By Maxwell Dammeier, News Correspondent
Bitcoin, the enigmatic cryptocurrency, recently arrived in Boston. People have been able to sell and purchase the currency through online venues since its inception in 2009, but never through brick and mortar installations. That all changed on Feb. 19 when the first Bitcoin ATM in the world was opened in Boston’s South Station, so that users can physically deposit money for Bitcoins.
Having recently entered the public consciousness, much of Bitcoin’s origins along with its processes and operations remain a relative unknown to the general population. To answer that question, it’s important to start from the ground up.
Peter Piasecki, a moderator for Reddit.com’s Bitcoin community, and general expert on Bitcoin, described it.
“Bitcoin is money designed for the Internet age–fast, decentralized, borderless,” he said. “Its value is determined by the free market and agreement between its users. There is no central government or bank controlling Bitcoin. Anyone can start using Bitcoin in seconds without having to apply for a credit card, sign any contracts or show any piece of ID. Bitcoin does to cash what email did to snail mail.”
Since being founded in 2009 by the secretive Satoshi Nakamoto (the name could be a pseudonym, as the founder has never come forward with his real identity), Bitcoin has had a tumultuous path towards widespread acceptance.
It gained value very slowly at first, one Bitcoin being worth only $0.30 at the beginning of 2011. From then on, Bitcoin has experienced a series of stratospheric rises in value accompanied by steep declines. In December 2013, Bitcoin reached a peak value of $1,100 before again declining and settling near its current value of around $645, according to Blockchain’s website. This volatility has led to tempered optimism among investors and potential adopters as, at this point, Bitcoin is far from a safe investment.
Bitcoin offers several distinct properties, or what some would term advantages, over typical government controlled currencies, otherwise known as fiat currencies. Piasecki illuminated a few of these.
“Bitcoin has a limited and predictable supply. It is perfectly scarce,” he said.
”In other words, the total number of Bitcoin available, along with the amount introduced over any given interval are controlled. The amount for both are set as part of the Bitcoin’s algorithms and are unchangeable. The guaranteed stability in this realm allows for predictability and eliminates potential surprises in money supply that fiat currencies sometimes provide.”
“With Bitcoin you don’t need to be dealing with the banks to transact online with anyone,” Piasecki said. “Bitcoin is often referred to as the local currency of the Internet.”
Any Bitcoin one owns is stored in a “Bitcoin wallet.” The wallet is an online address, hosted by any one of the numerous wallet providers. To access Bitcoin at this address, a private key, one which only the owner would know, is needed. This secure and personal way to store Bitcoin eliminates the need to use a bank to make online purchases, allowing for monetary online flexibility.
Most innovatively, Bitcoin allows for the ability to facilitate online transactions anonymously. However, this ability has led to a smattering of bad press for Bitcoin. Many have taken advantage of its anonymity potential to make a litany of illicit purchases ranging from hitmen to child pornography.
On the other hand, anonymity has positive aspects.
“Anonymity can also protect you from unwanted intrusion on your privacy,” Piaskecki said. “For example, what if your credit card record shows that you enjoy high-risk sports and you are applying for some job. The potential employers might have access to that data and use it without your consent to discriminate against you.”
“In some cases, remaining anonymous is essential for one’s survival. If you are a member of a political opposition in a totalitarian government, receiving a non-anonymous wire transfer from supporters can end up getting you killed,” he said.
Through all its controversy and unpredictability, Bitcoin has had early adopters here at Northeastern. John Platts, a sophomore, bought Bitcoin late in December 2013.
“Bitcoin seemed exciting, and something that, bought at the right level over the past tumultuous three or four months, seemed like a good buying opportunity,” he said.
While some are put off by the uncertainty, Bitcoin is still used by many. It is seen as an investment opportunity more than a currently usable currency. Although that could soon be subject to change. Platt himself stated that if more retailers and online vendors begin accepting Bitcoin as payment, he may begin to use it for purchases.
This process has already started. Major online retailer Overstock.com began accepting Bitcoin early this January. Whether or not more sites will follow is something to be seen.
