We may know Bitcoin more for shady pyramid schemes, money laundering and anonymous drug sales than for any legitimate enterprise. But the software’s creators are working to rectify that, introducing a new foundation designed to bring legitimacy to the fledgling currency.
Bitcoin is a fascinating idea, one that has had a remarkable amount of staying power despite facing some real challenges: it is a fully distributed digital currency with no central bank, no physical representation, and with anonymity built in. Money is stored on computers as cryptographically protected files, and you generate money over time just by being part of the network. These days, you don’t make too much: there are only so many bitcoins possible, and as the currency approaches the limits new coins get smaller and smaller. The power of Bitcoin is that transferring money is frictionless–you can send money to your friend as easily as you can to a stranger halfway across the world, and both transactions will be free and anonymous.
There have been some Bitcoin success stories. Mt. Gox is a well-respected Bitcoin exchange, handling currency exchanges from USD, Euro, etc to Bitcoin. Several stores are now accepting bitcoins. And many things can now be paid for by bitcoin instead of Paypal or, god forbid, credit card.
But the currency has a bit of an image problem. It is the currency of choice for Silk Road, the underground, fully-encrypted drug exchange operating on the dark-net. Several large companies have turned out to be money-gathering schemes, and others have had currency stolen by hackers. Its the first all-digital currency, and it is experiencing the problems you might expect.
The Bitcoin Foundation aims to rectify many of these problems. First, members will lose their anonymity, bringing some level of respectability to the service. Next, the foundation will pay developers to work on the currency, improving it, making it better and more robust. Finally, the foundation will present a friendly, business-focused face to the rest of the world rather than the rogueish, hacker-elite image it has right now.