Bitcoin: How it Works

Nolen Cooper, Reporter

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Bitcoin’s price has jumped up 25% in a matter of days, rising above $9,300 on October 28 trading from just under $7,500 on Oct. 25. Bitcoin is a computer file that is stored in a digital wallet and transferred peer to peer in exchange for goods, services, or cash, because of this Bitcoin is considered a cryptocurrency. 

“What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party,” said Bitcoin creator Satoshi Nakamoto.

Bitcoin or a fraction of a bitcoin can then be transferred to anyone elses virtual wallet. Every single transaction is recorded in a public list called the blockchain. With the blockchain, it is possible to trace all exchanges of bitcoin to ensure that all bitcoins spent are legitimate.

“I want to keep my purchases private so I would want it to show on a blockchain where anyone can see it,” senior Jory Spiroff. 

Bitcoin can be converted to cash using many methods the easiest being selling bitcoin to another party on a cryptocurrency exchange, such as Coinbase or Kraken. This would then allow for the cash traded for the coin to be put in a bank or converted to cash. 

“If you need to remain anonymous on a purchase maybe you shouldn’t be buying that item,” junior Marcus Temple said.

Bitcoins hold their value because people often use them as a way to pay for goods or services, and Bitcoin is not controlled by the government or banks, allowing them to remain anonymous on certain transactions. 

“I have never seen someone buy something with it, it’s more of an investment,” junior Michael Sitarki said. 

Bitcoins highest value was $19,783.06 for a single bitcoin in December 2017; today, the value of one bitcoin is $9,073.37.