Do you want to be able to impress your friends and family with how much you know about Bitcoin? And, no, I am not talking about the general facts, like how Bitcoin has seesawed from one extreme to the next.
The statistics compiled in the infographic below are not the kind of thing that a quick Google search will find for you. They are the result of many hours spent combing through all the data out there, looking for the most up to date, and most useful stats.
For example, 40% of the total Bitcoin in circulation are owned by just a thousand people. Or, Bitcoin can be used to pay for things as varied as pizza and hotel stays. When booking online through Expedia, for example, you can pay with a credit or debit card, a voucher or with Bitcoin.
Believe it or not, the first commercial transaction for Bitcoin was the purchase of two pizzas for 10,000 Bitcoins. That was in the days when the currency was thought to be pretty worthless.
Today we know a lot better. Cryptocurrencies have burst onto the market and have created a tidal wave of new investment opportunities. Bitcoin and other cryptocurrencies have changed the way we raise money for business and taken cloud funding to a whole new level.
It is really an exciting new world in the cryptocurrency sphere. You have the chance to get in at the ground level and make a real difference in the development of companies. Companies raise funds through selling their own tokens or forms of cryptocurrencies.
These Initial Coin Offerings were inspired by Initial Public Offerings in the “real” world but work differently. Buying ICOs does not automatically afford you the rights of a shareholder as having shares would in a traditional company.
Bitcoin, cryptocurrencies, etc. Forget what you think you know and learn about the real truth below.
By now, most people are somewhat aware of Bitcoin, what it is and all that the cryptocurrency has to offer. However, there is one aspect of Bitcoin that remains a little fuzzy and that is the actual history of Bitcoin. To try and clarify this confusion we have compiled what we do know about its ambiguous history – it’s worth brushing up on it, considering the virtual currency has taken the world by storm, and people are constantly debating about where the future of bitcoin is heading. By knowing a little bit about the history of the coin, you will be able to join in on these conversations and add in your own two cents.
The Early Life of the World-Famous Cryptocurrency
Who started Bitcoin?
Bitcoin has always been mysterious, with questions going as far back as to who created it. In fact, that has been a big question within the sector because the world only knows the pseudonym of the creator: Satoshi Nakamoto.
In 2008, Nakamoto published a paper in which he – or she – detailed the ideas that lay the groundwork for Bitcoins. This was the first appearance of the name Satoshi Nakamoto on the Internet.
Then, in April, as reported by Davis, Nakamoto stated that he – or again, I repeat, she – had “moved on to other things,” which resulted in the creator vanishing in thin air. When I say vanish, I mean all of Nakamoto’s accounts are now inactive, and it appears all of the coins in his/her wallet appear to be unspent.
See what I mean when I say the history is a little fuzzy? To top things off, rumors have surfaced – a number of times, actually – that the ‘creator’ of Bitcoin is actually a group of people, formed by Charles Bry, Vladimir Oksman, and Neal King.
It’s very likely that Bry, Oksman, and King are the brains behind the operation. Why? Because, according to various reports, these three men filed a patent that was related to secure communication two months before the Bitcoin.org domain was purchased. Coincidence? Maybe. But when the world needs answers, sometimes we have to settle for coincidences.
History of Bitcoin- The Facts
That being said, it’s not all speculation; we do have some facts:
1) In 2008, someone, under the name of “Satoshi Nakamoto,” posted “Bitcoin: A Peer-to-Peer Electronic Cash System” to a cryptography mailing list. It was then, and through this mailing list, that Hal Finney, a console game developer, found Nakamoto’s proposal for Bitcoin. Finney stated in 2013 that he was engrossed by the idea of having a decentralized digital currency – and now the entire world is too.
2) A couple months later, someone – or someone’s – registered and purchased the Bitcoin.org domain
3) A year later, the very first version of Bitcoin was rolled out, which then commenced the start of Bitcoin mining.
Regardless of who actually invented Bitcoin, whether it was one person or multiple, the fact that remains is that bitcoin probably won’t ever come closing to comparing to a traditional currency – which is a good thing – as it has no central bank and does not require regulatory authority to back it up.
What’s the Purpose of Bitcoin?
There are so many articles out there that describe what Bitcoin is used for, but only a few actually take the time to talk about how the use of Bitcoin relates to the history behind it.
It is crucial to remember that before Bitcoin, payment methods were never this advanced. Essentially, Bitcoin changed the game; it now allows for lower transactions, faster payment, and it is independent of governments. Further, Bitcoin allows individuals to actually own their coins.
Even though the origin of Bitcoin remains a little choppy, one thing we can all agree on is that Bitcoin has changed how the world works in ways that were probably never imagined.
What Does the Future Entail for Cryptocurrency Bitcoin?
There are a lot of skeptics out there, and there are a lot of people out there hoping for Bitcoin to fail. However, the thing to remember is that even though Bitcoin is not 100% a sure thing, and has experienced a number of slumps, it is still a new technology and the ‘next big thing’ so whether or not the price of bitcoin climbs or drops, it’s still probably going to continue to capture the attention of the masses.
So, what does that leave? All I can recommend is you educate yourself on all that is Bitcoin, so whenever something monumental happens, positive or negative, you will be able to formulate an opinion.
Bitcoin futures began officially trading on Sunday, December 10, 2017, first by the Chicago Board Options Exchange and, at a later date, by the Chicago Mercantile Exchange. There was a lot of debate about what Bitcoin futures would do to the market, but before we can get into that, it’s important to understand what Bitcoin futures are.
What are futures?
‘Futures’ are an agreement to buy and sell Bitcoin by a certain date. This is so regulators, in this case, the Commodities Futures and Trade Commission, can oversee anything going on in the market. As Bitcoin itself is not regulated, many people are still hesitant about it, but Bitcoin futures hopes to eliminate that hesitation, and so far it appears to have been successful.
‘Futures’ can help investors to speculate on the price of Bitcoin in the future, and it can also help to control the risk of investing in Bitcoin.
Here’s how this applies to Bitcoin: if any Bitcoin owner believes that Bitcoin prices will fall in the short term, investors can protect themselves against this by selling, or shorting, Bitcoin futures. It can be sold for a price that it is believed Bitcoin will be at further in the future (which is hopefully more than the price predicted for the short term). The seller will then have to buy back what they sold once the predicted time that they sold for arrives, and they will either make or lose money based on what the price is actually at compared to the predicted price.
