I’ve known about them for a while but now they are sweeping the news waves.
More than $1 billion dollars worth of a digital currency known as “bitcoins” now circulate on the web – an amount that exceeds the value of the entire currency stock
of small countries like Liberia (which uses “Liberian dollars”), Bhutan (which uses the “Ngultrum”), and 18 other countries.
Politicians and bankers are panicking in the name of money laundering. Real reason: it threatens their money making monopoly on currency and taxation.
Here is my understanding of how it works: It is a virtual currency; it is not physical. It is also a finite currency. A bitcoin is produced every 6 hours and production will cease at 21 million bitcoins. This is designed to replicate something like a gold standard, like the rate of mining and then the running out of the resource.
So while it is produced out of thin air, it is stable and not inflationary(at least very minimally until it hits its production cap).
The way it is set up, bitcoin is anonymous. People make transactions through their accounts using digitial signatures.
I am not ready to put money into it right now, but I have yet to find any flaws in my limited exposure to it, other than it being digital which would be a problem if the internet went down.