What is bitcoin? How do you use it?
Bitcoin is a digital currency that enables instant payments to anyone, anywhere in the world. It is currently trading at close to it highest ever value against major currenciesBitcoin uses peer-to-peer technology - named blockcode - to create a record or digital footprint of every transaction. This means that it is not a fiat currency and has no central or issuing authority. In technical managing transactions and issuing money are carried out collectively by the network.
Bitcoin is also the name of the open source software which enables the use of this currency. Its fundamental appeal is that it remains out of reach of governments, banks or legal authorities. For some this is its societal drawback, attracting the same criticism as that directed at secret offshore accounts.
Is bitcoin here to stay?There are still many sceptics as to bitcoin's long-term future but it has shown robustness as a trading currency. In its short history it has already survived one major crash and a $250,000 virtual robbery from its exchange.
Bitcoin's value has risen rapidly in recent years and now stands at an astonishing: 1:£2963. The exchange rate is still volatile, however - it recently lost 19% over four days.
Now an established online currency, bitcoin is also transacted via what have been described as bitcoin ATM machines - see here.
The crucial strength and vulnerability of bitcoin is that it is an unsupported currency. There is no Fed or Bank of England to regulate its value.
Who invented bitcoin?Much about bitcoin is shadowy, including the identity of its mysterious founder Satoshi Nakomoto. The name is a psuedonym - some believe there is a Banksy-like figure in the background. More likely it represents a group involved in the creation of the original software.
Why are some commentators suspicious of bitcoin?There have been also been accusations that the relative anonymity of bitcoin transactions encourage its use on what the Economist terms 'dodgy online markets'.
So Bitcoin is basically a money laundering device?Its supporters would argue that this is like blaming bank notes for bank robberies.
Like those who endorse Esperanto as a new peace-inducing world language, bitcoin users believe they have found a way of liberating money from the control of governments and financial institutions.
Is bitcoin a good investment?It is certainly a high-risk one. The potential pitfalls for bitcoin investors are summarised in this Forbes article.
Some argue that consumers will never adopt a 'virtual' currency. This ignores the fact most financial transactions are virtual - whether via card, cash transfer or cheque. In fact the ideal medium for illegal is physical cash
More on the bitcoin in this New Yorker article