For the serious web browser, bitcoins have become a major part of the online experience. Covering a variety of uses, this Internet based currency seeks to create an anonymous shroud between the buyer and a seller. Via a series of actions that begin once you purchase bitcoins, the origins of your transaction becomes obscured and potentially impossible to trace. Due to the volatile nature of this currency, a little research is suggested before transferring other funds into this format. Otherwise, you could be making a serious financial mistake.
An Anonymous Alternative
Beginning in 2008, bitcoins burst onto the Internet after being created by a developer who operated under the name of Satoshi Nakamoto. According to a paper this individual published in the same year, the currency was created as a means of creating anonymous electronic transfers, as well as an alternative to traditional fiat currencies. Today, the currency is used for this very purpose, although breakdowns in the process, generally based on user error, can compromise the anonymity of the parties involved. Also, the intrinsic value of the bitcoins fluctuates greatly from day to day, creating a somewhat volatile market for this currency.
How Bitcoins Work
The bitcoin creation and usage process is rather complex. First, coins are issued on a limited release schedule. Some of these offerings are given to the public via mining applications. The mining event requires the processing power of a user’s computer to figure out complex problems. Should an individual’s computer be successful, they will be awarded bitcoins. Coins already on the market can be purchased and used in a bitcoin payment gateway.
This gateway serves as both as an intermediary and an escrow point. Customers transfer their bitcoins to this third party, who will then release payment once the goods or services have been rendered or delivered from the business. This whole process generally will remain anonymous. Some individuals who harbor concerns over potential identification leaks will also use services, like bitcoin tumblers, to further obscure their personal information.
A Seedy Undertone
Of course, like most currencies, bitcoins do have some darker aspects associated with their use. The anonymous nature of the currency naturally lends itself to nefarious or illicit uses. Criminals who make transactions online can often use this currency to keep their whereabouts unknown. Additionally, some individuals use various means of social engineering and malicious software to compromise the security of others. Once they have gained access to another person’s accounts, little can be done to restore the currency that has been lost.
Perhaps the greatest proponent of illicit bitcoin use is the rise of illegal sites on the “deep web.” The deep web is every site that is not indexed by the major search engines. These sites often require the use of a routing program, such as TOR, to grant a user access. Combining this anonymity with that which is inherent in bitcoins has led to a black market that offers illegal firearms, drugs, and other prohibited content. While law officials around the globe try to stop these sites and their customers, the nature of bitcoins and the deep web has made their task exceedingly difficult.