Including what Bitcoin is and how to use it
Any hallmark of a developed society can be measured by its currency.
Throughout history, we started off with simple bartering. Then we progressed to banknotes and coins. As the Internet advanced its rapid pace, it was inevitable that the next stage of currency evolution was just around the corner. Of course I am talking about cryptocurrency, in particular Bitcoin.
What Is Bitcoin?
Like the Dark Web, cryptocurrency’s reputation suffers a bit as it is most commonly associated with Dark Web transactions such as drugs and guns. Plus the exchange rate is notoriously volatile, making it extremely difficult to have long-term trust in.
When it comes to cryptocurrency, Bitcoin is the world’s largest, occupying almost 50% of the digital currency market. Of course, Bitcoin has its rivals such as Ethereum, Litecoin, and Dogecoin, each with its own exchange rate. But Bitcoin benefits from wide name recognition and 16.5 million Bitcoin in circulation.
A Peer-To-Peer System
With Bitcoin, there are no actual banknotes or coins. This means no single government controls it because it is just numbers on a screen. Since governments can manipulate currencies for political purposes, this makes Bitcoin extremely attractive to many people.
Instead, it is a peer-to-peer (p2p) currency. This means that instead of a financial institution controlling it, Bitcoin is decentralized. It is passed from one user to another online.
Bitcoin transactions are publicly recorded in a ledger called the “blockchain”. This information is permanently and publicly viewable on Blockchain.info and cannot be edited or deleted. Blockchain therefore acts as the proof of a transaction.
Is It REALLY Anonymous?
Yes – and no. It is anonymous in that you can send and receive Bitcoin without revealing your name, address, and bank details to the payment recipient. There would also be no bank with your identity details on file to link that Bitcoin address to.
This is an example of a Bitcoin address :
Obviously this means no-one can see who owns that particular Bitcoin address. You’re just a sequence of letters and numbers. But if anything subsequently reveals it to be your address (say law enforcement tracks down drugs to your address and can connect a Bitcoin address to those drugs), then all transactions to that Bitcoin address will then be linked to you.
This is why it is generally recommended to use multiple wallets, and to not reuse a Bitcoin address for multiple transactions. That way, it becomes more difficult to pin a particular transaction on you.
Since you can’t walk into a bank and withdraw Bitcoin notes and coins, the only way to obtain the currency is to get them online. This is done through the use of a “wallet”. It enables you to pay someone with the currency, as well as receive payments.
There are so many options for wallets, that I am going to recommend two of each kind, the ones I consider to be the best, in my opinion.
Electrum (Windows, Mac, Linux, Android)
Whenever I have asked around for Bitcoin desktop wallet recommendations, this is the one most frequently mentioned. Electrum seems to be the one everybody makes a beeline for and I have yet to hear a bad thing said about it.
Encrypted keys stay on your computer. You can recover funds using a secret phrase. Multiple wallets are supported as well as third-party plugins.
Armory (Windows, Mac, Linux, Raspberry Pi)
Armory is highly praised but it is more oriented towards people with a bit more advanced technological knowledge. Armory is free and open-source, which means you can crack it open and inspect its programming code. You can satisfy yourself how good it is and not take the company’s word for it.
You can manage multiple wallets, which as we’ve said before, is good for making it harder to pin payments to you. But the nicest feature of all is something called “Cold Storage”. All private encryption key data is stored on an offline computer, making it impossible for someone to hack in and steal accounts.
Again, there are many options for mobile cryptocurrency wallets. But I focused solely on ones available for both iOS and Android.
CoPay is a free open-source cryptocurrency smartphone app where you can manage multiple Bitcoin wallets with ease.
The best part of CoPay is that the account is co-owned by a group of people (yourself and friends, for example). To make any transaction requires the permission of every account holder. That’s a really neat feature and stops one of the account holders from emptying the account and running off.
CoPay is even available for the Windows Phone. But honestly, who uses that these days? I doubt even Bill Gates does.
When you sign up for the Xapo app, it automatically comes with its own debit card, so you can withdraw your balance from ATM machines. But you don’t have to use the card if you don’t want to. You can use the app on its own. But the debit card is a nice touch.
Xapo also heavily promotes their heavy security vault for storing customer Bitcoin balances. The vault is in a decommissioned Swiss military bunker. Beat that Dr Evil.
Keeping Track Of The Exchange Rate
The exchange rate for buying Bitcoins is where your blood pressure is going to get tested. If you don’t believe me, this is the exchange rate today (April 12th 2019), if you want to convert one Bitcoin into US dollars.
Yes, just over $5,000 for one Bitcoin. And in the last five minutes, that rate has jumped up and down like a kangaroo on crystal meth.
Obviously though, you can have fractions of a Bitcoin, the same way you can have a hundred cents for every dollar. So if you go to Preev, and enter the amount you want (and the currency) on the right-hand side, it will automatically tell you in real-time on the left-hand side how much Bitcoin that comes to.
So one dollar is :
Dealing in cryptocurrency is definitely not for the faint-hearted. You can make a fortune when the exchange rate goes up. But in the blink of an eye, it can all come crashing down leaving you penniless. So the golden rule is don’t leave a lot of money in your Bitcoin wallet unless you are able to lose it if necessary.
With everything else in the world moving online, it made logical sense for finance to follow suit. Digital currency has many teething problems and many underlying faults (lack of regulation and laws to name two) but it is nevertheless here to stay.
Once it has better security protocols, a more stable exchange rate, and merchants willing to trust it and accept it as payment, that will be when it will really get going.