Bitcoin: Let’s make some money!

What if you had access to a virtual currency with a real value that was being actively used every day. Would you use it? Does this sound like science fiction?

The reality is that such a currency – the Bitcoin – is available today and fast becoming a phenomenon around the internet where it is being used in tens of thousands of transactions every day to pay for a host of goods and services – from sandwiches to dental treatment.

Kalara Law became one of the early adopters when it announced in 2011, that it will accept the coins as payment. Also, in our cutting-edge technology business law practice, we have advised a company with a product that will provide advanced means of “mining” the currency. The product will be going to market shortly.

Floating a currency with real value is no easy task, especially one that is decentralized, and exists in the virtual domain of millions of computers. The value is set by market demand, like any other currency, but no government entity is involved in its issue. There are several steps and many levels of advanced protection that are needed to secure the generation of the virtual coins – called “crypto – currency”. Transactions need to be tightly controlled, with a prescribed maximum of 21 million bitcoins in circulation.

See the growth of bitcoins. For more information, contact Kalara law firm

Mining: Bitcoins are generated on networked computers across the Internet. Minting of the virtual coins requires running a complex, controlled algorithm, over long periods of time, on high horse power processors. But before you get excited and set off on the next gold rush, we should warn you that several months of running an algorithm on one’s computer might not yield a single coin – trust us, we tried!

Transactions: Each coin is unique and can only be used once within a transaction. Transactions are broadcast to the entire network and verified within about 10 minutes. The overall trade volume amounts to millions of US dollars to 50,000 transactions per day.

Value: The value of the currency depends upon supply and demand and fluctuates like any other. There has been some criticism regarding the volatility of the currency which is at $106 per bitcoin, today.

One can make the argument that the bitcoin represents both capitalism and democracy, in a pure economic form. Market forces shape the value of the currency. And the generation of the value itself depends not upon being backed by a mineral such as gold, but upon the cycles of many machines churning quietly around the world.

 

If you have questions related to business and technology, please send an email to atty@kalaralaw.com