A look at the murkey origins of bitcoin after police raid Australian home

NEW YORK -- Australian police raided a home and office Wednesday that, according to technology websites, belongs to the founder of the virtual currency, bitcoin.

See Full Article

However, the origin of the currency remains murky, as is the identity of the founder. Here's a brief explanation of what bitcoins are, how exchanging the digital money works and why it's popular among some denizens of the web.

BITCOINS ARE VIRTUAL MONEY

Bitcoin is an online currency that allows people to make one-to-one transactions, buy goods and services and exchange money across borders without involving banks, credit card issuers or other third parties. Transactions can be made anonymously, making the currency popular among people who want to conceal their financial activity. As a result, this exotic form of money has become popular with libertarians as well as tech enthusiasts, speculators -- and criminals. Bitcoins are basically lines of computer code that are digitally signed each time they travel from one owner to the next.

HOW BITCOIN CAME TO BE

It's a mystery. Bitcoin was launched in 2009 by a person or group of people operating under the name Satoshi Nakamoto and then adopted by a small clutch of enthusiasts. Nakamoto dropped off the map as bitcoin began to attract widespread attention, but proponents say that doesn't matter; the currency obeys its own, internal logic.

ALL I REALLY WANT IS A PACK OF GUM. WILL THIS BITCOIN COVER THAT?

Like any other currency, bitcoins are only worth as much as you and your counterpart want them to be. In its early days, boosters swapped bitcoins back and forth for minor favours or just as a game. One website even gave them away for free. As the market matured, the value of each bitcoin grew. At its height in late 2013, a single bitcoin was valued above $1,100. On Wednesday, it was worth about $415.

I'VE ALWAYS HATED SMALL CHANGE AND I CAN THINK OF NOTHING BETTER THAN TO TRADE IN ALL MY CASH FOR BITCOINS RIGHT NOW

That would be a questionable decision. Businesses ranging from blogging platform Wordpress to retailer Overstock have jumped on the bitcoin bandwagon amid a flurry of media coverage, but it's still not as prevalent as cash. On the one hand, leading bitcoin payment processor BitPay works with more than 60,000 businesses and organizations -- roughly three times more than it did last year. The total number of bitcoin transactions has climbed to over 200,000 per day, more than double the number at the start of this year, according to bitcoin wallet site blockchain.info.

HOW BITCOINS ARE KEPT SECURE

The bitcoin network works by harnessing individuals' greed for the collective good. A network of tech-savvy users called miners keep the system honest by pouring their computing power into a blockchain, a global running tally of every bitcoin transaction. The blockchain prevents rogues from spending the same bitcoin twice, and the miners are rewarded for their efforts by being gifted with the occasional bitcoin. As long as miners keep the blockchain secure, counterfeiting shouldn't be an issue.

HOW BITCOIN IS VULNERABLE

Much of the mischief surrounding bitcoin occurs at the places where people store their digital cash or exchange it for traditional currencies, like dollars or euros. If an exchange has sloppy security, or if a person's electronic wallet is compromised, then the money can easily be stolen. The biggest scandal involved Japan-based bitcoin exchange Mt. Gox, which went offline in February 2014. Its CEO, Mark Karpeles, said tens of thousands of bitcoins worth several hundred million dollars were unaccounted for. He was arrested on suspicion of inflating his cash account in August.

A RAID DOWN UNDER

Technology publications Wired and Gizmodo published reports this week claiming an Australian businessman is bitcoin's likely inventor. The Australian Federal Police said a search of the man's home and office Wednesday was related to a tax investigation and not recent media reports on bitcoin.



Advertisements

Latest Tech & Science News

  • HitchBOT creators to study whether robots can help patients change behaviour

    Tech & Science CBC News
    The inventors of HitchBOT, the friendly, traveling robot that delighted fans in Canada and beyond, saw the project as a way to ask the question, "Can robots trust humans?" Now they're teaming up again with a physician to ask a different question: "Can robots help humans to change?" It's a project that's part of a new collaboration between IBM and Hamilton Health Sciences — a two-year, first-of-its-kind clinical trial with medical patients about whether "social robotics" and AI can make a…
  • Rhino breeder in South Africa plans online auction of horn

    Tech & Science CTV News
    JOHANNESBURG -- A rhino breeder in South Africa is planning an online auction of rhino horn, capitalizing on a court ruling that opened the way to domestic trade despite an international ban that was imposed to curb widespread poaching. Source
  • Subway dig uncovers 'Pompeii-like scene' in Rome

    Tech & Science CTV News
    This photo made available Monday, June 26, 2017, by the Italian Culture Ministry, shows parts of the 1,800-year-old skeleton of a dog, which apparently perished in a blaze in Rome. (Italian Culture Ministry Via AP) Source
  • 10 million tonnes of fish catches dumped back into oceans: study

    Tech & Science CBC News
    Fishing fleets dump about 10 per cent of the fish they catch back into the ocean in an "enormous waste" of low-value fish despite some progress in limiting discards in recent years, scientists said on Monday. Source
  • 5 rare Barbary lion cubs go on show at zoo in Germany

    Tech & Science CTV News
    BERLIN - Five rare Barbary lion cubs have been shown to the public for the first time at a zoo in southwestern Germany, delighting visitors as they clumsily plodded through their enclosure. The babies -- females Jumina and Lin and males Baz, Chaka and Sab -- were born two months ago, but could only be shown off at the Neuwied zoo Monday because their immune systems weren't strong enough earlier. Source
  • Ohio working to reduce harmful Lake Erie algae

    Tech & Science CTV News
    TOLEDO, Ohio -- Ohio's environmental regulators who have pledged to drastically cut what's feeding the harmful algae in Lake Erie will consolidate oversight of the work to make sure money is being well spent and research isn't overlapping. Source
  • Fisheries officials trying to determine what caused death of six right whales

    Tech & Science CTV News
    MONCTON, N.B. -- Marine mammal experts plan to meet today to discuss next steps as they try to figure out what caused the death of six North Atlantic right whales found floating in the Gulf of St. Source
  • New Zealand law student launches climate change court case

    Tech & Science CTV News
    WELLINGTON, New Zealand -- A New Zealand law student is taking the government to court over its climate change policies in hopes of forcing it to set more ambitious targets. Sarah Thomson is challenging the government over commitments that include a pledge under the Paris climate accord to reduce greenhouse gas emissions by 30 percent below 2005 levels by 2030. Source
  • SpaceX launches 10 satellites from California air base

    Tech & Science CTV News
    LOS ANGELES -- A SpaceX rocket carried 10 communications satellites into orbit from California on Sunday, two days after the company successfully launched a satellite from Florida. The Falcon 9 rocket blasted off through low-lying fog at 1:25 p.m. Source
  • Why this conservation group thinks soiled undies are a good thing

    Tech & Science CTV News
    One of the best things about summer is the fresh selection of fruits and vegetables available throughout the warm months. But a strange crop with far less nutritional value has a Canadian conservation group excited for the season. Source