So, as an example, let’s say that in two months time, Bitcoin is predicted to be at $18,000. Based on Bitcoin futures, a person could choose to sell their Bitcoin at that predicted price. Once the two months have passed, they will have to repurchase what they sold. Let’s say the actual price of Bitcoin in two months time ended up being $16,000, rather than the predicted $18,000. This means that the person has earned $2,000, despite the fact that Bitcoin price dropped.
What happened when Bitcoin futures launched?
When the first iteration of Bitcoin futures officially launched on December 10, 2017, it went crazy, so crazy in fact that the Chicago Board Options Exchange (CBOE) had to temporarily stop the bidding in order to restore some calm. The Bitcoin price jumped as much as 26% when Bitcoin futures first launched.
The CBOE initially started with three bitcoin futures, one to expire in January, one in February, and one set for expiration in March.
The anticipation of Bitcoin futures and the waves that were caused by the actual launch of Bitcoin futures venerated those who have long believed in the continued success of the cryptocurrency. To them, the commencement of Bitcoin futures and its initial success meant that Bitcoin wasn’t going anywhere. It also seemed to legitimize Bitcoin, or at least make it sound more appealing to those that had been more hesitant about joining the cryptocurrency world. With the launch of Bitcoin futures, thousands of new users started trading in Bitcoin; nobody wanted to miss out on the action.
Now, with the increasing demand for Bitcoin futures, the actual price of Bitcoin will no doubt climb as a result, as more established investors begin getting involved with Bitcoin, as is already being seen. The mere announcement of Bitcoin futures, in fact, was enough to increase the price of Bitcoin.
There are also those that believe that Bitcoin futures will make it easier to short Bitcoin, namely big-time Wall Street institutions such as J.P. Morgan. This idea, however, has led to even greater debate.
Why won’t shorting be the best move for Wall Street?
Most people have credited Wall Street institutions with the plan to short Bitcoin for the near term, meaning that they’ll sell Bitcoin based on the predictions of the futures, and then earn a profit by buying it back at a cheaper price. However, others believe that this won’t actually end up working for them, that there won’t be any profits to be earned from shorting because the predictions about future Bitcoin price will be wrong.
The argument behind this is that the Bitcoin price surge is occurring not because of the announcements relating to Bitcoin (such as the launch of a bitcoin future), but as a result of Bitcoin itself. Those supporting this argument believe that Bitcoin has entrenched itself well enough in the mainstream market that it can survive on its own. In other words, people don’t need something like a bitcoin futures agreement to buy Bitcoin; they were already interested in buying it and so the demand for Bitcoin is coming from the people themselves, not from the news generated about Bitcoin.
By this reasoning, Bitcoin price is going to rise on its own, and it’s going to continue rising. To have the price rely on news means that slower news days would result in a lower Bitcoin price; however, if the price of Bitcoin is actually reliant purely on Bitcoin and its integrated demand, then the price will continue to rise so long as the demand is still there. If that’s the case, anybody who shorts on Bitcoin may find themselves losing money. The only way you can earn money off of shorting on something is if that something’s price is less than what is predicted. But if the Bitcoin price rises and rises, then shorters will actually end up losing money because they will have to buy their Bitcoin back at a higher price than they sold it for – which completely defeats the purpose.
Under this argument, it doesn’t make sense for Wall Street institutions to short on Bitcoin. Why risk losing the money? If and when Bitcoin continues to rise in price, it seems far more likely that Wall Street will want to properly invest in Bitcoin and earn some money, rather than wasting their time (and potential cash) by shorting on it. After all, wouldn’t they want to take advantage of all the exploding interest in Bitcoin? Wouldn’t they want to make money off that interest?
You know how some people say the hardest part of University is actually graduating and putting your degree to the test? Well, Bitcoin is kind of like that. An individual can learn and master all of the digital currency’s basics, but it is an entirely different story when venturing out to get your “hands” on some bitcoins. But don’t worry – this guide will tell you everything you are going to need to know.
Perhaps the most important thing for a potential bitcoin investor to know is that they have the option of purchasing bitcoin, a digital currency, from an exchange, or directly from other people through various marketplaces.
Paying for bitcoins is a fairly simple process as an individual can do so in a number of ways. But how, you ask? Well, you could, for instance, pay for your bitcoins with hard cash or a credit and debit card, or you could pay for them with wire transfers or even with other cryptocurrencies. Keep in mind it will all depend on who the individual is buying the bitcoins from and where the sender is located.
However, if you are looking to purchase bitcoins with your PayPal account or credit card, you might run into some trouble. Why? Because such transactions have the potential to be reversed with just one simple phone call to the card company. As a result, most cryptocurrency exchanges avoid this method of payment as it is extremely burdensome to prove that any goods changed hands in a transfer of bitcoins.
That said, not all hope is lost, as consumers in some countries are starting to see more and more options for bitcoin payment methods.
To elaborate, Coinbase, and Circle (all operated in the United States) offer bitcoin purchases with credit cards, while CoinCorner and Bittylicious offer their services in the United Kingdom, taking both 3D Secure-enabled credit and/or debit cards. It is important to keep in mind that these services will not accept credit or debit cards unless they are on the MasterCard or Visa networks.
If, however, you are an underbanked consumer in the United States, then you can look to expresscoin, which accepts personal checks, wire transfers, and money orders.
Setting Up Your Bitcoin Wallet
Before we dive into actually setting up a bitcoin wallet, it is important that we do a quick vocabulary review in order to avoid confusion.
Remember that “Bitcoin wallet” and “Bitcoin exchange” are not the same thing. A bitcoin exchange is essentially a place where you can trade Bitcoin for a fiat currency, and while exchanges offer some sort of wallet capability to the individual, it is not its only function. Most exchanges will suggest to users that it is best to transfer their currency to a secure wallet as exchanges try to shy away from the storage of bitcoins for long periods of time. Therefore, the best option to take is moving your coins to a wallet.
Got that? Great – let’s move on.
