Bitcoin is a virtual currency created by Satoshi Nakamoto in 2009. Last January a bitcoin was worth $13. That November prices peaked at $1,073 because of demand in China. By the end of August 2013 all the bitcoins in circulation were valued over $1.5 billion. Bitcoin use is popular because of the small transaction fees and the ability to purchase things anynomously. This is possible because bitcoin has no central authority. One bitcoin is currently worth $480.80 U.S.D.

The process in which bitcoins are created is called “mining.” There is a limited number of bitcoins, so mining is extremely competitive. Miners earn bitcoins by solving increasingly difficult math equations. Every time an equation is solved, the consecutive problems are harder. These math problems are solutions to transactions, so that double spending is not possible.

Once the math equation is solved, a block is created. Blocks contain recent transactions that have not yet been recorded and data is permanently recorded in them. Miners earn 25 bitcoins per block when they solve the equation.

In 2017 that reward will be divided by half and every four years it will be halved yet again. There is a lot speculation as to whether bitcoin will ever turn into a currency that is accepted everywhere since it’s not backed by anything of monetary value. There are stores that accept bitcoin, such as a Lamborghini dealership in Newport Beach, CA that sold a car in bitcoin worth $103,000 USD. But since the third-largest bitcoin exchange Mt. Gox closed in February and over $500 million were lost in bitcoins, many think the demise of bitcoin is coming soon.

“It needs nationalization, issued by government, by a country and to be regulated,” economics teacher Julie Youngblood said.

Since bitcoin has no central government it basically holds it’s value as long as people believe it’s worth anything. Physical currency is backed by the issuing government’s central bank which controls monetary policy.

“Money printed loses it’s value when it keeps on being printed,” Youngblood said.

Bitcoin is released a certain amount at a time, so its value is determined by its demand. Bitcoin will never be released just because more is needed.

“I think this is the way of the future. I would definitely use it if more stores accepted it. It’s so much easier than dealing with cash and credit cards,” senior Jake Deven said.