If you stop a random stranger on the street and ask that person what a Bitcoin
is, you might get a confused stare. Try asking that same question a year from now and maybe every person you ask will say, "It's a digital currency that's decentralized and uses cryptography to use control transactions to prevent double-spending." Or they'll simply tell you it's a digital currency. Either way, Bitcoins are growing too large to ignore.
Bitcoins have nearly doubled in value in the just the last month alone, going from $125 at the start of October to around $310, depending on where you look. The virtual currency is currently trading at an all-time high, and that has some scratching their heads and others warning of a crash.
The thing is, Bitcoin's value recently recovered from a crash. Back in April, the value soared to $266 before tumbling all the way down to $75. Lots of media coverage attracted inexperienced traders to try their hand at Bitcoins, only to see the currency's value drop, of which DDoS attacks played a role.
Image Source: Flickr (antanacoins)
Yet here we are again, watching as the virtual currency rebounds in a big way. Furthermore, it's inching closer to becoming a real currency, though it has some demons to exorcise first. For example, Bitcoin's value fell at the beginning of October when it was discovered that an illegal online drug marketplace called Silk Road
was dealing only with Bitcoins. It was shut down by the FBI and Bitcoin's value has obviously recovered since then, but there's a new version of Silk Road on the web with a homepage that openly mocks the FBI.
The other challenge is the anonymous nature of spending Bitcoins. While that's a big draw for users, it's also a major downside when theft occurs.