In just eight years, Bitcoin and the idea of “virtual currency” have gained acceptance and use both online and in the physical world. Spread by word of mouth and other “viral” means, decentralized virtual currencies have gone from a mere thought experiment to a tangible economic reality.
Today, one can use Bitcoin or other currencies not backed by the U.S. government to buy physical goods and services and online services. Established companies, such as Dell, DISH Network, Microsoft, and Papa John’s Pizza, all accept Bitcoin payments.
As with conventional currencies, participants in Bitcoin trade work for credits. A special program uses computational cycles on a participant’s computer processor to verify and record a vast public ledger of all Bitcoin transactions, called the “blockchain.” In return for their “e-labor,” participants receive a small reward for each successful completion of the blockchain verification process.
The introduction of Bitcoin, by a still-unknown individual using the name “Satoshi Nakamoto,” may have solved the theoretical challenges faced by virtual currency, but too few people know that alternative currencies are a real alternative or trust them enough to use them.
U.S. government policies over the years, starting with the National Banking Act of 1863, a law