Money in bits

This company has been around since 2009. It has a market cap of ₹67,000 crore. It does business all over the globe. The company has created an ecosystem around it for several other Venture Capital funded start-ups. Big banks in the US are interested in this company's technology. More venture capital money flowed into this space in 2015 than into internet start-ups in 1996. This company's share price is up almost 50% so far in 2016, and yet hardly anyone knows about it, much less talks about it. Seems strange?

That's because there is no such company. I'm talking about bitcoin.

What's a bitcoin?
Bitcoin was created by Satoshi Nakamoto as a digital currency which can be transferred across borders in a manner completely bypassing the current banking system. In a world where currency is issued by governments and their central banks, this was a groundbreaking innovation. Bitcoins come into existence when they are 'mined' digitally, the mining process consisting of solving a complex math problem and having the solution acknowledged by the community. Just as with mining in the real world, bitcoin mining requires the use of scarce resources, in this case computing power. Miners are rewarded with freshly created bitcoin when they are successful in solving the math problem.

The system is designed in such a way that there will never be more than 21 million bitcoins in existence, of which 14 million bitcoins have been mined so far.

What's the use of bitcoins?
A currency is only as good as the things that it can buy. The infamous Zimbabwean 100 trillion dollar note is worth nothing because it can buy nothing. Bitcoin is worth something because people accept it in exchange for goods and services. Dell for instance accepts payment in bitcoin. A lot of digital goods retailers accept bitcoin. There are companies offering bitcoin based credit cards which can be swiped just like the regular credit cards in stores and restaurants. There is a market for it and the market is growing. With big banks and venture capitalists pouring money into the bitcoin ecosystem, and the governments of the world acknowledging its existence, there is clearly some merit to bitcoin which bears watching.

How can I buy bitcoins?
Bitcoins can be bought online quite easily via unocoin.com, a Bangalore-based start-up. Unocoin also stores your bitcoin for you and allows you to exchange your bitcoin for rupees. For the Do-It-Yourselfers, there is localbitcoins.com, an online exchange where buyers and sellers can interact and trade.