We have heard stories about bitcoin in the news recently so many are asking, “What is it?” Technically, a bitcoin isn’t really a thing; it is a computer generated answer to a complex algorithm. This string of 1’s and 0’s is your bitcoin. It only has value if other people are willing to trade you goods for your bitcoin.
Fortunately, more and more businesses are accepting bitcoins as currency. You can use bitcoins to buy goods or pay for services and there is NO trail of what you bought or who the purchaser and seller are. This is why bitcoins started as a means to trade illegal goods on the Dark Web. There are no paper trails, no banks, accountants or government overseers to track money and goods.
Once “The Web” became aware of bitcoins, people started looking into them as a way to purchase goods without having to pay bank fees, PayPal transfer fees or taxes on purchased goods. Others looked at them for investment purposes. In June 2013, a bitcoin could be purchased for $100.00. By November 2013, the value reached $1000. There have been fast and drastic rises and falls in the market value of bitcoins.
The easiest way to get involved in bitcoins is to invest. Mining, the term for solving the complex equations necessary to recieve bitcoins, requires specialized computer hardware and some technical knowledge. If you are going to invest, there are many web sites that give detailed instructions on what is needed to store and keep your bitcoins secure, using your bitcoins in transactions and following the bitcoin market.
Be aware that, just like with any financial transaction over the Internet, there are many bitcoin scams. Because bitcoins transfers cannot be traced, there is no way to find out who the person was that you transferred BC to before receiving the goods you were purchasing. Also, there are no guarantees, bailouts, .and no agency to (like the FDIC) to insure your bitcoin “bank” or market place.
Recently, one of the largest bitcoin exchange markets shut down after losing over 850,000 bitcoins, worth more than $400 million. Other exchanges have come and gone on the Internet, so choosing one to handle your online transactions can be dangerous.
Bitcoins are only one form of crypto-currency, but are the one making the headlines now. Below are some links to help you learn more, and possible get started with your own bitcoin portfolio.