You’ve probably heard of Bitcoins before, but even with a close understanding of how encryption works and the idea of wallet chains that tracks, but yet doesn’t track, the Bitcoin, it’s all a ‘bit’ confusing. Because a Bitcoin is little more than, well, bits on the internet, there’s nothing physical to hold in your hand, jingle in your pocket, or get in a birthday card from Grandma. Well, maybe in an eCard, but that’s a pretty sophisticated Grandma if she’s sending you fifty bitcoins in an eCard for your birthday.
Old-school Grandma can now send you bitcoins in the real-world now, too: a handful of hackers have developed a bitcoin change machine, built into a suitcase. They brought it with to DefCon as a fun toy, but they ended up sparking quite a bit of interest.
The BitCoin Briefcase lets you insert regular coins, and then prints out the proper value in BitCoins as a QR Code. It sorta sounds like the reverse of the laundromat coin changer, but there’s something even more similar out there. You know those Coinstar coin counting machines, sitting over by the distilled water dispenser and Stanley Steemer display at the grocery store? Nearly every one can dispense giftcards, and some can even convert pocketchange to PayPal balances.
So, BitCoin might not seem all that innovative, especially when you compare the fact that, with ECH and online bill pay, most people never see a dollar sign on paper ever. But, let’s go back to a BitCoin’s existence.
A BitCoin is a small sequence of characters, which represent a certain value of BitCoins, which exists and is verified to have value by the BitCoin mining process. The mining process is essentially a mathematical process, and not one based in regulation or law. As such, once a BitCoin exists it is about as individual an object as a metal coin. Your dollars may get sent to PayPal, but they exist in PayPal only as long as PayPal chooses to acknowledge they’re there and allow you to have access to it. Stealing, devaluing, or counterfeiting a BitCoin is inherently difficult, if not impossible.
So, let’s go back to the BitCoin Briefcase: they’re doing something one better than CoinStar. A CoinStar funds a debit account with a business, and the status of your balance is at the whim of the business’ discretion, the agreement you made in funding your account, and any applicable laws. A BitCoin, however, is permanent, immutable. Its value might change, but so does gold; an ounce of gold is still an ounce of gold. So, a BitCoin is still a BitCoin whether stored on a computer or printed out as a QR code, but a “dollar” on an Amazon giftcard is a bit fuzzier. The BitCoin Briefcase might be a fun toy, but it’s a demonstration of something that a dollar isn’t. Even if you convert a BitCoin from one form to another, in theory, it does retain its inherent value as a BitCoin.