{"id":15054,"date":"2022-07-08T08:00:21","date_gmt":"2022-07-08T06:00:21","guid":{"rendered":"https:\/\/www.sciencefocus.com\/?p=122860"},"modified":"2022-07-08T08:18:10","modified_gmt":"2022-07-08T06:18:10","slug":"what-is-bitcoin-and-can-it-be-a-viable-currency","status":"publish","type":"rss_feed","link":"https:\/\/c01.purpledshub.com\/bbcsciencefocus\/rss_feed\/what-is-bitcoin-and-can-it-be-a-viable-currency\/","title":{"rendered":"What is Bitcoin and can it be a viable currency?"},"content":{"rendered":"

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By Alex Hughes\n \t\t<\/p>

Published: Friday, 08 July 2022 at 12:00 am<\/p>

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Since its creation in 2009, Bitcoin has been one of the internet\u2019s favourite talking points. It has made millionaires and billionaires of some, and completely emptied the wallets of others.<\/p>\n

But, despite its glorious gains and eye-watering declines on a near-weekly basis, there are many who still argue that it is the future of money. Some countries have even gone ahead and adopted it as their official currencies.<\/p>\n

So is Bitcoin and the many other cryptocurrencies it has been followed by the future? We spoke to Brett Scott<\/a>, author of Cloudmoney: cash, cards, cypto, and the war for our wallets<\/em> to find out.<\/p>\n

What is Bitcoin?<\/strong><\/h2>\n

Bitcoin sits in a bit of a weird position. As a fairly new concept in the world of finance, it hasn\u2019t really been classified into the world of currencies, and there is good reason for that.<\/p>\n

\u201cBitcoin is traditionally described as a decentralised digital currency, but I don\u2019t find that a very informative description. If you look at how it works, it is essentially a system for issuing tokens,\u201d says Scott.<\/p>\n

\u201cIt is a way for a network of strangers to get together and follow a set of rules by which they will issue tokens and move them around between themselves. Historically, that has been a difficult task to do.\u201d<\/p>\n

Up until Bitcoin, the transfer of digital money from one person to another required a third person in the form of a bank. When you pay for something with a contactless card, you are asking your bank to send over some of your money to another account.<\/p>\n

The aim of Bitcoin is to enable these transactions without the use of a middle party. However, it isn\u2019t quite that simple.<\/p>\n

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\u201cThe technological aspect of Bitcoin is ingenious, but the actual monetary side is quite crude. Imagine taking a big sheet of glass and then punching a bunch of disks out of it and then handing them out, claiming that\u2019s a monetary system, that\u2019s similar to what Bitcoin is,\u201d says Scott.<\/p>\n

It might sound like a strange description, but it is an easy way to understand Bitcoin. At its core, Bitcoin is a pretty featureless token. In its early days it didn\u2019t have much of a use and could just be assigned from one person to another, it wasn\u2019t until later that it was assigned monetary value.<\/p>\n

\u201cWhen you hear a news story about someone buying a pizza with Bitcoin, they aren\u2019t actually exchanging Bitcoin for pizza. They are using a system called counter-trading. This is where non-monetary objects are exchanged for a monetary value,\u201d says Scott.<\/p>\n

An easy way to picture counter-trading is to imagine you buy a jacket from a store for \u00a3100. You leave, decide you don\u2019t like the jacket and go back to return it. The store says to you that they can offer a refund or swap it for something of a similar value, so you pick up a pair of jeans that have a similar value.<\/p>\n

If an Alien was to watch this transaction, it could seem like jackets were a type of currency to be spent, but really you\u2019re doing multiple transactions to get there: you\u2019re buying a jacket, returning it for its full value and then using that money to buy another item.<\/p>\n

\u201cYou\u2019re taking two monetary transactions and superimposing them over each other to cancel out the money part. That\u2019s in theory how Bitcoin transactions work. When someone says they bought jeans for Bitcoin, they first had to calculate how much Bitcoin they needed to buy to afford those jeans, essentially using a standard currency with an added step,\u201d says Scott.<\/p>\n