Share

A look at Bitcoin as creator reveals himself

London - Australian entrepreneur Craig Wright on Monday revealed himself as the creator of the virtual Bitcoin currency to media outlets, the BBC, The Economist and GQ magazine.

The move follows years of speculation about who was behind the digital cash system.

READ: Mystery solved? Australian says he's Bitcoin founder

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 such as 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 was launched in 2009 as a bit of software written under the Japanese-sounding name Satoshi Nakamoto which, it now appears, hid Craig Wright's true identity. 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 - by having their computers run 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 was worth a few US cents. Its price topped out at well over $1 000 in 2013. Now, a single Bitcoin is worth about $460 (R6 573).

There are presently more than 15 million units in circulation. Some economists point to the fact that - because it is limited - its price will increase over the long run, making it less useful as a currency and more a vehicle to store value, like gold. But others point to Bitcoin's volatility, security issues and other weaknesses.

Q. What's the future?

A. Some commentators say that like many technological developments, the first iteration of a product will encounter difficulties, possibly terminal ones. But the trail it blazes might smooth the way for the next crypto currency.

Problems include an apparent vulnerability to theft when Bitcoins are stored in digital wallets.

The virtual currency movement also faces legitimacy issues because of the way it allows for anonymous transactions - the very thing that libertarian adopters like about it.

Detractors say Bitcoin's use on the underground Silk Road website, where users could buy drugs and guns with it, is proof that it is a bad thing.

Some governments, including Russia and China, have heavily restricted how Bitcoins can be used.

If Bitcoin does become more widely accepted, experts say, it could lead to more government regulations, which would negate the very attraction of the Bitcoin concept.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
19.00
-0.3%
Rand - Pound
24.15
-0.1%
Rand - Euro
20.64
-0.3%
Rand - Aus dollar
12.38
+0.4%
Rand - Yen
0.13
+0.4%
Platinum
905.16
-2.0%
Palladium
1,006.63
+0.1%
Gold
2,154.73
-0.3%
Silver
24.92
-0.5%
Brent Crude
86.89
+1.8%
Top 40
65,996
-0.4%
All Share
72,197
-0.3%
Resource 10
53,320
0.0%
Industrial 25
99,852
-0.6%
Financial 15
16,590
-0.2%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders