By Jim Karpen on Mon, 04/22/2013
Bitcoin has been in the news in recent weeks. The virtual currency was trading for $15 earlier this year and rocketed up to $260 earlier this month. It's now trading at about $120, up from around $50 a few days ago. Now that's volatility.
It's a highly unusual currency in that there's no central issuing authority. An anonymous individual created an open source algorithm and proposed the idea for the virtual currency in a technical paper in 2008. The idea, and the currency, took off. Today, there are many Bitcoin apps available for the iPhone and iPad. You can use them to monitor the Bitcoin exchanges and manage your online Bitcoin account. Unlike Android phones, however, you won't be able to use your iPhone or iPad as a wallet for Bitcoins because Apple constrains it. However, those with jailbroken iPhones can serve as wallets.
Blockchain lets you manage your Bitcoin account and track your transactions. It had a wallet feature last year, but Apple pulled it from the App Store. The developer removed some of the functionality and later put it back in the App Store. What's Apple afraid of? You can read an article in Forbes that speculates why. In short, Apple has Passbook and doesn't want to undermine its value as a mobile payment system. A wallet is convenient, allowing you to present your Bitcoins at stores when you're out and about. A surprising number of retail establishments and websites accept Bitcoins. You can find lists online, such as this Wiki list.
Quite a number of apps let you track the current value of Bitcoins on the many exchanges. I'm using Coinbits (free) on my iPad. It tracks 30 Bitcoin exchanges that trade in U.S. dollars, as well as the exchanges that trade in all the available currencies. You can sort the list by time of last trade, amount of last trade, and symbol name, as well as by currency. Plus, it gives you detailed information on each of the exchanges. Coinbits is a universal app and therefore also available on the iPhone.
So where do Bitcoins come from? Anyone can make them. It's called Bitcoin mining. You simply download some software to your computer and get it started mining. But as more Bitcoins get into circulation, the harder it is to make them. You typically need a fast computer, a pool of people contributing to your mining operation, and a bit of luck. I was surprised to see there's even an iOS app for Bitcoin mining. MobileMiner (free) is a universal app that lets you connect to your already-existing online pool account and uses your iOS device to crank away at the mining. It will only run in the foreground, and you'd be well advised to leave your device plugged in due to battery drain.
Libertarians like Bitcoins because the original algorithm limits the supply to a fixed amount. Enthusiasts like them because they live on the Internet and are free of government authority and regulation. Those engaged in illicit activities like them because, just like cash, their transactions can't be traced. Merchants like them because they bypass the fees of credit card companies. But some economists say that given the fixed supply, they'll never have the necessary fluidity to lubricate markets and are therefore ultimately impractical as a medium of exchange. Governments don't like them because the transactions aren't taxed. And, of course, the people who bought theirs at $15 and sold them at $260 like them quite a lot.