Explaining the Bit in BitcoinOn your way to work, you stop at the gas station to fill your car with gas. When it comes time to pay, instead of pulling out your credit or debit card, you enter your Bitcoin information. What is Bitcoin? Is it just another online payment method like PayPal, or is Bitcoin something more? Googling “Bitcoin” returns a vague answer that defines Bitcoin as a peer-to-peer cryptocurrency. This “answer” only raises more questions. The problem with defining cryptocurrency is that the term itself is related to Bitcoin. Cryptocurrency is used as a general definition for Bitcoin and other similar online currencies. Knowing what the term cryptocurrency means still doesn't answer the central question: what is Bitcoin? To truly understand Bitcoin, more specific questions are needed. What is Bitcoin, how does it work and should you use it? To fully understand Bitcoin, you need to have a basic understanding of how traditional currency works. Currencies like the dollar bill and the euro are guaranteed by a central bank. This central bank is controlled by one or more countries. The dollar, for example, is supported by the US government through the Federal Reserve. The only reason people trust the US dollar is because it is backed by the US government. Consumers therefore do not trust the physical currency itself, but the government behind it. The only value of a currency is the trust we place in the country that controls it. The controlling government has complete control over the currency it backs. For example, each dollar bill is marked with a specific identification number. This allows the government to track the banknote in the global market... middle of paper ...... foot as an accepted currency before people start using it. Works Page Cited Babbage, Charles. “Bits and Bob.” Web blog post. The economist. The Economist, June 13, 2011. Internet. May 7, 2014. Bornholdt, Stefan and Kim Sneppen. “Do Bitcoins Make the World Go Around? On the Dynamics of Competing Cryptocurrencies.” (2014): arXiv. Internet. May 7, 2014. Hanley, Brian P. “The False Premises and Promises of Bitcoin.” (2013): arXiv. Internet. May 7, 2014. Jacobs, Edwin. “Bitcoin: A little too far?.” Journal of Internet Banking and Commerce 16.2 (2011): 1-4. Commercial source completed. Internet. May 7, 2014.Nakamoto. Satoshi. “Bitcoin: a peer-to-peer electronic payment system.” Bitcoin.org. The BitcoinFoundation, nd Web. May 11, 2014.Sorge, Artus Krohn-Grimberghe Christoph. “Practical aspects of the Bitcoin system”. (2013):arXiv. Internet. May 7 2014.