Brewster Kahle, founder of
Internet Archive and Alexa Internet, recently invited me to experiment with Bitcoin,
the six-year-old digital currency that, according to Bloomberg Businessweek,
“thrills nerds, inspires libertarians, and incites the passions of economists
who debate the value of money made from nothing but ones and zeros.” My task is
to convert one Bitcoin, now valued at nearly $1,000, into U.S. dollars and back
again as many times as possible in as many different ways as possible—and write
about the experience.
Before receiving the
assignment, I knew very little about Bitcoin beyond the fact that it had been
gaining popularity among techies in the Bay Area. Now I can see why: Unlike the
failed alternative currencies that came before it, the Bitcoin system has a
built-in mechanism to prevent fraud. All Bitcoin transactions are recorded in a
public ledger available on the Internet and maintained by “miners”—a scrappy
group of software engineers racing
to solve complicated math puzzles and unlock more Bitcoins. But according to
Bloomberg, no more than 25 Bitcoins can be mined every 10 minutes; Satoshi
Nakamoto designed the system to ensure that the money supply would increase
gradually.
Some laud Bitcoin as a
viable alternative to government-controlled money (former Stanford University
lecturer Balaji Srinivasan “calls the currency ‘the missing piece of the
Internet’ that will make transactions frictionless”), while others think select
groups of miners already wield too much control. Even so, Bitcoin seems to
embody the creative and iterative spirit of open innovation.
I’m delighted by the opportunity to experiment with Bitcoin and invite you to check back for updates on my Bitcoin transactions. For now, I'm off to the races.
I’m delighted by the opportunity to experiment with Bitcoin and invite you to check back for updates on my Bitcoin transactions. For now, I'm off to the races.
