It was May 21, 2010, a day that will live forever in Internet history.
In the state of Florida USA, a computer programmer put his stylus in his pocket protector and thought, “I’m hungry.” Now, hungry-in-Florida had a friend in London, England, and they’d been talking about this new Internet Bitcoin service and how it might work. Our US-based-fellow wanted pizza bad, but he was on the outs with his former girlfriend, who took the orders at the local pizza shop, and he really liked the pizza there, but he was afraid what might happen to the toppings if he called her with the order. So, thinking-and-hungry-in-Florida zapped $25 to Mr. Bitcoin who assigned cautious-in-Florida an anonymous Bitcoin address worth 10,000 bitcoins (4 bitcoins to the US cent — quite the deal back then). Next, starved-in-Florida transferred the 10,000 bitcoins to the virtual-wallet Bitcoin address of his facilitating friend in England, who in turn emailed the pizza shop’s anonymous Bitcoin address (all Bitcoin addresses are apparently anonymous) and traded the 10,000 bitcoins for two giant pizzas to be delivered to a person wearing a stocking cap, dark glasses and new jeans at the bus stop outside anonymous-in-Florida’s apartment.
The frist bitcoin transaction had been completed.
Bitcoins don’t really exist. They’re not real coins. They are a way of anonymously trading across the Internet, and they are purported to be a way of doing this without bank or government involvement. Of course, you first have to find a Mr. Bitcoin who will act as your confidential intermediary to facilitate the trade and encrypt the barter from prying eyes.
A number of these traders are out there. You might think of them as old-fashioned Vikings plying the new-fashioned waters of the Internet in their dragon boats loaded with golden doubloons to trade in far-away lands for what you want and then sailing back with the loot to you waving on the dock. Except these new-fangled barterers don’t use gold or doubloons, they use bitcoins in internet bursts to close the deals so you acquire the goods. BTC China in China, Mt. Gox in Japan and Bitstamp in Europe operate very large Bitcoin trading exchanges, and the value of the bitcoins they trade has increased dramatically. A couple months ago, a single bitcoin was reportedly worth about US $1,000, and the value of all bitcoins floating in the ether of the world-wide web was estimated to be over US $10 billion.
Now, another bitcoin story.
You have this Arkansas piglet, a very cute little pink pet pig, and you have your eye on a pair of Korean jeans, a very stylish pair of jeans. You know the pig would make a great house-friend, but it’s too far to fly the pig across the Pacific for the trade. Let’s say the pig is worth US $1,000 on the open market and the jeans are already on sale on the Internet for US $1,000 or equivalent in bitcoin – a very nice porcine and pants. You really want those jeans. So, you ask Mr. Bitcoin what to do? His answer is immediate: Sell your cute piggie on the Internet for 1 bitcoin (worth $1,000) and buy the jeans with your 1 bitcoin — the fees are much less than credit card sales, and no external party can associate you with the transaction. You do the deal with the bitcoin, it works wonderfully, and do you look good. Oink.
That’s how it’s supposed to work, but some cautions are directed.
Bitcoin value may fluctuate: Your 1 bitcoin may no longer be worth $1,000 to the pants merchant, who may now want 2 bitcoins for the trade – you’d be without a pig with no leggings to show. Not everyone takes bitcoins: If the merchant stops accepting bitcoins, you’ve lost the pig, and the bitcoin is burning a hole in your pocket with no place for you to spend it. Governments may control bitcoin exchanges: You have a bitcoin, but the local sheriff may say you can’t use it in their town.
Despite the concerns, Bitcoin has emerged as a new way to trade without money or easy external tracking, and it is enjoying growing popularity and acceptance. Some physical shops even let you walk in and pay from the bitcoin wallet on your handheld device.
What on earth is the world coming to?
Great fun for sure, I think.
But still, caution may be advised.
You wouldn’t want to buy a pig in a poke
And you may want to exercise some care when biting into that pizza.
Just in case — you know you ordered your favorite toppings and she’ll see the order.
And, the stocking cap and glasses are great, but remember your former girlfriend picked out the new Korean jeans you’re wearing and sometimes she does the deliveries.
It never hurts to test the waters, or the pizzas.
Grandpa Jim