bitcoin is around £34 / $50!
In other words, if this stuff gains enough traction, and criminal bankers and politicians continue to abuse the system for their own ends, then we can expect a full blown financial apocalypse! And we should take action! Right now the Bitcoin economy is worth half a billion dollars (i’m guessing, but i’m sure its around about there). If Bitcoin were the entire economy, then one Bitcoin would equal one twenty-one millionth of the worlds wealth! In other words, we should ALL get involved NOW!

Okay, so lets get started.
  • Grab a USB pocket drive ! This will now be your digital wallet.
  • Download Truecrypt (http://www.truecrypt.org) and copy the file to your usb drive.
  • Open Truecrypt and create a new Truecrypt volume on your USB drive. This acts like a separate drive with password protected encryption, keeping your wallet safe inside it.
  • Download a Bitcoin Wallet program. There are a few to choose from, but on the Mac I chose MultiBit (https://multibit.org). Copy this into your Truecrypt drive.
  • Open Multibit. It creates a default wallet. Make sure it's stored on the protected drive and not in your user folder or wherever else on your hard drive. If it is, do the following (from the multibit website) :
  • On a Mac, copy the entire MultiBit application onto your USB drive. The name of the application file will be MultiBit-[version].app. Then go to where your wallets are stored and copy the files multibit.properties and multibit.blockchain onto your USB drive into the same directory. You can then double click the MultiBit-[version].app on your USB drive to run MultiBit

Okay now you are all set to send and receive some digital Cash! To get started, lets get some FREE coinage! Yes, some people are literally giving away money! Okay, it’s not much, but just you watch the global economy CRASH and see how Bitcoin shall stand strong and gain value. Bitcoin is seriously performing! Click on the receive tab, and then copy the string of numbers (that’s your account no). To get you started, some sites are offering fractions of Bitcoin for just pasting in your bitcoin address, visiting a web page, or filling out a captcha! Visit http://www.freebitcoin.nl, which contains links to sites which offer free bitcoins. Great to get you interested and started.

Some important sites then. Blockchain (https://blockchain.info) gives info on all transactions completed and pending, and contains various financial graphs such as value in dollars etc. There are also links for developers. To see your own account, the address is http://blockchain.info/address/YOUR-ACCOUNT-NO-HERE

Mount Gox (https://mtgox.com) is the largest bitcoin exchange, and if you decide to invest some money in bitcoin then this is place to go!

Wow. Just looked at Mount Gox there. Bitcoin now sitting at $58. That didn’t take long!
Next time I’ll have a look to see how easy it is to start accepting Bitcoin from a PHP programmers perspective.
But in the meantime, get yer cowboy hat and boots on, it’s the Bitcoin Gold Rush! Yeehah!