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Bitcoin & Cryptocurrencies Primer: What You Need To Know.

October 26, 2017 by  
Filed under Business, Money, Opinion, Weekly Columns

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(ThySistas.comThe term “cryptocurrency” has become more common in recent years. You may have only noticed it in passing; a mention in a news report or an article you don’t pause to read online. The term is so opaque that pausing to learn exactly what it’s describing isn’t something on the top of many people’s to-do lists.

If the above describes your association with cryptocurrencies up until this point, then it’s a good idea to learn what they actually are. They offer a passport into a world where the current banking system is viewed as a failure, and cryptocurrencies are suggested as the solution. If there’s ever been one bandwagon ever worth jumping on, it’s this one. So without further ado, let’s take the leap and learn more.

What Are Cryptocurrencies?

The term “cryptocurrency” is a compound word:

  • Crypto” = means concealment, secrecy, anonymity
  • Currency” = a system of money

So, “cryptocurrency” just means: “an anonymous monetary system”. Rather than transactions being attached to your name — as they are with a standard bank account or credit card — cryptocurrency transactions are completely anonymous.

Why Is Anonymity Important?

We should all take our personal data security seriously, although — let’s be honest — few of us do. Right now, there are potentially thousands of companies who hold information on you. They know who you live with, where you shop, how much you earn, how much you know. For a lot of people, this kind of data being available to companies is unacceptable– they feel it’s a violation of privacy.

As a result, being able to pay for transactions anonymously is the best solution to this problem. The idea is that the purchase of goods and services should not automatically mean handing over your personal data. That might sound odd, as we’re so used to just handing over information about ourselves, but in a world of identify theft and data breaches, cryptocurrencies may just have a point.

How Does Bitcoin Relate To Cryptocurrencies?

Bitcoin is simply the most used of the bunch; there are hundreds of other forms of cryptocurrency, some of which date back to the 1990s. Bitcoin is just the market leader, so if you’re going to delve into the world of cryptocurrencies, you’re definitely going to want to take the time to learn more about Bitcoin and how it can work for you.

How Does Bitcoin Work?

  • Bitcoins are stored in a personal wallet, which contains Bitcoin you own.
  • Each Bitcoin has its own private ledger, showing where it has been and when it has been used. Names are never revealed, but the individual wallets that a Bitcoin has resided in are recorded in its individual ledger.
  • Bitcoins can be transferred from one person’s wallet into another.
  • When a transaction is made, Bitcoin “miners” verify that the transaction is authentic and can be recorded in the ledger for that Bitcoin. As a result, Bitcoin is basically fraud-proof, as all transactions are verified by an anonymous third party.

Sound confusing? It’s not as bad as it initially sounds! Essentially, Bitcoin tracks the movement of the currency and verifies each transaction. Conventional banking tracks what people do.

What Are Bitcoins Worth?

At the time of writing, one Bitcoin is worth $5,457.

Bitcoins can be broken into pieces, akin to how dollars break down into cents. Bitcoin units are known as satoshis; named for the mysterious founder of the service. There are one hundred million satoshis per Bitcoin.

What Is Bitcoin Used For?

When you have Bitcoin in your wallet, then you can use it the same way you would with conventional money. You can buy items online, order services, or just use it as a method of investment. People have made a fortune from buying Bitcoin and then seeing the value of their investment rocket.

So Bitcoin Is A Replacement Monetary System?

Yes. A completely digital form of money, which is user-verified so that there’s no need for third parties like banks.

Isn’t Bitcoin Used For Illegal Purposes?

Bitcoin has gained a reputation as being used for illegal purposes due to the Silk Road, a notorious websites where users could buy and sell a number of different illegal substances. However, this is but one use of Bitcoin; it’s not why the currency was created; and Bitcoin usage is not indicative of illegal activity.

Bitcoin may have a way to go to completely shred this reputation, but think of it like this: if someone uses a credit card to buy stolen goods, do you blame the credit card provider? Of course not– you blame the person. Bitcoin has been unfairly maligned, though gradually, it is beginning to bounce back from this association.

Where Can I Use Bitcoin?

It is becoming more common for online stores to allow payment by Bitcoin, though admittedly the creep towards acceptance is rather slow. If you make a lot of online transactions, then you can check the payment page to see if they will accept payment in Bitcoin. Many do. It is safe to assume that this number will continue to grow.

What Are The Key Benefits Of Bitcoin?

Let’s put Bitcoin into a nutshell:

  • Anonymous transactions, meaning you don’t have to hand over your valuable personal data to make a purchase online.
  • A consensus verification system, reducing the likelihood of fraud.
  • You always have control over your money; your Bitcoin wallet is yours to do with as you please. This is particularly important if you have lost money when a bank has collapsed, a nightmare that can happen to anyone who holds funds with any bank. With Bitcoin, you’re always the one in possession of your money, not the bank.

Should You Use Bitcoin?

If you have money you would like to invest, then buying Bitcoin (or satoshis) is a good choice. The market is buoyant, there’s promise in future development, and that bad reputation is slowly being shed. While you might not be able to use that Bitcoin at many stores right now, this is a situation that is likely to improve in the future.

So, do you think you might be tempted to give Bitcoin — and cryptocurrencies — a try?

Staff Writer; Latasha Hall

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