Bitcoin: Cash is a blast from the past

Bitcoin is not coin, nor bit of metal. You can't hold it, stuff it in a purse or hear it jingle in your pocket. It only exists in that murky virtual world of zeros and ones.

Nor does it have an exact and unchanging value; what it's worth depends on who will accept it and what they'll give in trade. Not very reassuring, but such is the future. This is more commodity than old-style money. Yes, hard currency is becoming old style.

Friday's front page story reported Bitcoin's official arrival in North Idaho, with at least one Rathdrum business setting up to soon accept this digital currency. Bitcoin is just emerging into the mainstream across the globe, but expect to see more of it.

Pay with your smartphone or tablet (better reactivate that annoying password); never mind the credit card... Well, someday.

Think of it as credit in a barter system - points associated with your ID and labeled with a unique series of numbers which can be traded, added, or debited in transactions with others willing to deal in it. You may see a token or piece of paper sporting a Bitcoin number, but the tangible material has no value because it is not the "coin," the number on it is. Most Bitcoins are not incorporated in physical form; they're "VC" - virtual currency in a peer-to-peer casual network.

Bitcoin means some assumed risk for businesses and individuals accepting it as payment for goods and services, because its value fluctuates (for now) faster than that of paper dollars and bank card transactions. Banks are uninvolved in its storage and value; the FDIC does not insure it (for now?). The value of a Bitcoin equals whatever someone is willing to give you for it, today. That varies by person, time, location, and transaction. Since its first known use in January 2009, the value of just one Bitcoin has varied from less than one-thousandth of one dollar to more than a thousand dollars.

Let's backtrack a little, and venture into VC's sordid history.

Anything new in the virtual world begins with a sense of freedom and innocence, like infancy (Bitcoin just turned 5, still a baby). The Internet has an enduring quality of ardent liberty - free speech and a sense of unfettered entitlement; hard core Web geeks believe in this as strongly as the most basic of human rights. So began Bitcoin five years ago as a 2008 mathematical project of someone calling him- or herself Satoshi Nakamoto, who wrote the algorithm (computer code) which mines new numbers, stores them in a "blockchain," then offers them for trade in the virtual marketplace. Part of the mystery is we still aren't sure of Satoshi's real identity.

Now to the sordid: Anything unregulated (expect that to change) is prime fodder for felony. Beyond simple hacking and theft, unregulated, untracked currency is a great way to buy or sell something illegal, so multimillions in Bitcoins have trafficked guns, drugs, and people on the dark side of the Internet. Taken down last fall by an ironically old-fashioned criminal investigation resulting in the arrest of creator Ross Ulbricht, a massive site on the "Dark Web" called Silk Road was the connection point for Bitcoin-funded murders-for-hire and many other things unspeakable.

So back to the well-lit Web, how do you get Bitcoin, if you want it? Exchanges, private and commercial. You can get Bitcoin simply by selling something and taking Bitcoin as payment, or you can go to a number of exchange Web sites and buy it. These are early days, so I can't recommend one over another as secure; be skeptical, research, and select carefully. You will need to download a (free) "Bitcoin wallet" app on your phone.

Good luck. I'm sticking with the jingling variety.

Sholeh Patrick is a stubborn neo-Luddite with the Hagadone News Network. Contact her at sholeh@cdapress.com.