BitCoin (BTC) is a “virtual currency” created in 2009 by Satoshi Nakamoto (possibly a pseudonym). It is an attempt at creating a non-centralized currency to be used in the global market. There a number of websites that sell goods and services for BitCoins, as well as exchange sites where traders can buy or sell BTC for other currencies.
http://en.wikipedia.org/wiki/Bitcoin
Getting Started With BitCoin
https://en.bitcoin.it/wiki/Getting_started
Proceed With Caution!
The following video is a recent (at the time this article was published) market evaluation of BitCoin, hopefully giving the reader a clear picture of its current status before they make a decision one-way-or-another on the currency:
The Ups and Downs of BitCoin Value
bitcoinbullbear.com is a great site for Trade Analysis of BitCoins.
The short 2 year history of BitCoin shows two major adjustment, one bringing the value of BTC to $30, and another bringing it down to 1 cent. Keep in mind this is a very elementary assessment of the historical trends of the BTC.
The Black Market Boom
Following a Gawker article on Silk Road; a black market website where users could buy and sell illegal drugs for BitCoins, the price of BTC began to rise quickly. This represented its market value as a means of laundering money for black market purposes. This was quickly noted by a number of government officials, and many traders called for criminal regulations on BTC trading to ease the concerns of its illegal uses.
The Hacker Crash
Recently major trading sites for BTC were hacked bringing the currency to near collapse. Shortly following a heist to the sum of nearly $500,000 worth of BitCoins brought up addition security issues to the BitCoin community. The newly revealed risks of the BTC brought the value back to reality. However, being only 2 years old, it is possible these events are merely growing pains in the new currency, and that future traders will learn from the lack of security that led to such a theft.
What Gives BitCoins Value?
Any item is given the value as “money” when it is accepted as a universal trade item within a market. Some items only have value as money; if a Dollar bill was not accepted as a trade item it would only be worth the paper it is printed on, in contrast, if Gold was not accepted as a trade item (as is the case now) it would still have some value in the market for industrial, superficial and wealth retention uses.
BitCoins only have value in that they are accepted and recognized within the global market. At what value is up to the market. BitCoin could be referred to as the “Open Source Currency,” being it does not gain its value from any single institution.
The Creation of BitCoins vs. Federal Reserve Notes vs. Sound Money:
Bitcoins are created at a controlled rate through the practice of “mining.” Mining is actually the process of confirming the transaction history of the entire pool of BitCoins in existanc. Essentially, in order to create BitCoins, someone must use processing time to run confirmation software on the BitCoin system. This is an essential job in order to secure the BitCoin community, a represents some real work required to produce the currency.
In comparison;
Federal Reserve Notes are created through the process of borrowing from the U.S. Treasury Department. The Treasury writes up a contract in which it acknowledges that they are borrowing a certain number of Federal Reserve Notes (at interest). This contract is then sent to the Federal Reserve which prints up said amount of Notes to then be sent to the U.S. Treasury. There is no limit at which these Notes can be printed, and there is no work required to create them beside that which I previous mentioned. In fact, the entire process can be done on a computer without actually printing any notes.
At the same time, while BitCoin value has recently been manipulated through a couple security breaches and theft, the value of Federal Reserve Notes (“Dollars”) is constantly manipulated through the very process of creating new Notes. The controlled rate of BitCoin creation is done so in a fashion that is meant to prevent inflation.
Now, let’s compare both to “Sound Money” or “Precious Metals”:
Precious Metals are created through the process of physically mining the resource from the earth. Sound Money is created by adding value to these metals by minting them as coins (and embedding them with marking that refer to a confirmation of their content by an acknowledged body, such as a government).
The value of precious metals is manipulated by the market itself, or better explained, by supply and demand. What makes precious metals valuable in coin form is that the metal itself has both industrial and superficial value. For instance, your computer has a small amount of gold in it, as well, people like the appearance of Gold and value it as jewelry. However, both the industrial and superficial use of Gold does not consume all of the supply of gold. Thus, creating coins of the metal allows for people to trade it for goods, knowing that the market maintains a certain value due to the eventual demand of it for industrial (and superficial) uses.
You can even trade BitCoins for Gold and Silver here: http://coinabul.com/
What Can I Buy With BitCoins?
In theory you can buy anything anyone is willing to sell you for BTC. However, practically, you are limited to what is available through websites. Here are a few sites that sell good and services for BitCoins:
Buy Food Products at Bit Munchies:
For Bit Coin is a Forum of Services Available for BTC:
Dragon’s Tale is a Gambling/MMO using BitCoins:
http://www.dragons.tl/index.php
BitCoin World Market Offers a Variety of Goods (even Hemp Protein Powder!):
Should I Get Into BitCoin?
Despite the ups-and-downs of the 2-Year lifespan of the BTC, there is still a functioning community buying and selling goods and services with the currency. I like the idea of BTC, and see a lot of potential in it, however, I am not in a financial position to experiment with money, and the future value of BTC is unknown. At this time I do not plan on buying any BitCoins, as I hope to see how the market pans out. I’m going to set up a wallet and open my readers to donate to my site with BitCoins. Once I get a decent number of BTC I will try making some purchases and see how it goes.
If you want to donate BTC to The Free Independent-Sun, my wallet # is:
1DTeC6TaZEQ2mtRw7x2vi4Fu2pRvtsf89D
Jack Wagner is the Editor of The Free Independent-Sun. Born in Sonoma, California and currently residing in San Francisco, Jack set up The Free Independent-Sun on July 4th, 2009, after sleeping in and not making his usual trip up north for his hometown festivities. He figured he'd do something revolutionary to make up for it. In the Summer of 2010 Jack registered Seraf Media with the City and County of San Francisco as a Sole-Proprietorship. He is dedicated to articulating the finer points of the Revolution in order to bring about a Global Renaissance and Abundant World Economy. He also isn't afraid to get his hands dirty transplanting succulents. 
