Tuesday, November 28, 2017

What is Bitcoin

Bitcoin is a type of digital currency. It is also a payment system. Bitcoin was created in 2009 by someone named Satoshi Nakamoto. To this date, no one knows who Satoshi is. There are many theories (Elon Musk, a supercomputer in China, etc.), but no one has officially stepped forward to claim the honor. As part of the creation, s/he also created the first blockchain database. Here's a link to the white paper (Bitcoin: A Peer-to-Peer Electronic Cash System) which explains how bitcoin works.

What problem did Satoshi solve in the white paper? S/He made it possible for a technology to be the intermediary by coming up with a logic to obtain consensus by all parties. In this way, no "trust" broker like a bank or lawyer is needed.

The number of Bitcoin available in the market is limited to approximately 21 million. There are approximately 16.7 million bitcoin on the market today (you can see how many bitcoin are currently on the market by clicking here). As of 11/26/2017, bitcoin is worth a little over $9,000. You can check on the latest bitcoin price here.

Due to its popularity you can use Bitcoin at numerous stores. Some of these stores include:

WordPress.com, Overstock.com, Subway, Microsoft, Reddit,Virgin Galactic, OkCupid, Namecheap, CheapAir.com, Expedia.com, Gyft, Newegg.com, and Whole Foods.

In addition to being able to send an unlimited amount of money to anyone with a cell phone, Bitcoin transactions are also anonymous. As President Obama stated, if the govt. can’t crack encryption, then people are walking around "with a Swiss bank account in their pocket."

The implications of this last point are very compelling. Bitcoin can't be manipulated, controlled or shut down because it's completely decentralized. If government could shut it down they would have done so already.

You can obtain Bitcoin in three ways: buy it, mine it or trade it

Buying Bitcoin 

If there were a central bank of Bitcoin it would be Coinbase. You can buy Bitcoin through Coinbase, but your payment options are limited.

You can also buy Bitcoin through a peer-to-peer network like Craiglist. The Craigslist of the digital currency world is LocalBitcoins. You can purchase Bitcoin with over 300 different payment options on LocalBitcoins, including Paypal, gift cards, credit cards or Amazon.

Click here for a list of payment options on LocalBitcoins. 
Click here for a comparison of LocalBitcoins and Coinbase.

Mining Bitcoin

In addition to buying Bitcoin, you can also obtain it by making it. This is what people refer to as bitcoin "mining".  The Internet is full of videos showing you how to set up your mining "rig". This video is just one example.

Trading Bitcoin

To trade bitcoin you need to sign up with a service that will provide the volume you need. These services are referred to as exchanges. My favorite trading platform is Binance. This isn't the largest exchange, but they have the best opportunities for traders. The best site for looking up market information about market size and volume is CoinMarketcap. I'll be providing more information about trading in future posts.