For those who have been too busy with work and other responsibilities to keep track of what has happened with Bitcoin and other digital currencies, the following may be of interest.
Recently I met a man who accepts Bitcoin in his business and is also a Bitcoin miner. Meeting a human face-to-face who knows about digital currency events previously only read about was very interesting. When he showed me the growth chart of Bitcoin value, I was duly impressed.
Image from: http://www.coindesk.com/price/
Here I must state a disclaimer as to my biases.
Approximately 20 years ago I studied fiat money, fractional reserve banking and the monetary systems of the United States of America.
After the very painful realization of the magnitude of the sham/scam the monetary system I was born into is, I spent a lot of time thinking about how to replace it with another system that actually serves the purpose of facilitating energy/monetary exchanges while protecting the users from being mercilessly taken advantage of. Then urgencies forced me to think of other matters.
Happily, other humans worked on the problem and at least started to solve it.
For a quick overview, here is the link to the Wikipedia.com article:
Bitcoin is a software-based online payment system described by Satoshi Nakamoto[note 1] in 2008 and introduced as open-source software in 2009. Payments are recorded in a public ledger using its own unit of account, which is also called bitcoin.[note 2] Payments work peer-to-peer without a central repository or single administrator, which has led the US Treasury to call bitcoin a decentralized virtual currency. Although its status as a currency is disputed, media reports often refer to bitcoin as a cryptocurrency or digital currency. (End excerpt)
The article at "Wired" titled "The Rise and Fall of Bitcoin" has a more detailed history of Bitcoin. Please note: the fall of the Bitcoin referred to was followed by an amazing rise in value.
In November 1, 2008, a man named Satoshi Nakamoto posted a research paper to an obscure cryptography listserv describing his design for a new digital currency that he called bitcoin. None of the list’s veterans had heard of him, and what little information could be gleaned was murky and contradictory. In an online profile, he said he lived in Japan. His email address was from a free German service. Google searches for his name turned up no relevant information; it was clearly a pseudonym. But while Nakamoto himself may have been a puzzle, his creation cracked a problem that had stumped cryptographers for decades. The idea of digital money—convenient and untraceable, liberated from the oversight of governments and banks—had been a hot topic since the birth of the Internet. Cypherpunks, the 1990s movement of libertarian cryptographers, dedicated themselves to the project. Yet every effort to create virtual cash had foundered. Ecash, an anonymous system launched in the early 1990s by cryptographer David Chaum, failed in part because it depended on the existing infrastructures of government and credit card companies. Other proposals followed—bit gold, RPOW, b-money—but none got off the ground.
One of the core challenges of designing a digital currency involves something called the double-spending problem. If a digital dollar is just information, free from the corporeal strictures of paper and metal, what’s to prevent people from copying and pasting it as easily as a chunk of text, “spending” it as many times as they want? The conventional answer involved using a central clearinghouse to keep a real-time ledger of all transactions—ensuring that, if someone spends his last digital dollar, he can’t then spend it again. The ledger prevents fraud, but it also requires a trusted third party to administer it.
Bitcoin did away with the third party by publicly distributing the ledger, what Nakamoto called the “block chain.” Users willing to devote CPU power to running a special piece of software would be called miners and would form a network to maintain the block chain collectively. In the process, they would also generate new currency. Transactions would be broadcast to the network, and computers running the software would compete to solve irreversible cryptographic puzzles that contain data from several transactions. The first miner to solve each puzzle would be awarded 50 new bitcoins, and the associated block of transactions would be added to the chain. The difficulty of each puzzle would increase as the number of miners increased, which would keep production to one block of transactions roughly every 10 minutes. In addition, the size of each block bounty would halve every 210,000 blocks—first from 50 bitcoins to 25, then from 25 to 12.5, and so on. Around the year 2140, the currency would reach its preordained limit of 21 million bitcoins.... (End excerpt)
What is apparently the official Bitcoin site is at:
The following video is embedded at bitcoin.org:
The link from the end of the video is:
CuriousInventor at youtube.com has two video explanations of how Bitcoin works that appear to be correct based upon my searches so far:
"How Bitcoin works in 5 minutes"
A more detailed version from Curious Inventor is "How Bitcoin Works Under The Hood":
Please feel free to add relevant information.