Although Bitcoin, hasn’t exactly infiltrated the mainstream ethos, it’s getting there. You may have even heard the term floating around outside of message boards, or dark alleyways. Still, maybe you don’t understand it or, aren’t even sure if you want to. If that’s the case, I certainly don’t blame you, what with all things economic seeming so esoteric, risky and intimidating.

But, unlike E.T.F.s, C.D.s, and countless other acronymic, annoying financial concepts, this peer-to-peer, electronic currency is worth investing understanding in, because it’s the complete antithesis of that politically-influenced banker bastardry we call dollars.

Bitcoin exists entirely within the online sphere and operates without cronyism, governments and banks (though there are exchanges). No one holds authority over it, or issues it (it’s created through a process called “mining”). Because of these novel characteristics, it’s far more efficient and transparent than conventional currency. Regulators and special interest groups are completely removed from the equation. It’s basically the ultimate Libertarian currency.

When put to use, the concept is as radical as it is simple: party A sends money to party B without party C. Yet, because Bitcoin is an economic entity drenched in technology, it still manages furrow more than brows with confusion. To understand Bitcoin, it helps to understand fiat currency, or currency backed by governments.

Rather than exchanging goods and services directly for goods and services, for some reason, we use currency backed by an arbitrary value. A one hundred dollar bill, for example, is just a piece of hard-to-create cotton given a designated amount of worth. Then there are credit cards, which work as a metaphorical exchange of currency, coupled with a promise of repayment. People these flawed, antiquated technologies for granted because governments have done a great job of making them seem like a given. They’re not.

Bitcoin, on the other hand, operates off of transaction ledger is backed by a complex mathematical algorithm which everyone is privy to because it’s open source. Coding whizzes call it fool proof. Banks and naysayers call it scary, a scam or unsustainable.

cover_0710.inddWith a typical cashless transaction (your mom’s credit card, PayPal, etc.), the business must absorb the cost of transferring money from your bank to their bank. This convoluted process, called an interchange, costs a percentage—usually 3% of the transaction value—and takes time, maybe days. Bitcoin cuts banks and interchanging out of the equation, reducing fees. This is obviously beneficial for businesses and consumers.

The money saving potential goes far beyond fees and taxes. Bitcoin users circumvent remittance fees and exchange rates between countries because governments have zero (or at least very little) influence over the currency. The cost of overseas transactions, (which can be quite outrageous) theoretically, become non-existent.

As with any financial endeavor, Bitcoin can be risky. It ceases to work if people don’t use it. The value has fluctuated greatly in the past, prompting some economists (suit and tie types mostly) to call it volatile, dangerous or sure to fail. But like the dot com boom of the ‘90s, many people are willing to jump without a chute. Young, savvy communities like Reddit have proven to be a natural fit for this financial innovation, but a growing number of brick-and-mortar and online businesses are taking advantage of this phenomenon as well.

Despite the ever-present naysaying, the sheen of Bitcoin hasn’t worn off. In fact it’s been remarkably stable (at least for Bitcoin). To many, it still has a patina of nerdy obscurity to it, it’s certainly no ice bucket challenge. At this point, it’s still revolutionary, but it’s been tested and put to practice successfully time and time again.

Now, we wait to see what happens. And, oh yeah, go buy some.

Kevin Sterne is a freelance writer, journalist, and editor. He’s currently working on a M.A. in Writing and Publishing at DePaul University. You can read more of his work at or flap your feathers @kevinsterne