Why are people rushing to buy a ‘Bitcoin’?

A new kind of online currency that favors anonymity and is (so far) very secure has been in the news recently as its value has shot up dramatically. But most people still don’t know what a Bitcoin is and where it comes from.

Bitcoin’s origins are murky, but it began as a project in 2009 under the pseudonym “Satoshi Nakamoto.” Sophisticated programming creates new Bitcoins at a set rate of time. Those who trade Bitcoins install so-called wallet software on their computers that allows them to buy or sell Bitcoins online. While some exchanges for Bitcoins have been hacked, the currency itself has so far held secure; no one has yet been able to copy a Bitcoin. The wallet software keeps identities of buyers and sellers anonymous, which has caused Bitcoins to be linked to illicit markets.

Only 21 million Bitcoins are planned to be created and perhaps because of that limit and the slowing rate of new Bitcoin creation, their value continues to climb. As of this writing, a Bitcoin is worth more than $200, but the pricing fluctuates wildly.

The rush to buy Bitcoins as the value has soared has fueled concerns that there may be a bubble in the Bitcoin market.

If you have a question for Omar Gallaga, email him at ogallaga@statesman.com