A new type of online virtual currency, Bitcoins, is becoming more and more popular in the public eye. Bitcoins work like any other type of currency, but contain many remarkable differences from the cash we’re used to.
“I learned about bitcoins last year when they were worth $14 each,” sophomore Gabriel Margolis said. “I wish I had bought some then.”
Bitcoins act as online virtual currency and are not controlled by any central authority like a government or a bank. In fact, no traditional organization is producing these bitcoins. Rather, they are “mined” by special software that solves mathematical problems that in turn issues bitcoins to the miner. As more Bitcoins are mined, however, the process becomes more difficult and more time consuming.
Contrary to the popular belief, Bitcoins didn’t appear out of nowhere. They have been available since 2009, when one Bitcoin was worth 20 cents. Now, however, one Bitcoin is worth approximately $730, 36400 times their original value.
“Since I had one computer lying around, I decided to put it in use and generate Bitcoins for me,” junior Eric Sun said. “Although it was difficult to mine enough Bitcoins to offset the cost of energy my computer was using, I managed to earn 0.5 Bitcoins.”
Because of the immense fluctuations of Bitcoins, they are not presently seen as safe investments. The value of a Bitcoin can increase by tenfold overnight, but it can also plummet a hundred times below that in a minute. However, despite the risks, many Jefferson students are becoming interested in this new form of currency.
Following the massive increase in value, some Jefferson students invested in Bitcoins. Junior Michael Smith bought 0.1 Bitcoins when one Bitcoin was worth $360.
“After seeing the jump in value, I bought 0.1 Bitcoins hoping their value would rise in the future,” Smith said.