Some might find it beneficial to think of your bitcoin wallet as your go-to place to store your new bitcoins. This will help you get into a routine of putting all of your eggs into one basket, which will help tremendously with the organization when you actually want to purchase items with those stored bitcoins.
One of the great aspects of bitcoin wallets is that the user is able to choose the level of security that they want. What does this mean? Some wallets will take on the form of an everyday spending account (you can compare this to a leather wallet), while others provide top of the line protection.
Here are the top 5 options for bitcoin wallets:
Desktop Bitcoin Wallets
Mobile Bitcoin Wallets
Internet-Based Bitcoin Wallets
Let’s look at those five in a little more depth, shall we?
There are a number of desktop wallets available, all of which come with different features. Some of the more popular options include MultiBit (if you use Windows or Mac OSX), Hive (which is an OS X-based bitcoin wallet), Armory (which focuses on enhanced security), and DarkWallet (which focuses primarily on anonymity).
If you are someone who finds themselves standing in brick-and-mortar stores, drooling, and wanting to purchase hundreds of items, then a mobile bitcoin wallet might be the option for you!
Essentially, the mobile wallet will run as an application on your mobile device. The wallet will store your private keys for your bitcoin address, as well as allow you to pay for items directly with your smartphone.
Internet-Based Bitcoin Wallets
Perhaps one of the main advantages of using an internet-based wallet is that the user can access it from anywhere, no matter which device they are using. How does it work? Well, internet-based wallets store your private keys online, on a computer that is controlled by a third-party and connected to the WWW.
It’s okay if you are looking for the cheapest option for keeping your bitcoins safe – most people are. That’s why we have something called a paper wallet. In fact, there are numerous sites that offer paper bitcoin wallet services.
The gist of a paper wallet is that it will create a bitcoin address for you, as well as an image that contains two QR codes: the first is the public address that a user can use to receive the digital currency; the second is the private key, which the user uses to spend bitcoins that are stored at that address.
As of right now, hardware wallets are pretty sparse in number. But, if you are lucky enough to get your hands on one, you should consider yourself lucky: these are extremely dedicated devices that have the ability to hold private keys electronically as well as facilitate payments.
Like most things, however, bitcoin wallets have both pros and cons. And while to date, there seem to be more pros than cons, one cannot completely ignore their known vulnerabilities. For example, anyone storing bitcoins locally on their computer will have to back up their wallet regulatory – just in case the drive spontaneously corrupts.
In the end, it’s just going to depend on how you manage your bitcoin wallet. One of the most important things to remember is not to lose your private key (which, as mentioned, is stored in your wallet)
A Closer Look: Bitcoin Exchanges and Online Wallets
It’s a well-known fact in the cryptocurrency sector that bitcoin rookies will be swarmed by a number of exchanges and wallets in an attempt to persuade the user into using their service.
Similar to most things, the exchanges will vary in terms of what they offer. For instance, some exchanges are primarily for institutional traders, while others cater to the simple side of life, offering more limited purchasing and selling capabilities.
That being said, the majority of wallets and exchanges will hold copious amounts of fiat or digital currency for you, taking on the form of a traditional bank account.
If you are looking to engage in regular trading and speculation, then your best options are bitcoin wallets and exchanges. Additionally, if you do not need 100% anonymity and don’t mind long drawn out processes that ask for proof of identity, then again, exchanges and wallets are your guys.
For the most part, this is the law in the majority of countries. In fact, no regulated exchange can work its way around this law. Why? Any company that is interfacing with the system is obligated to meet “know your customer” requirements.
Here’s a quick list of some of the best bitcoin wallets/exchanges around the globe:
Unocoin: This is an exchange that primarily targets the Indian marketplace. Unocoin allows for an individual to sell, purchase, and store bitcoins. If you are looking to make a deposit, you can do so through any national online bank.
Coinjar: This is worth adding to your “To-Watch” list as it was Australia’s market leader back in 2015. In fact, the Melbourne-based wallet and exchange provider raised $500K AUD in venture funding and won an award at Finovate Europe two years ago for its user experience.
Coinbase: You might have heard of this wallet and exchange service before as it is quite popular. Originally a United States-based service, Coinbase has recently opened up to a variety of European countries.
Xapo: Offering deposits in fiat currency that are converted to bitcoin, this wallet and bitcoin debit card service has made a name for itself as of late.
Keep in mind that after you set up your account, and have a bitcoin wallet, you will likely be asked to connect your existing bank account to your wallet. It will be during this step that you move funds between the two accounts through wire transfer. Generally speaking, this step will include a fee.
Even though the majority of people in most countries around the world have the ability to move money to overseas accounts, these fees tend to be extremely high and the user might experience long delays when turning their bitcoins back into fiat currency.
Risk to Keep in Mind
It is essential to keep in mind that, despite the positives, a bitcoin wallet or exchange does not have the same protections that conventional banks do. What do I mean by this? Well, a wallet or exchange does not tend to have insurance for your account if the exchange were to be robbed or go out of business.
Due to the fact that the digital currency isn’t seen as a legal tender in most of the world, authorities tend to be stumped when it comes to how they should approach thefts.
Here are some banks that have been known in the past to be biased against bitcoin:
The Royal Bank of Canada
Commonwealth Bank of Australia
Bank of Nova Scotia
Barclays (United Kingdom)
Bank of the West (United States)
Chase (United States)
Yet another problem is that if a thief enters your personal wallet due to a password or security slip on your exchange, the user does not have a way to recover their funds.
Can You Make Face-To-Face Trades?
The short answer to this question is yes. Some people might opt out of dealing with the hassles of the bank and go straight to acquiring the digital currency through face-to-face trade.
Keep in mind that if an individual is preparing to meet face-to-face with a local seller, they will be required to have access to their bitcoin wallet. Additionally, you will need to bring a mobile device or laptop that is connected to the Internet in order to confirm the bitcoin transaction.
If, however, you are shy in nature and do not want to take the ‘one-on-one’ trading route, you can take a meander over to Meetup.com, which is a site that allows you to see where in your area has a bitcoin meetup group.
While every seller is different, it is still very likely that the user will be asked to pay a premium of roughly 5 % to 10% over the exchange price for an over-the-counter trade.
A Brief Overview: Bitcoin Mining
Before we conclude this guide to purchasing bitcoin, it is worth mentioning a word or two about bitcoin mining.
