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What’s a bitcoin? A look at the digital currency

Associated Press

Digital currency

Q: What is a bitcoin?

A: Bitcoin is an online currency that allows people to make one-to-one transactions, buy goods and services and exchange money across borders without involving banks, credit card issuers or other third parties.

Bitcoins are basically lines of computer code that are digitally signed each time they travel from one owner to the next.

Q: What’s a bitcoin worth?

A: Bitcoins are only worth as much as you and your counterpart want them to be. In its early days, boosters swapped bitcoins back and forth for minor favors or just as a game. One website even gave them away for free.

As the market matured, the value of each bitcoin grew. At its height three months ago, a single bitcoin was valued at $1,200. On Tuesday, it was around $500.

Q: Is the currency widely used?

A: That’s debatable. Businesses ranging from blogging platform Wordpress to retailer Overstock have jumped on the bitcoin bandwagon amid a flurry of media coverage, but it’s not clear whether the currency has really taken off.

On the one hand, leading bitcoin payment processor BitPay works with more than 20,000 businesses — roughly five times more than it did last year. On the other, the total number of bitcoin transactions has stayed roughly constant at between 60,000 and 70,000 per day over the same period.



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