There is a fair bit of noise out there about Bitcoin. Many have heard of it, most are trying to figure out what it really is, but some are using them and even “mining” them. So why is Bitcoin important, if at all and why should I care. Will Bitcoin have any real effect on the video game vertical? Time will tell, but I have some thoughts about this.
First a Little History
Bitcoin was created as a digital peer-to-peer currency in 2009 and is not backed by any government entity, bank, or other centralized service. A person (or group of people some contend) going by the pseudonym Satoshi Nakamoto, wrote the software for issuing or as it’s called, mining the Bitcoins. Here is the original paper describing Bitcoin. The mining process occurs when a participant solves complex math problems to mine the Bitcoins. Since mining and verification are decentralized, the growth and security of the system does not rely on a single source but rather a vast global network using cryptographic technology. Miners are rewarded for their efforts by being required to verify and record the transaction of a Bitcoin in exchange for Bitcoins and a small transaction fee, not unlike credit card processing or PayPal. What is unique about this process is that Bitcoins are created at a rate of 1 block or 25 Bitcoins every 10 minutes. There is a finite amount of Bitcoins that will be available to the world; only 21 million will be issued ending in the year 2140. Bitcoins are kept in digital wallets and are spent by going through a rather standard online transaction similar to online banking or PayPal purchases. Here is a little more info on Bitcoin. And if you are interested, a great Wiki page on digital wallets.