While you used to be able to mine your own bitcoins, there are now mining-specific devices that have been added to the network, which has increased the difficulty required to mine a significant amount of bitcoin.
If you are told that you can mine the digital currency with a PC or a graphics card, don’t listen to them. Their information is either from 2014, or they may be trying to dupe you into purchasing outdated equipment.
Can I Turn to Investment Trusts?
Some people might not be attracted to the idea of purchasing and storing copious amounts of bitcoins, and that’s totally okay. If you find yourself in this position, check out an investment trust, such as The Winklevoss ETF or the Bitcoin Investment Trust.
Are There Bitcoin ATMs?
Yup! However, this is still a relatively new concept. With a bitcoin ATM, an individual will insert their cash and scan their mobile wallet QR code in order to receive the codes needed to load the digital currency onto your wallet.
Keep in mind there will be an exchange rate, which could range from 3-8%.
While purchasing bitcoin can be a lengthy or difficult process for some, there are a number of options that help make the process a tad bit easier for the user.
If you purchase but don’t spend your bitcoins or exchange them with other currency, it can be very easy to forget about them. The best way to avoid this is to start using your wallet immediately. And as always, make sure you read reviews and the fine print before finalizing any purchases or exchanges with your Bitcoin!
Think you’re ready to make your first Bitcoin transaction? Here’s everything you are going to need to know.
Bitcoin transactions are able to be sent from and to electronic bitcoin wallets. Further, they are digitally signed for security. Everyone on the bitcoin network is made aware when a transaction is being made, and the history of any transaction can be traced back to the point where the bitcoins were created.
Holding onto bitcoins can be beneficial – especially if you’re waiting for the price to go up – but the whole point of this digital currency is to spend it, right? So without further ado, let’s get into how bitcoin transactions work!
There Are No Bitcoins, Only Records of the Transactions
Bitcoins are funny little things because they don’t actually exist anywhere. That includes on a hard drive. Someone can say that they have bitcoins, but if you were to look at their bitcoin address, you will see that there are no digital bitcoins held in it. Essentially, one cannot point to a physical object, and that includes a digital file, and say “this is a bitcoin”.
Instead, the bitcoin network stores records of transactions between different addresses, with balances that rise and fall. Nothing goes undetected in the network; every transaction that takes place will be stored in a ledger called the blockchain. If an individual is looking to work out the balance of any bitcoin address, they will have to reconstruct it by looking at the blockchain.
What Does a Bitcoin Transaction Look Like?
If for example, Jane wanted to send some bitcoins to Tim, that transaction would include three pieces of information:
An input. The input is a record of which bitcoin address was used to deliver the bitcoins to Jane in the first place.
An amount. The transaction would also include the number of bitcoins Jane is sending to Tim.
An output. This will be Tim’s bitcoin address
How Do You Send a Bitcoin?
In order to send bitcoins, you will need two things: 1) a bitcoin address, and 2) a private key.
An individual’s bitcoin address is generated randomly and is a sequence of letters and numbers. On the other side of the equation, the private key is another sequence of numbers and letters, but unlike the bitcoin address, the key is kept secret.
It’s helpful to think of your bitcoin address as a safety deposit box with a glass front. Even though everyone knows what’s in the box, only the private key can unlock it to take things out or put things in.
When Jane is ready to send bitcoins to Tim, all she has to do is use her private key to sign a message with the input, amount, and output.
Jane then sends the coins from her bitcoin wallet out to the wider bitcoin network. After that, bitcoin miners will verify the transaction, by putting it into a transaction block and solving it.
Why Do You Have to Wait for the Transaction to Clear?
Sometimes you are forced to wait until miners finish mining. What does this mean? It means it can take a bit of time for your transaction to be verified by the miners. According to the bitcoin protocol, each block takes about 10 minutes to mine.
Generally speaking, there are two outcomes that you might experience. Some merchants ask for you to wait until this block has been confirmed, which means that you may have to make a cup of tea and come back again before you can download the goods or take advantage of the paid service.
However, other merchants won’t make you wait until the transaction has been confirmed. These are the types of merchants who assume that you won’t try and spend the same bitcoins elsewhere before the transaction is finalized. This tends to happen for low-value transactions.
What Happens if the Input and Output Amounts Don’t Match?
Due to the fact that bitcoins exist only as records of transactions, it’s possible that you can end up with different transactions tied to a particular bitcoin address. For instance, Rebecca sent Jane two bitcoins, Alec sent her three bitcoins, and Lucy sent her one bitcoin, all as separate transactions at separate times.
If this were to happen, these would not automatically combine in Jane’s wallet to make one file containing six bitcoins. They would just sit there as different transaction records.
If Jane wants to send bitcoins to Tim, her bitcoin wallet will try to use transaction records with different amounts that add to the number of coins that Jane wants to send to Tim.
It is rare that when Jane wants to send bitcoins to Tim that she won’t have the right number of bitcoins from other transactions.
Are There Transaction Fees?
Sometimes, but not always.
Transaction fees are calculated using a number of factors. For instance, some bitcoin wallets allow you to set transaction fees manually. Any section of a transaction that is not picked up by the recipient or returned is thought to be a fee. This will then go to the miner who solves the transaction block as a reward.
As of right now, the majority of miners process transactions for no fees. However, as the block reward for bitcoins decreases, this will be less likely.
Many find the most frustrating part about transaction fees in the past to be that the calculation of those fees was mysterious and complex. It has been the result of a number of updates to the bitcoin protocol, and it has developed organically.
Are You Able to Get a Receipt?
Sadly, Bitcoin wasn’t really meant for receipts. However, payment processors like BitPay offer the advanced features that you wouldn’t normally get with a native bitcoin transaction, such as receipts and order confirmations.
What Happens If I Just Want to Send Part of a Bitcoin?
It’s important to remember that bitcoin transactions are divisible. The lowest you can divide your bitcoins into is a ‘satoshi’, which is one hundred millionth of a bitcoin. Additionally, it is possible to send a transaction as small as 5430 satoshis on the network.
If you’re interested in cryptocurrency, chances are you probably understand that Bitcoin is not only the first cryptocurrency to be created, but it is also one of the most important out there.
