Toss A Bitcoin, Make A Wish
What exactly is bitcoin? It's complicated, but the short answer is that it's digital currency that could one day take over physical currency.
Bitcoin. It’s probably the most well-known word that no one understands. It easily rivals the term “racketeering.” It makes sense that no one understands it. When Googling “definition of bitcoin,” you come up with tons of crazy answers. I’ll summarize them for you:
“Bitcoin is a digital currency that uses encryption techniques to create new currency and regulate funds that can be issued through an uncontrolled network on a coequal basis and how are you still reading this because it is so boring.”
Yes, bitcoin’s greatest problem is marketing. No one knows what the heck the talk is about. So I’m about to take on the monumental task of explaining it.
Fun fact: My old boss managed 15 employees at a financial technology company. During one meeting, he stopped everything and announced, “What the hell is a bitcoin? I can’t figure it out.”
Let me explain to you as well: bitcoin was the first decentralized digital currency. It’s a currency that can only be transferred through the internet. Bitcoins have many advantages to traditional money. Transfers occur person-to-person, for instance. This means that it has very low fees, is globally usable, and is sent anonymously (which admittedly gives the currency a somewhat sketchy reputation as it is often the currency of the dark web). Plus, you don’t need to mess with a bank. These are the reasons why it’s gaining so much traction.
No one controls the bitcoin market. It’s a free system, much like email. People send emails back and forth, but no one controls email technology. It’s in everyone’s best interest to keep email working. It’s the same in the bitcoin market. Thus, people cooperate to make sure the currency operates as it should.
Why Does Bitcoin Have Value?
You’re probably wondering why bitcoin is worth anything. After all, it’s just code. You can’t hold it in your hand. No powerful government entity recognizes it.
Let’s back up for a second. Why does any currency have value? It doesn’t. Very few things in life actually have value: food, water, homeostasis, sex – the basics. But everything else, the dollar, the yen, the pound, the rupee… essentially worthless when the zombie apocalypse comes. So bitcoin isn’t as outlandish as it first seems. All currency just has perceived value.
If you want to give digital currency a try, how do you get it? There are many bitcoin exchanges where you can enter or exit the market with a government-regulated currency. Among the most popular exchanges are Bitstamp, Bitfinex, Coinbase, and BTC-E.
Or you can get bitcoin through mining.
BEING A BITCOIN MINER IS LIKE BEING AN ACCOUNTANT. BUT BEING A DIGITAL CURRENCY MINER SOUNDS COOLER, DON’T YOU THINK?
When mining, you are processing peer-to-peer bitcoin transactions. For this service, you are entered in a lottery system wherein bitcoins are given away. So if you serve as an employee (essentially) to the bitcoin marketplace, you may get paid via bitcoin. This takes a specialized computer, so it’s not for someone who wants to simply use bitcoin as an alternative to PayPal. Mining takes serious investment.
Why Bitcoin Makes Sense
It’s simple. Pretty soon, most transactions will be done over the internet. The next generation may never even handle paper money.
An all-digital currency makes sense. Besides, “big banks” have developed a very poor reputation as of late. They charge high fees, they issued too many mortgages pre-2008, and they are a hassle. Bitcoin supersedes all of that nonsense.
Phew. Now that you understand how bitcoin works, feel free to go get some. It’s way easier to use than to understand!