What you should know about Bitcoin and other Cryptocurrencies
Since its deployment, bitcoin, as well as other cryptocurrencies, have surfaced as an impending competition to the financial system, though theft, illegal activity, and fear still hover on their heads. You will find all you need to know about them here.
Bitcoin has found its way into a lot of conversations about the future of economics, the internet, and technology. The future of cryptocurrencies remains a topic that is controversial. But after you read these 10 important things to know about the world of cryptocurrencies, the conversation won’t be strange to you anymore.
The difference between cryptocurrencies, virtual currencies, and digital currencies
Virtual currencies were introduced as a result of trust issues with digital transactions and financial institutions. Although they are not yet considered as money by a lot of people, they still operate independently and not rely on traditional banks and stand as a potential competition.Around 2012, the European Central Bank described virtual currency as a form of digital currency that is unregulated and is issued and controlled by its developers, and accepted and used as a part of a specific virtual community.
However, digital currency is form of virtual currency, which is produced and stored electronically. Cryptocurrencies are types of digital currencies, but not all of them.
That will lead us to a more specific definition of what cryptocurrency is. It is a subset of digital currencies that makes use of cryptography as a form of security, making it hard to counterfeit. What makes it different is the fact that no central authority can issue it.
Bitcoin is a type of cryptocurrency that has a specific number which is associated with an address. A programmer, or group of programmers, in 2008, under the pseudonym Satoshi Nakamoto issued a paper designating what digital currencies are. After that, in 2009, it launched a software that produced the first cryptocurrency and Bitcoin network. Bitcoin was produced to take power out of the hands of central banks and the government, and hand it over to the people.
Other types of Cryptocurrencies
There are other types of cryptocurrencies asides bitcoin, but they are not talked about so often. The next most popular after bitcoin is probably Litecoin, which most online retailers also accept. It was inspired by Bitcoin and is in some way similar, but it was built as a form of improvement on Bitcoin by using open source design.
There are a lot of other types of cryptocurrencies, such as Ripple, Namecoin, Mastercoin, and Peercoin.
Who makes the regulations for Bitcoin? The essence of the currency is decentralisation, but various countries have their own legalities. Tax authorities and Law enforcement are concerned about the use of this cryptocurrency because the ease of using it for legal activities like money laundry, and also its anonymity.
The Security and Exchange Commission (SEC) of the United States has not been able to issue specific regulations on cryptocurrencies, but it often warns about fraud and investment schemes. FinCEN (Financial Crimes Enforcement Network), which is an agency under the Department of Treasury, in 2013 took initiative and published virtual currency guidelines. A lot of countries are still looking for ways to tax cryptocurrencies.
How to get bitcoin
To begin, get a bitcoin wallet. There are many websites where you can download an app on your phone or computer to store Bitcoins. For example, MultiBit is an application that can be downloaded for Linux, Mac and Windows. To store the Bitcoins, you have three options:
- Web wallets, which allow transactions through a third party service provider. With this, if there are issues from their end or its gets hacked, you at risk of losing your wallet, so it is always advised to have secure passwords and extra backups.
- Mobile wallets which allows you travel with your bitcoin to anywhere, and puts you in complete charge of them.
- Desktop wallets
The issue is, just like money, bitcoin can be stolen in enormous amounts, and the losses cannot be recovered since there is no centralised bank. A number of types of bitcoin ATMs exist that exchange bitcoin to your preferred currency.
Where can bitcoin be used?
There are several places where you can use bitcoin to buy services and products. There’s no reason to the list or real rhyme, which includes small independent retailers like restaurants and bakeries, and bigger big corporations. You can also use the currencies in buying train tickets, flights, and upgrades to your OK Cupid profile; gift cards on eGifter; hotels on CheapAir; products on Overstock.com;. There is a list on SpendBitcoins that shows all the places where you can easily spend your cryptocurrency.
The future of cryptocurrencies
The value of Bitcoin has been fluctuating drastically for some years now, and there are still about 8 million of the coins in existence in the cyberspace. Though, many issues related to security still remain which will always be in existence.
In 2013, a Japanese exchange, Mt. Gox, handled about 70% of all bitcoin transactions, but in February 2014 they filed for bankruptcy when they lost about 750,000 bitcoin, and nothing has been proven in the case. Because of its universality, it can be used for transactions in developing countries, and also international transactions.
Experts have advised investing a few if you have them and see how it grows in the coming years or months, because it is of a surety that some regulations will soon be placed on the currency.
A lot of investor are showing interest in the currency and a number of businesses are jumping on the bandwagon looking for momentum to increase, but stabilisation might take a while as the people, international community, and governments make the decision on how the following generation of currency transits into the world of digital currency.
Cryptocurrencies are definitely a new trend and seem to be something that has come to stay for a long long while.