It is important to understand that Bitcoin is a form of digital currency, and it is created and held electronically. No one controls it. Unlike euros or dollars, Bitcoins are not printed – they are produced by people, businesses, running computers worldwide, using a software program that solves mathematical problems.
Mentioned briefly, Bitcoin is the very first example of a steady growing category of money known as a cryptocurrency.
Okay, So What’s the Real Difference Between Bitcoin and Normal Currencies?
Glad you asked. Bitcoin can be used for buying things electronically. Essentially it’s like conventional dollars, yen, or euros, which also happen to be traded digitally.
With that said, bitcoin’s ability to be decentralized is one of its most important characteristics and the thing that gives it a competitive edge when it comes to conventional money. Because no single institution controls the bitcoin network, many investors remain at ease as it means a large bank is blocked from controlling their money.
Who Created Bitcoin?
You can thank software developer Satoshi Nakamoto for the digital currency. Nakamoto proposed bitcoin, which was an electronic payment system based on mathematical proof. The aim was to produce a currency independent of any central authority, as well as one that was transferable electronically, and one that had very low transaction fees.
Bitcoin has been used increasingly all over the globe since its birth in 2009.
Who Prints Bitcoin?
That’s a trick question; no one prints Bitcoin. This is a currency that isn’t physically printed in the shadows by a bank, unaccountable to the population, and making its own standards and rules. Central banks can simply produce more money to cover the national debt, which devalues their currency.
Instead, bitcoin is created digitally. By who, you ask? Well, it’s created by a community of people that anyone can join. The process is quite simple: bitcoins are ‘mined’, using computer power in a distributed network.
Further, this network processes transactions that are made with the virtual currency, which effectively makes bitcoin its own payment network.
Can I Churn Out Unlimited Bitcoins?
Nope. The protocol of bitcoin – the rules that make the currency work – state that only 21 million bitcoins can ever be created by miners. But, these coins can be divided into smaller parts. The smallest divisible amount is called a ‘Satoshi’, after the founder of bitcoin, and it is one hundred millionth of a bitcoin.
What’s It Based On?
Conventional currency tends to be based on gold or silver. In theory, you know that if you handed over a dollar at your bank, you could get some gold back (keep in mind this didn’t actually work in practice). However, bitcoin isn’t based on gold; it’s based on math. Chris Dixon, co-founder of Hunch now owned by eBay, was once quoted as saying: “There are 3 eras of currency: Commodity based, politically based, and now, math based.”
Globally, people are using software programs that follow a certain mathematical formula to create bitcoin. Interested in learning more about the programs that make up bitcoin? The mathematical formula is available for free, so anyone is eligible to check it out.
Additionally, the software is open source, which means you can look at it to make sure that it does what it has been promised to do.
Here are Bitcoin’s 7 Most Important Features:
Bitcoin has a number of features that allow it to stand out in a group of government-backed currencies.
Bitcoin is Easy to Set Up
Traditional banks often make you jump through hoops just to open up a bank account, and with bitcoin, you can create a bitcoin address in a matter of seconds, no questions asked. Did I mention you could set up your bitcoin address with no fees payable?
Bitcoin is Anonymous
Okay, bitcoin is kind of anonymous. You are able to hold multiple bitcoin addresses, and they will not be linked to your name, address, or any other information that could be used to personally identify the user.
Bitcoin is 100% Transparent
…bitcoin stores details of every transaction that ever happened in the network in a massive version of a general ledger, known as the blockchain. Basically, the blockchain tells all.
If you have a publicly used bitcoin address, other users can tell how many bitcoins are currently stored at that address. But they won’t know that it’s yours.
Bitcoin is Decentralized
As mentioned, the bitcoin network is not controlled by one central authority. Every single machine that mines the currency and processes transactions make up a part of the bitcoin network and all of the machines work in unison. What does this mean? It means, in theory, one central authority can not mess with monetary policy and cause a meltdown – or decide to take people’s bitcoins away from them. If parts of the bitcoin network go offline, the money keeps flowing.
Bitcoin is Fast
Users are able to send money anywhere in the world and it will arrive in minutes, as soon as the network processes the payment.
Bitcoin is Non-Repudiable
After you send your bitcoin, you will not get them back. That is unless the recipient returns them to you. If not, say goodbye because they are gone forever.
Transaction Fees are Very Small
It’s possible that your bank might charge you a $10 fee for international fees, but bitcoin won’t.
Bitcoin has a lot going for it, in theory. However, because in the years since it was first created, there have been a number of other assets and forms of blockchain technology that has been developed, it’s important to read more about bitcoin before you hop on the train. Make sure you read up on how bitcoin is mined, how the network keeps an eye on everything, and what happens when a bitcoin transaction occurs.
Generally speaking, selling Bitcoin isn’t quite as straightforward as buying bitcoin. However, it is not impossible to learn. If you follow this guide, you will learn all the information you need to start trading bitcoin!
For those leaning towards selling their bitcoin, you will first need to consider which method best suits your situation. For instance, do you want to sell your bitcoin online or sell it in person? Both options have their fair share of advantages and disadvantages.
Are you looking for the easiest way to pass on your digital currency? If so, you might want to consider selling your bitcoin in person. In all honesty, scanning a QR code on someone’s phone and accepting cash-in-hand is about as easy as a bitcoin transaction can get.
Further, if you have friends or family that are looking to purchase bitcoin, the process is fairly straightforward. All you have to do is set your loved ones up with a bitcoin wallet, send them the bitcoins, and then collect your cash.
That being said, there are a number of things to be aware of when selling your digital currency in person. If you are serious about taking the in-person route when selling your bitcoin, you might want to think about making a note on the following:
A) Make Sure You Agree on a Price Rate That Works For You
A lot of people use a price from a prominent bitcoin exchange
There are a few sellers who factor in a percentage on top of these rates to cover costs. It also acts as a convenience/anonymity premium.
You can use a mobile app to calculate prices. Try any of the following: Zeroblock and BTCreport.
It is extremely beneficial to know about the local fluctuations in price.
There are a number of bitcoin meetings that take place around the world and people seem to be happy to trade bitcoin and other cryptocurrencies.
B) Always Be on the Lookout
If you are carrying a large amount of cash in a public place, it is always wise to have a friend tag along for the meeting.
