Imagine a currency accepted anywhere in the world, and is not regulated by the government. What would it look like? Who would create it? Well, it already exists, and has for quite a few years. Now it's rising in popularity, but it's also raising questions about its staying power.
Think about a dollar bill. It's basically just cotton and linen in the shape of a rectangle. It's not backed by gold anymore. It's only backed by faith and trust. It's like a bitcoin. Only a bitcoin, you can't touch and it's not regulated by anyone.
"There's a big movement among young people who want to feel their money is safe," says Matt Brock, who is one of those "young people." Brock is the founder of NovaWhite an internet-based retailer that sells teeth-whitening supplies and accept bitcoin as a form of payment. "So you don't have to worry about the volatility of governments or any instability that causes fluctuations in currencies to rise and fall, so from that perspective it's safe," says Brock.
The dollar, the yen, the euro.. they all started somewhere. They have value because society believes they do. Well society is starting to believe in a new currency: the bitcoin. Developed by an anonymous programmer or programmers in 2009. Back then, it was only worth a few cents.
Today, one Bitcoin is worth roughly $800, 590 euros, 82,000 yen.
So, how do you get one? Meet Matt Joseph. He's an engineer by day, bitcoin miner by night.
"The more I learned about it, the more interested I became," says Matt Joseph. To get a bitcoin, you have to contact someone like Matt, a miner.
Just like a worker mines for gold, he mines for numbers. Like a gold miner uses a pick, Matt uses his computer. The computer's software works hard, figuring out long equations. After a few thousand correct answers, the miner is rewarded with part of a bitcoin. "Every about 10 minutes computers on the network verify a block of transactions, and these blocks of transactions are encrypted, so that's why it takes a powerful computer to solve them," says Joseph.
A couple of software programs later, the bitcoin is officially in Matt's digital "wallet." Yes, there's an app for that. When you call Matt to buy a bitcoin, you'll pay him roughly $800, and he'll transfer the bitcoin from his personal wallet's address to yours. Matt keeps the money, but says he doesn't make much since he puts it into the upkeep of his computer.
Now that you have a bitcoin, where can you use it? Right now, mostly online. But only at a few places in Chattanooga, like NovaWhite.
But what if the bitcoin fails? That means there's no government bailout or promise you'll get your money back. These guys though, don't seem too worried.
"Either way, whether it fails or it's the next revolution, I think it's good to be a part of it," says Brock.
So maybe it's true: a bit of change could do you good.
A bitcoin is divisible down to 8 decimals points, so you can send fractions of a cent or millions of dollars instantly. Now again, this currency isn't tangible. Those shiny coins you've seen are simply a representation.
Right now there's about 12-million bitcoins in existence. The maximum that will be generated is 21-million.
By the way, a hearing on Monday between the founder of Bitcoin Investment Trust and New York's top banking regulator is furthering the idea that bitcoins will be regulated very soon.
By Natalie Jenereski