TOKYO – Frenchman Mark Karpeles, 30, the CEO of collapsed Bitcoin exchange MtGox, has been arrested in Tokyo on theft allegations as Japanese investigators grill him over the disappearance of hundreds of millions of dollars worth of the virtual currency.
Here are some key facts about Bitcoin.
Q. What is it?
A. Bitcoin is a virtual currency that is created from computer code. Unlike a real-world currency like the US dollar or the euro, it has no central bank and is not backed by any government.
Instead, its community of users control and regulate it. Advocates say this makes it an efficient alternative to traditional currencies, because it is not subject to the whims of a state that may wish to devalue its money to inflate away debt, for example.
Just like other currencies, Bitcoins can be exchanged for goods and services — or for other currencies — provided the other party is willing to accept them.
Q. Where does it come from?
A. Bitcoin is based on a piece of software written by an unknown person or people in 2009 under the Japanese-sounding name Satoshi Nakamoto. Other digital currencies followed but Bitcoin was by far the most popular.
Transactions happen when heavily encrypted codes are passed across a computer network. The network as a whole monitors and verifies the transaction, in a process that is intended to ensure no single Bitcoin can be spent in more than one place simultaneously.
Users can “mine” Bitcoins — bring new ones into being — when their computers run these complicated and increasingly difficult processes.
However, the model is limited and only 21 million units will ever be created.
Q. What’s it worth?
A. Like any other currency, its value fluctuates. But unlike most real-world analogues, Bitcoin’s value has swung wildly in a short period.
When the unit first came into existence it
Originally appeared at: http://www.enca.com/technology/bitcoin-virtual-currency-factbox