2. Selling Bitcoin Online
Source Image: Deposit Photos: @siraanamwong
It might not be the easiest route to take, but selling bitcoin online is by far the more common way of trading your digital currency. As of right now, there are three ways for an individual to sell their bitcoins online.
The first way to sell your bitcoin online involves a direct trade with another person. Websites that offer this selling structure include the following: Coinbase, LocalBitcoins, BitBargain, and Bittylicious.
How does it work? Well, on these sites, an individual is required to register as a seller. Essentially this involves verifying your identity. Following registration, you are eligible to post an offer, which signals that you want to sell, and the website will let you know when a buyer wants to trade with you. Once you have been alerted of a potential buyer, your interaction is exclusive with the buyer, but you still have to use the website to complete your trade.
B) Exchange Trades:
Another alternative for selling bitcoins is to register with an online exchange. With this, your trade is with the exchange rather than an individual. Even though you are still required to verify your identity, you won’t have to do as much work when it comes to actually organizing the sale.
How does it work? Exchanges act as an intermediary who holds onto everyone’s funds. An individual will place a ‘sell order’, stating the amount and type of currency you wish to sell, and the price per unit you hope to sell for.
If someone places a matching order buy, the exchange will complete the transaction. The currency is then credited to your account.
With that being said, this route does have a downside. If you are looking to sell bitcoins for fiat currencies, you will have to withdraw those funds to your bank. Here’s the problem: if the exchange is dealing with liquidity problems or issues with its banks, it can take an insane amount of time to receive your funds.
If you take this route, it is important to mention that it is your responsibility to look after your own funds, and store any unneeded amounts offline, just in case the exchange gets hacked one day.
C) Peer-to-Peer Trading Markets
One of the latest developments in the bitcoin space is the advent of sites like Purse and Brawker. These sites set out to bring together two groups of people with both specific and complementary needs.
The first group is people who want to use their bitcoins to buy goods from sites which do not yet accept digital currencies. The second group consists of individuals who would like to purchase bitcoin with a debit or credit card. The marketplace then brings together people with matching requirements to sell bitcoin to one and provide discounted goods to the other.
Essentially, the market acts as an intermediary and offers individuals the platform, bitcoin wallets and escrow for a transaction.
How does it work? Good question! As a point of reference, consider the example below:
Jane posts her Amazon wish list on the market, and states the discount she would like (tends to be up to 25%)
Tim has a debit/credit card and wants to purchase bitcoin matching the value of Jane’s purchase(s). Tim accepts the trade and, via the marketplace, purchases the Amazon goods and asks that they are delivered to Jane’s address.
After the items are delivered, Jane alerts the marketplace and Tim’s bitcoins are released from escrow and deposited in his wallet. Keep in mind this does not include Jane’s agreed discount and a small fee for the marketplace.
Additionally, it is important to keep in mind that this system means that Tim will be paying a high fee for the service, but it also means he will be able to acquire bitcoin through a bank card with ease.
Are There Issues When it Comes to Withdrawing Funds?
Most agree that the universal way to move money around the globe is international wire transfers. And for the most part, the majority of online bitcoin markets support this transferral method.
Another way to move money to your bank after selling a bitcoin is through the “Single European Payments Area” (SEPA) system. The SEPA system was created so that international transfers between member states of the EU was more efficient.
But, transfers tend to take a long time (roughly 4 days) and can include large charges – which makes trading expensive.
Verifying an Individual’s’ Identity
Even though most of the bitcoin markets mentioned in this article require little to no identification from buyers, they do require a lot of proof of identity from sellers. In fact, there are a number of legal requirements from bitcoin markets to record who their users are, and most (if not all) are collecting identity data in anticipation of approaching regulations.
If you are hoping to become a seller, it is worth completing the identity verification process when you first join the site. Why? Because getting this step out of the way helps to remove selling barriers if and when you choose to do so.
Keep in mind that markets will ask you to upload scans of two utility bills displaying your name and address. They will also ask for a photo ID.
The takeaway? If you are interested in finding a place to sell bitcoin online, but you’re uncomfortable with the idea of uploading personal documents to an untrusted business, you are probably going to struggle with seeing your bitcoins off.
Interested in learning how to buy Bitcoin? First, you need to master the basics. After that, the next step will be acquiring some of the digital currency. But how, you ask? Below is a guide that will tell you everything you need to know.
Let’s walk the process of buying bitcoin and setting up your bitcoin wallet!
Step 1: Buying Bitcoin
First and foremost, remember that you can buy bitcoins from exchanges or directly from other people via marketplaces.
When purchasing bitcoins, the user has the option of paying in hard cash, credit cards, debit cards, wire transfers, and even other cryptocurrencies. Keep in mind it will all depend on who you are buying the bitcoins from and where you live.
Surprisingly, it is still not an easy process to purchase bitcoins with your PayPal account or credit card, depending on your jurisdiction.
Why? Because such transactions can easily be reversed with a simple phone call to the card company (this is referred to as “chargebacks”). Due to the fact that it is hard to prove any goods changed hands in a transfer of bitcoins, exchanges tend to steer clear of this payment method, as do most private sellers.
But, the options have started to grow for consumers in a number of countries.
In the United States, for instance, Circle and Coinbase offer purchases with credit cards. Further, CoinCorner, Bittylicious, and Coinbase offer this service in the United Kingdom, accepting 3D Secure-enabled debit and credit cards on the MasterCard and Visa networks.
If you are an underbanked consumer in the United States, you can turn to expresscoin, which was launched to service this market, accepting personal checks, wire transfers, and money orders.
Step 2: Setting Up Your Bitcoin Wallet
After you buy your bitcoins, you will need to get yourself a bitcoin wallet. Essentially this will be your go-to place to store your new bitcoins. In the world of bitcoin, this is referred to as a ‘wallet’, but some prefer to think of it as a kind of bank account. This shouldn’t take more than two minutes to set up.
You have the option to choose the security level you want in your bitcoin wallet, as each wallet provides different levels of security. For instance, some wallets act like everyday spending accounts and could be compared to a conventional leather wallet, while others provide military-grade protection.
