Two Sides of the Same Coin: Bitcoin & Virtual Currency
The word “coin” as part of product names has been popping up recently in the technology and financial media. Bitcoin, a decentralized virtual currency, has led the discussion around cryptocurrency from news headlines to the Federal Reserve. And they’re not alone. Although the first out of the digital currency gate, Bitcoin has paved the way for a slew of alternative currency networks: Litecoin, Peercoin, Novacoin, FeatherCoin, PPCoin, Namecoin, and more…notice a pattern?
“Coin” is a recognized reference to money or currency. In virtual currency, compound words ending with “coin” have become the norm. “Coin” has become the category signifier modified by a specific currency name like “bit,” “lite,” or “peer.” Just as “dollar” is the monetary unit for many nations’ tangible currency (US dollar, Australian dollar, etc.), “coin” is treated in a similar fashion in virtual currency.
In the gaming realm, virtual coins are the symbol of reward and, often, scoring points. Similarly, Bitcoin uses a “reward” system to create new bitcoins. Bitcoins are created through a process called “bitcoin mining,” which is quite complex and competitive. The word “mining” is used because the process is akin to mining tangible commodities like gold: It takes time and effort, and there are limited resources to be mined. A very high-level, overly simplified description of “bitcoin mining” is that each “miner” (person running a computer(s) that does lots of complicated math) solves the algorithms and verifies a number of bitcoin transactions into a new “block.” Once submitted to and confirmed by the Bitcoin network, the miner is awarded newly created bitcoins. These bitcoins are then ready to be disseminated into the network for purchase or to be spent.
Cryptocurrency has birthed another crop of “coin” names through the necessary virtual currency trading engines, news/analysis, communities, blogs, etc. including Coinwarz, CoinMKT, CoinDesk, Coinmarketcap, Coinbits, We Use Coins, Start Bit Coin, Coinbase, and plenty more.
Virtual currency has its own nomenclature as well. Each digital currency’s unit of account is the lower case version of the concept or network: 1 bitcoin or abbreviated as BTC or XBC, 1 litecoin, LTC and so on just like the dollar, yen, Euro, etc. Each unit can be split into subunits called millicoin, microcoin, and the smallest unit for bitcoins, the satoshi, after the developer’s pseudonym, Satoshi Nakamoto. Plus, all have associated symbols, just like the dollar or Euro sign. As the virtual currencies become more popular and become more widely used, the nomenclature will continue to expand.
Virtual currency is a new and rapidly changing category. Over the next several years we will likely see the industry’s influence on our language.
And just to complicate matters, the Coin payment device recently launched: it’s a way to combine several different payment and gift cards into just one sleek black “card.” Coin takes real currency and moves it one more step into the virtual realm (a card that represents cards that represent dollars). Who knows, maybe some day you’ll be able to load your bitcoins and litecoins on to a Coin card. But we bet it still won’t be able to make change for the bus.