After The Huge Bitcoin Heist, We Ask: What The Hell Is Bitcoin, Anyway?
Short answer: You can’t eat it. Just so you know.
You may have read rumors recently about a heist that saw around $350 million being stolen from something called Mt. Gox. And you may then have read slightly further and seen that the currency stolen was called “Bitcoin,” at which point, you probably shrugged and moved on, figuring it was probably something to do with those crazy kids with their World Of Warcraft and their Facebook and smartphones and all-night discotheques with the fancy cocktails. But wait! Bitcoins are a real thing, and someday – maybe someday soon – they may even be relevant to your life. So in the interest of pretending we’re occasionally useful, here’s what you need to know about Bitcoins.
Okay, smartass, what the hell is a Bitcoin?
Short version: It’s just an alternative form of currency, and it can be used to buy pretty much anything, provided the seller accepts it. Although described as a crypto-currency, certain physical retailers, cafés, and restaurants around the country accept Bitcoins now, so it’s not just relegated to an Internet currency anymore – there’s even a Bitcoin ATM in Austin, Texas.
So why is Bitcoin kinda associated with more, uh, illegal kinda stuff?
Weellll, it’s a pretty popular form of payment on the Dark Web. See, the Dark Web is a shady region of the Internet (because nerds love giving things awesome names); a sort of virtual underbelly far from Google’s searchbots where criminal things go down. If you know what you’re doing, you can buy anything from a brick of heroin to a machine gun to an assassin online, and the heavily-encrypted Bitcoin tends to be the currency of choice because it allows you to safely make a payment without entering your credit card details. After Silk Road – a sort of Amazon.com for drugs and other bad shit – got shut down, a lot of the news reports kind of lumped Bitcoin in with Silk Road, so it’s still unfortunately associated with those kinds of nefarious activities.
So how do you go about acquiring these Bitcoins, then?
It’s actually pretty simple.
Step 1: Set up a digital Bitcoin wallet using easily downloadable software.
Step 2: Exchange your money, either directly from your bank account or using a credit card, for Bitcoins. This is done through a Bitcoin exchange market such as Mt. Gox, which was, until yesterday, the largest and most important Bitcoin market in the world.
Step 3: Purchase things with your Bitcoins from vendors who will accept them.
As with all currencies, value is based on popular consensus. For example, we can’t hand our landlord an issue of Maxim Magazine and expect to pay our rent with it, but if, one day, people decided old issues of Maxim Magazine were the most valuable things on Earth (which we pray for every day), we would instantly become ridiculously wealthy. The point is, if enough people agree that something has value, or more importantly, if someone is willing to exchange goods or services for something, it becomes valuable. People in the digital world have agreed to assign value to Bitcoins, so whether you like it or not, they’re worth something.
So…is Maxim going to be lecturing us on digital currencies from now on, instead of showing us pictures of sexy girls and articles about farting?
No, it’s just this one. Normal service will resume…now.