Here are the top 3 options for bitcoin wallets:
A software wallet that is stored on the hard drive of your computer
An online web-based service
A ‘vault’ service which works to keep your bitcoins protected offline or multisig wallet which uses a number of keys to protect your account
Keep in mind that, like most things, these wallets have their fair share of vulnerabilities. For instance, if you store bitcoins locally on your computer, you have to make sure that you backup your wallet regularly just in case the drive becomes corrupted.
Online and Exchanges Wallets
Bitcoin rookies will discover a number of wallets and exchanges competing for their business.
In fact, some are full-blown exchanges for institutional traders. Others are simpler wallet services that have more limited buying and selling capabilities.
If you are looking to engage in regular trading and speculation, and don’t need 100% anonymity or don’t mind long bureaucratic setup procedures that tend to involve proof of identity and providing detailed contact information, your best options are exchanges and wallets.
For the most part, this is the law in the majority of countries and no regulated exchange can work its way around it, as any company interfacing with the financial system must meet “know your customer” requirements as well as anti-money laundering requirements.
Additionally, the best exchange option depends on your location.
Back in 2015, the largest full trading exchanges by volume in the world were Bitfinex (Hong Kong), BTC-e (unknown), Huobi (China and Hong Kong), Bitstamp (United States), BITCC (China), and OKCoin (China).
For those who don’t know, Coinbase is a wallet and exchange service that also trades US dollars and euros for bitcoins. Coinbase has both web and mobile apps. It was originally a US-only service, but it has recently opened up to a number of countries in Europe. Further, Circle offers users around the globe the chance to send, receive, store, and exchange bitcoins.
Xapo, a wallet and bitcoin debit card provider, has also made a name for itself as of late, offering deposits in fiat currency that are converted to bitcoin in an individual’s account.
Additionally, Coinjar is worth adding to your radar as it was the market leader in 2015 in Australia. The Melbourne-based wallet and exchange provider raised $500k AUD in venture funding. Not to mention Coinjar won an award at Finovate Europe 2015 for their user experience.
Last but not least, Unocoin is an exchange that is aimed at the Indian market. It allows users to sell, buy and store bitcoins. Deposits are able to be made through any national online bank or through NEFT/RTGS. Keep in mind registration with a PAN card is required to use the site’s services.
After you have set up your account, and have a bitcoin wallet, an individual will be asked to link an existing bank account and arrange to move funds between the two via wire transfer. Generally speaking, this will include a fee. Depending on the exchange, some will allow for the individual to make a deposit in person to their bank account (that is, through a human teller, and not an ATM machine).
Even though most people in most countries have the ability to transfer money to overseas accounts, fees tend to be much higher and the individual may face more long delays when changing their bitcoins back into fiat currency.
It is important to mention that if you are asked to link a bank account to use the exchange, it may only admit banks from that region or country.
If you purchase but don’t spend your Bitcoins or exchange them with other currency, it can be very easy to forget all about them. The best way to avoid this is to start using your wallet immediately. And as always, make sure you read reviews and the fine print before finalizing any purchases or exchanges with your Bitcoin!
VANCOUVER, British Columbia, March 15, 2018 (GLOBE NEWSWIRE) — DMG Blockchain Solutions Inc. (TSX-V:DMGI) (OTC:DMGGF) (“DMG” or the “Company”), a diversified blockchain and cryptocurrency company and Primary Engineering and Construction (“Primary”), an Electrical Engineering and Construction firm, today announced their joint initiative to study and improve power quality for crypto mining.
The goal of this collaboration is to analyze electrical characteristics and requirements for large scale crypto mining operations. Company COO Sheldon Bennett commented, “Recently we announced a best-in-class partnership with D-Link for switching and routing for our crypto mining operations and this week we announce a best-in-class partnership with Primary for infrastructure and power management. This Phase 1 report will translate into significant savings for DMG in power infrastructure costs, as our power providers will have a better understanding of our needs. Essentially, it will make it easier for the utilities’ industry to work with us which is yet another market leading initiative.”
Phase 1 of the study has been completed
The results of Phase 1 served as key inputs for the system impact study conducted by the local grid operator. Anthony Bowers, Specialist Engineer – Primary, commented, “As crypto mining facilities are new to utility companies, using regular industrial load assumptions can have significant implications; it’s great to see DMG has set out to ensure the right data was made available to ensure a smooth interconnection process.” DMG has agreed to allow Primary to use the results of the studies as the basis for Primary’s upcoming submission to the Institute of Electrical and Electronics Engineers (IEEE) for consideration at an upcoming conference.
Phase 2 of the study is underway
Phase 2 of the study will expand the sample size from the original test system to a larger production system. This allows greater focus on optimizing the actual power system design for crypto mining, including measuring the larger scale system (multi-megawatt) energy consumption, peak kilowatt demand, power factor and system harmonics. The effect of harmonics is relatively unknown in the crypto mining community. As such harmonics are of particular interest to DMG as they can interfere with the continuous operation of the crypto mining units.
Sheldon Bennett, COO of DMG, commented, “This partnership with Primary and their ability to quickly understand our power needs would have been advantageous when I was building my first 58 megawatts in Alberta; however with Primary’s insight DMG’s current facility (designed for up to 85 megawatts) will benefit from this information as well as the upcoming plans for DMG’s next build-outs, which are in the 100s of megawatts.”
Primary Engineering and Construction Corporation (Primary) was founded in 2002 as a specialist electrical engineering design and design-build firm in Calgary, Alberta. Since then, Primary has rapidly expanded across Western Canada with office locations in Kelowna, Victoria, Vancouver, Calgary, Edmonton, Saskatoon, and Regina. With a focus in electrical and telecom. utility infrastructure, Primary is actively involved in renewable energy, grid modernization, power quality, system renewal and expansion projects across the country.
About DMG Blockchain Solutions
DMG Blockchain Solutions Inc. is a diversified blockchain and cryptocurrency company that manages, operates and develops end-to-end solutions to monetize the blockchain ecosystem. DMG intends to be the global leader in bitcoin mining hosting – Mining as a Service (MaaS), bitcoin mining, blockchain forensics/analytics, and blockchain platform development.
