Huffington Post Canada

Should we be worried about Bitcoin?

Is there an anonymous, free, and untrackable virtual currency currently making its sweep across the World Wide Web? It is not quite that simple, but Bitcoinis poised to become the next big thing in computing and finance.

How do Bitcoins come into existence? According to The Economist:

Unlike other online currencies — such as the new Amazon Coins — the supply of Bitcoin is not determined by any central issuing authority. Instead, new coins are generated according to a predetermined formula by thousands of computers solving complex mathematical problems. As more coins are generated, these problems get ever more complex, increasing the cost of computing power necessary to generate them, and so setting a floor underneath the price. Mimicking gold, the currency is designed to be deflationary.

The money is generated through Bitcoin “mining,” which is:

The process of making computer hardware do mathematical calculations for the Bitcoin network to confirm transactions and increase security. As a reward for their services, Bitcoin miners can collect transaction fees for the transactions they confirm along with newly created bitcoins.

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