What are bitcoins?

Bitcoins are units of digital currency that can be transferred over the Internet. They get stored at a unique address which is like an online wallet or bank account that you can access with a password. Registering a new address is free and is as easy as signing up for an email account. Transactions between bitcoin addresses are recorded in a public record that's published on the Internet and keeps track of what amounts are stored at every address. Fifty new bitcoins are generated by a mathematical algorithm every ten minutes and are distributed to people who contribute computing power to the network. The software to participate in the network is free so anyone can run it. Over time, fewer and fewer bitcoins will be created until there are a total of 21 million of them by the year 2040. Each bitcoin is divisible up to 8 decimal places, making it possible to transact tiny amounts.

Why use them?

They're free, fast, secure, and global. Merchants don't get charged for accepting them and you don't get charged for transferring them, even internationally. There are no fees, prerequisites, or limits. You can register addresses anonymously and create as many accounts as you like. They can never be frozen because no central authority controls them. Whether you're sending a fraction of a cent or a million dollars, the network doesn't discriminate. You can use bitcoins to securely store and backup your savings and gain access to them from anywhere that has Internet. Bitcoins tend to appreciate in value over time because of their limited supply so they make a good investment. Unlike dollars and other national currencies, no government or issuing authority can print more of them.

What can I buy with them?

The number of companies accepting bitcoins is growing quickly but their immediate utility still isn't so much as a VISA/Mastercard/Debit competitor for retail commerce but as an alternative to Western Union, PayPal and the Big Banks as a means of transferring value. They enable you to send free, immediate payments to your friends and family from a phone or laptop so you can pay a co-worker back for coffee, transfer wages to family overseas, or donate to organizations like WikiLeaks who have been cut off by the major payment companies. We're working to get more stores accepting them in Vancouver though because we believe it'll be in their best interest to avoid the transaction fees charged by the credit card companies. Transaction fees end up getting built into the prices we pay for goods and services across the board so we're all subsidizing the big banks and credit card companies indirectly whether we use their services or not.

How is their price set?

Most merchants accepting bitcoin will use an exchange rate from one of the online markets like cavirtex.com to determine their equivalent dollar value. The exchange rate is simply the last price that some seller was able to charge some buyer for bitcoins in the free market and is governed by supply and demand. Bitcoins aren't backed by any underlying commodity or insured by any authority. They have an intrinsic value however as a superior form of currency due to their mathematically guaranteed scarcity, security, ease of use, distributed nature, lack of fees, divisibility, and global recognition. At vanbtc.ca we offer to pay cash to local merchants in exchange for bitcoins they receive as payment. We also offer to sell bitcoins for cash in person at various locations. We peg our rates to cavirtex.com and don't take any commission.

Where can I get some?

Sign up for a free account at blockchain.info/wallet and find someone who will send you some in exchange for goods, services, or cash. Local merchants and enthusiasts in Vancouver can be found at vanbtc.ca. There are also several bitcoin exchange markets operating online. The largest one in Canada is cavirtex.com and is run out of Calgary. They link up buyers and sellers and facilitate trades by allowing you to deposit and withdraw Canadian dollars directly from your bank account. A list of other online exchanges and their rates can be found at bitcoincharts.comvanbtc.ca

Where can I learn more?

Check out vanbtc.ca and get a wallet at blockchain.info. Come to our monthly meetup group (meetup.com/bitcoinvan) or send me an email at asoltys@gmail.com. I'm a local software developer and I've made a bitcoin payment app that's running in stores around town. I'd be happy to send you some bitcoins and teach you more about them.