Cautionary Note Regarding Forward-Looking Information
This news release contains forward-looking information based on current expectations. Statements about the Company’s plans and intentions, improvement of power quality, the Phase 2 study, build-outs and additional megawatts, other potential transactions, product development, events, courses of action, and the potential of the Company’s technology and operations, among others, are all forward-looking information. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Such information can generally be identified by the use of forwarding looking wording such as “may”, “expect”, “plans”, “estimate”, “anticipate”, “intend”, “believe” and “continue” or the negative thereof or similar variations. The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company, including but not limited to, business, economic and capital market conditions; the ability to manage operating expenses, which may adversely affect the Company’s financial condition; the ability to remain competitive as other better financed competitors develop and release competitive products; regulatory uncertainties; access to equipment and power; market conditions and the demand and pricing for products; the demand and pricing of bitcoins; security threats, including a loss/theft of DMG’s bitcoins; DMG’s relationships with its customers, distributors and business partners; DMG’s ability to successfully define, design and release new products in a timely manner that meet customers’ needs; the ability to attract, retain and motivate qualified personnel; competition in the industry; the impact of technology changes on the products and industry; failure to develop new and innovative products; the ability to successfully maintain and enforce our intellectual property rights and defend third-party claims of infringement of their intellectual property rights; the impact of intellectual property litigation that could materially and adversely affect the business; the ability to manage working capital; and the dependence on key personnel. DMG may not actually achieve its plans, projections, or expectations. Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which the Company will operate in the future, including the demand for its products, that there will be sufficient power to operate its bitcoin mining machines, the ability to successfully develop software, that there will be no regulation or law that will prevent the Company from operating its business, anticipated costs, the ability to achieve goals and the price of bitcoin. Given these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements.
The securities of DMG are considered highly speculative due to the nature of DMG’s business.
Factors that could cause the actual results to differ materially from those in forward-looking statements include, failure to obtain regulatory approval, the continued availability of capital and financing, equipment failures, lack of supply of equipment, lack of supply of power, failure to obtain any permits required to operate the business, the impact of technology changes on the industry, competition, security threats including stolen bitcoins from DMG or its customers, consumer sentiment towards DMG’s products, services and blockchain technology generally, failure to develop new and innovative products, litigation, increase in operating costs, increase in equipment and labor costs, failure of counterparties to perform their contractual obligations, government regulations, loss of key employees and consultants, and general economic, market or business conditions. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The reader is cautioned not to place undue reliance on any forward-looking information.
The forward-looking statements contained in this news release are made as of the date of this news release. Except as required by law, the Company disclaims any intention and assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Additionally, the Company undertakes no obligation to comment on the expectations of, or statements made by, third parties in respect of the matters discussed above.
Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Don’t you want to vote in the presidential elections and know that there wasn’t any fraud if you lose? If so, consider moving to Sierra Leone, as the world’s first blockchain presidential election has just taken place there.
Blockchain technologies keep growing and proving to everyone that they are much more than just networks for cryptocurrencies. This week a new milestone in the evolution of this technology has been achieved thanks to the strategic alliance of Sierra Leone National Electoral Commission and Agora – a blockchain development company focused on the electoral sector.
The presidential elections that took place last week were carried out in a traditional way, the only difference being that as an initial test, at the western districts, Agora participated in these elections by invitation of the NEC, which accredited the Swiss company as an observer, according to Agora CEO Leonardo Gammar who explained in the official Telegram channel of the company. The executive disclosed the terms of the agreement:
“Agora’s team is involved in the Sierra Leone presidential elections, and we are in Freetown with our partner, the European Commission, helping the node operators of our blockchain (The Red Cross and the Swiss Federal Institute of Technology at the University of Freiburg) to audit today’s election results. We are proud to announce that our results in the western districts were ready two hours before the NEC and all NGOs, with 86% of the votes recorded.”
These would be the theoretically expected results, but so far no one has ventured to check them because of the strategic and delicate level of a presidential election.
The results obtained reveal the electoral behavior of the western districts and serve as support for a series of upgrades that could lead, in the very near future, to the complete migration towards a blockchain platform that allows a level of trust and efficiency which is impossible to guarantee in traditional systems (both electronic and paper-based).
According to the information provided in the White Paper, Agora takes its developer role in an area as important as the electoral one very seriously: They do not exercise any partisan approach, their product is designed to be politically transparent, and four layers of blockchain development ensure a voting process with unprecedented levels of quality:
“Agora has built a multi-layer architecture that is based on blockchain technology, which includes several innovations that have been developed by our team. Agora’s blockchain, called the Bulletin Board, is a distributed permission ledger based on the Skipchain architecture, which we have been developing since 2015. Data on our Bulletin Board is cryptographically tied to the Bitcoin blockchain through our Cotena layer, which provides a high level of immutability and decentralization of our data. The system we have architected provides high throughput capabilities and low overhead, which enables Agora to be run on low bandwidth devices.
Agora is composed of four technology layers: the Bulletin Board blockchain, Cotena, the Bitcoin blockchain and Votapp. These layers communicate with each other in various instances throughout the election process to provide a cryptographically secure voting environment with auditable proofs. A visualization of our technology layers is provided below.
Likewise, its voting system guarantees electors the virtues of a traditional blockchain: Immutability, anonymity, transparency, and speed:
“Agora’s voting process consists of six distinct steps, which together provide for a cryptographically verifiable voting solution that merits the confidence of voters and the wider public. Elections on Agora’s platform proceed according to the following steps:
Configuration: Election administrators create a new election event.
Casting: Voters cast their encrypted ballots to Agora’s network.
Anonymization: Agora’s network anonymizes all voter ballots.
Decryption: Agora’s network decrypts the anonymized ballots.
Tallying: All votes are counted.
Auditing: Auditors post their reviews confirming the validity of the election results.”
Unofficial results of the more than 400,000 ballots that were manually inputted into Agora’s blockchain system, can be compared to the official data official data.
However, although it is the world’s first blockchain presidential election with a national impact, other official electoral initiatives based on the blockchain have already been successfully carried out, such as the Active Citizen Platform of Russia, the municipal elections of South Korea’s Gyeonggi-do, and the announcement of Nasdaq to introduce a patent for vote authentication and election processing.
Good times for Sierra Leone and voters worldwide – a blockchain presidential election marks the beginning of a future free of fraudulent voting and hopefully, a future without political discussions over electoral results is much closer than we think.