Fun way to transact using bitcoins
DEPENDING on who you ask, bitcoins are a goofy geek invention with as much long-term value as Monopoly money - or a technological development that could transform currency the way e-mail and texting have transformed correspondence.
A type of digital cash, bitcoins were invented in 2009 and can be sent directly to anyone, anywhere in the world. You don't have to go through a financial institution, which means no fees and no one tracking your spending habits.
With a current market capitalisation of US$1 billion (S$1.3 billion), bitcoins are beginning to be more widely accepted. You can use them to pay for a pizza or make speculative bets that could end up financing your child's college education.
Some critics say that the bitcoin infrastructure is insecure, as hackable as any other computer-based system.
"The way the basic bitcoin system works is both incredibly solid and incredibly clever from a technical standpoint," said Mr Nicholas Weaver, senior staff researcher at the International Computer Science Institute in Berkeley, which studies and advances a range of emerging technologies.
"However, the system's security is fragile."
Nonetheless, paying with bitcoins can be a weirdly fun way to make transactions. Here is a primer on how to do it.
An easy way to get bitcoins is to just find someone willing to sell them to you. For example, Mr Julian Tosh, an information-technology systems administrator in Las Vegas, lets friends and family buy items on his Amazon wish list and pays them back in bitcoins.
"This works well as long as I need stuff," said Mr Tosh, who presided over the Bitcoin Lunch Mob in Las Vegas, which gathers to discuss and trade bitcoins.
But maybe you don't personally know any bitcoin enthusiasts like Mr Tosh or the Winklevoss twins, Cameron and Tyler, who own around US$11 million worth of the item and have filed papers with the Securities and Exchange Commission to form a bitcoin investment trust.
So, you might try localbitcoins.com, which lists people in your area who are willing to exchange bitcoins for cash. Check out sellers' profiles and reviews to make sure they are reputable.
Bitcoins can be easily transferred and stored using a digital-wallet application on your Android mobile device. Popular wallet apps include BitcoinSpinner and Bitcoin Wallet. There are no iOS bitcoin-wallet apps.
Once you have your bitcoins, the fun part is spending them. Bitcoin.travel, BitcoinsInVegas.com, Spendbitcoins.com and Reddit have directories of businesses that accept bitcoins as payment.
To make a purchase, all you have to do is type the receiver's key code or scan his QR code into your bitcoin wallet and you're done. You can't cancel payment later, so be sure it's what you want before you click "send".
Still, even the most ardent bitcoin boosters urge caution. Bitcoins have appreciated more than 700 per cent since this time last year.
"It's supervolatile, so I'd tell people to go slow," said Mr Peter Vessenes, chairman and executive director of the Bitcoin Foundation.
"Never hold more bitcoins than you're prepared to lose."