Bitcoin, Explained: Everything you need to know about the new electronic currency

From Mother Jones:

What is a Bitcoin? How did you pay for your coffee this morning, by cash? By credit card? If a growing number of bank-fearing techies have their way, you’ll soon be able to pay for that mocha latte through an untraceable virtual currency called Bitcoin. As of this month, Bitcoins are worth over a billion dollars, and interest in the currency is skyrocketing. Here’s everything you need to know about a currency that sounds like it belongs in a fantastical realm: You can’t touch it, it’s prized in the underworld, its creator disappeared in a cloud of mystery, and if you want to keep it safe, you should keep it hidden in a bunch of different places.

No, but really. What is it? A Bitcoin is a unit of currency, launched in 2009, that only exists online and isn’t controlled by any kind of central authority, like the US Federal Reserve. You can send Bitcoins to anyone who has a web connection (or hand someone your hard drive containing the currency.) You hold on to Bitcoins by setting up a virtual wallet, either through a third-party website, or by storing it on software run on your computer—although storing your Bitcoin wallet only on your computer is about as secure as stuffing hundred-dollar bills under your mattress. As soon as you have your wallet, you’re part of the big Bitcoin network. If you want to buy something from your neighbor, you simply need to obtain their anonymous identification number and send them some Bitcoins, which takes between 15 minutes and an hour to process. If you are confused, here is an awesome one-minute video from PandoDaily.

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