Bit by Bit: dissecting Bitcoin for what it’s worth


By Sean Vichinsky

Bit-what, you say? Bitcoin–a new(ish) virtual currency, non-government sanctioned, maybe even a tad illegal. Sound intriguing? Check out Sean Vichinsky’s comprehensive analysis of this mysterious moolah.

Think about just how often you make a transaction online. It can be on Ebay, or Amazon, or even through a mobile game like Candy Crush Saga. When you buy the entire first season of Game of Thrones on Amazon, or buy more lives in Candy Crush Saga, a microtransaction may occur where the app or website automatically withdraws the proper payment with your provided credit or credit card info. Paypal can also be used in these cases to complete the transactions.

This medium of payment is far from unusual these days; in a world where Ebay and Amazon are the new Target and Walmart, the ability to pay for things online can be essential for many. On a daily basis, Paypal transactions tend to value about $397 million, according to Business Insider. That’s almost half a billion dollars of U.S. currency networked across an online system, every single day.

At the end of the day, however, any transaction made with Paypal (or almost any transaction online for that matter) is still rooted in U.S. currency. If you bought a new purse online for $49.99 plus shipping, you’d have comparable results if you were to buy the same product in-person at Macy’s for the same price.

Now, the way we make transactions online may be changing. A new form of currency, the cryptocurrency, continues to make waves every day as it becomes more prominent in the global economy. The bitcoin, a cryptocurrency which first surfaced in 2009, is currently worth more than $200 from its starting point of just a few dollars. Compared to Paypal, Bitcoin transactions, which number 80,000 per day, are valued at around $257 million. Again, that’s valued in U.S. currency – except there’s one problem.

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