NEW YORK (FOX5NY) - To understand Bitcoins and Crypto-currency, we first have to explain Blockchain technology. Michael Haley is a blockchain expert at AlphaPoint, which is launching its own coin next year. Haley explains that up until now a transaction between two parties has been handled by a centralized authority, either a bank or government. Blockchains decentralize that process, which means the users take control of their own data and not the likes of free services which monitor users for commercial purposes.
Experts point out another downside of centralized networks is that governments and banks can sometimes be affected by hacks and corruption, and come with fees and inefficiencies. The blockchain depends on computer users around the world to verify the transaction between two parties. Once all the miners validate that transaction, a record of it is stored on their computers. For anyone to hack that transaction, they would have to hack a lot of computers in a lot of different countries holding a record of that transaction. While people's digital wallets have been hacked. To our knowledge, the Bitcoin blockchain has never been hacked.
It is on this blockchain technology that Bitcoin functions. Bitcoin Specialist and Blockchain Advisor Thomas Emmanuel says the goal is to give people the ability to control their own finances without interference from banks or governments. Emmanuel expects more progress in the months ahead, " right now people are looking at this as an investment but eventually people have to have a way to spend this currency, so I think adoption is one of the biggest hurdles to get over."
Perhaps an early sign of adoption, Bitcoins can be used to purchase gift cards for retailers like Amazon, Nike and Walmart. Websites including CheapAir.com and Overstock.com also accept the crypto-currency. The NBA franchise, Sacramento Kings, are accepting Bitcoin for everything from tickets, to jersey's to hot dogs.
Several other coins called 'alt coins' have also entered the crypto-currency space, we'll be getting to a few of them in the coming weeks.