What is Bitcoin?

what is bitcoin

It’s always fascinating to me when real-life news stories are written in to television shows. Take the recent episode of The Big Bang Theory involving bitcoin. Until I watched, I had never really asked, “What is Bitcoin?” but now it’s fascinating to me… and I am not entirely sure why.

The Big Bang Theory – Bitcoin Episode

What if you solved complex math equations seven years ago to earn bitcoin that is now worth $5000 per bitcoin (or more) and then forgot where you put the file that proves what you own? That’s exactly what happened to the characters on The Big Bang Theory season 11, episode 9.

Sheldon took the bitcoin as a prank and sent his friends on a wild goose chase to unsuccessfully recover the flash drive that held their proof of bitcoin ownership.

At the time the episode aired, the value of bitcoin was increasing daily and through 2017 went from $800 to $18,000 per bitcoin. For Sheldon, Leonard, and the rest of the gang, they may have lost millions of dollars!

What is Bitcoin? 

Before we get all wound up that we missed the biggest “investment” of the year, let’s talk about what bitcoin really is…and isn’t.

Developed in 2009 as a cryptocurrency, bitcoin is a digital currency using encryption techniques to regulate new units produced and to verify the transfer of funds. New units are produced just like Sheldon and the gang told us – by solving complex math equations in a process known as mining.

  • Is it really an investment? Not exactly. Bitcoin operates independently of a central bank and is therefore not subject to FDIC or SEC regulations. In other words, investors don’t have the same protections as they would with a traditional investment in savings accounts or stocks and bonds. You may not invest your retirement savings into it but if you’ve got the resources and are willing to gamble, it might be fun to own a bitcoin.
  • Is it actual coins? No, it’s not an actual currency. It’s accounted for in cyberspace.
  • Can anyone buy a bitcoin? Like with bonds, there has to be bitcoin available to acquire. When the demand increased in 2017, that’s when the price per bitcoin increased to unprecedented levels.

The perception, and perhaps reality, is that bitcoin is really just a money laundering scam and it’s hard to dispel that myth. While there are colleges overseas who accept tuition payment in bitcoin, it’s often used to buy and sell items in untraceable transactions including illegal drugs, so there’s a stigma, real to perceived, to being a bitcoin owner.

As an IT Support company for small to medium sized businesses, we are most concerned that websites are being hacked and the hackers are demanding bitcoin as payment to unlock the site. Read more in our blog post How Ransomware is Changing Data Security.

If you’re worried about the security of your business data, give us a call to schedule an appointment today!

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