A while back I covered a story about the deep web, a hidden part of the Internet where you can log on to sites such as Silk Road and purchase any drug or other prohibited commodity in a secure, anonymous fashion.
I claimed that the deep web and Silk Road would be revolutionary, but I overlooked something entirely: the bitcoin.
Bitcoins are a relatively new digital crypto-currency, created by the mysterious Satoshi Nakamoto in 2009. They hold the potential to rattle our largest financial institutions, and at the very least, make us question our conception of currency.
Just like the gold that we base our currency on, bitcoins are ‘mined’ by groups of computers using special programs to answer totally insane, irreversible cryptographic equations. When the computer or group of computers calculates an answer for a given question, a bitcoin is produced.
It’s odd to think that a currency could be made digitally and still possess value, but there are costs involved (electricity and time), and there will be a finite number of them in the future, (21 million bitcoins by 2140, exactly). And although I’m still weary of the claim, apparently it’s a near-impossibility that someone could counterfeit or steal bitcoins because of their sophisticated level of encryption.
However, the most important and revolutionary aspect of the bitcoin is that no governments currently regulate it, and will likely not be able to unless they shut down the Internet entirely. Also, there is no way to artificially inflate them, because unlike gold, you cannot ‘shave off’ part of a bitcoin. Paying with bitcoins is the equivalent of exchanging actual gold for a product, and there is no tax involved yet.
If you read my article about Silk Road, you’ll know that bitcoins function as the currency of the deep web — and to set things straight — you can buy many other things than drugs, guns, and hit men with bitcoins these days.
A new startup company, Pizza for Coins, is a website allowing users to purchase Domino’s pizza using bitcoins through an exchange service. Some ultra-hip restaurants are already starting to accept bitcoins for dine-in customers as well.
These sort of entrepreneurs claim that if enough people begin to use bitcoin, it will be cheaper to pay with than real money.
This all sounds good and dandy, a currency created by the people and for the people, not one controlled by banks and scheming corporate lizards, but is it really the way to go?
I’m not at all an expert on economics, but I can tell that bitcoins are going to start a fiasco whether they succeed or not. Lawmakers have already condemned them, saying they are illegal and used mainly to buy drugs off the Internet. However, deeming them ‘illegal’ is not even an option yet, because no legislation currently exists to define them as such.
Aside from the question of whether or not this currency is feasible, I’m most intrigued by what the metaphor of the bitcoin reveals.
It’s something I’ve always suspected, and it’s also a romantic, highly clichéd notion, but with a digital currency like this it becomes quite literally clear that money isn’t real anymore.
Quinn Scahill is a senior English major. His columns appear Fridays in the Collegian. Letters and feedback can be sent to letters@collegian.com.
