By now most of us have heard of Bitcoin and how one Bitcoin is worth over $17,000 US. A lot of marketing is going on especially in social media that Millennials Favor Bitcoin Over Gold, Stock & Traditional Banking. Few people are crying that they should have invested in BitCoin 7-8 years ago itself. Few so called “financial analysts” are filling up my LinkedIn profile with their Bitcoin related articles on how I can double, triple my money in just few days. I asked them to invest all their money in Bitcoins if they are so confident and sleep well – you don’t need to waste your time writing articles.
This is what people wants to do – “Buy 0.00001 of a bitcoin. Change LinkedIn profile as Investor & Entrepreneur. Live, Eat, sleep Bitcoin”. Very funny – isn’t it?
Now, let’s talk about this “new gold” which was introduced in 2009 January as an open source software. The total value of all Bitcoins out there is worth billions of dollars. Much like Paypal, it’s a digital asset that can be used in the online bartering system, but also involves its own form of currency.
But unlike other payment systems that involve connecting your account with a bank or a credit card company, it’s decentralized, meaning this payment system doesn’t work with a central bank. In other words, it works from person to person. Read 5 Professional Ways to Earn from LinkedIn without Investment if you are not interested in risking your money in BitCoins and other crypto currencies.
Basically, you send bitcoin, or a percentage of bitcoin to another person or business. But why would you want to do that?
- Pay for merchandise
- Send as a gift
- Pay for services
- Receive an investment
- Have fun
☞ Some Quick Interesting Facts about BitCoins :
- The first item ever purchased using bitcoin was a pizza on 22nd May 2010. Since then that day is celebrated as Bitcoin Pizza Day.
- The number of bitcoins is fixed at maximum 21 million. This is expected to be reached by 2140.
- As of 2017, the owner of BitCoins (“Satoshi Nakamoto”) owns up to 1 million bitcoins, an estimated value of more than $16 billion now.
- Bitcoins are made using a Bitcoin mining software process which relies on math problem solving.
- The smallest transaction unit is 1 satoshi which is equivalent to 0.00000001 BTC (Bitcoin).
Many people love to collect bitcoins, as their value has skyrocketed over the years. However, you should be aware that bitcoin can be the focus of many scams. In order to not be a victim it’s important to educate yourself. Are there legitimate bitcoin transactions online? Yes, there are. You just need to be aware of them.
☞ What Is Bitcoin?
Bitcoin is both an online currency and a worldwide payment system. The word was created from two words, “bit” and “coin”. Die-hard fans will call them coin. You don’t need to be involved in every aspect, but you may still be interested in learning a bit about the company.
A bitcoin is actually created by a computer code. There is no gold backing it up, or US dollars or a Swiss bank account.
bitcoin.org was first registered in 2008. Satoshi Nakamoto wrote a paper about the system that was sent to their mailing list to announce how it worked.
Bitcoin was created by an anonymous person. It could also have been invented by a group of people. They go by the name of Satoshi Nakamoto. The company originally started with an open-source code (free and available for everyone) in 2009.
Bitcoin can be exchanged for other currencies. The process for creating Bitcoin as part of a reward is called “mining”. By early 2015, over 100,000 online merchants accepted bitcoin for payment. I strongly recommend you to read The Era Of CryptoCurrencies – Is It Worth Investing Now? to understand a different perspective of this topic.
By 2017, there were anywhere from 3 to 6 million users using a cryptocurrency wallet, with bitcoin being predominant. (There are other companies that do cryptocurrency too.)
Bitcoin can also be known as bitcoin without the capital letter at the beginning, though more commonly Bitcoin is the tech and bitcoin is the unit. However, the Oxford Dictionary suggests all uses be in lowercase.
The tickers that are used to represent bitcoin are BTC and XBT. Since it’s worth so much now, the coins are traded as millibitcoin (mBTC) and satoshi. A satoshi is the smallest amount you can trade, which is 0.00000001 bitcoin, one hundred millionth of a bitcoin.
☞ How Can I Buy Bitcoin?
It’s easier to spend bitcoin than it is to figure out how to buy it. You’ll need to start with a wallet from a company and provide something that they want to buy in exchange for that bitcoin. Many wallets will accept Steam gift cards, so that can be the simplest way to get started.
As for using it for payment, many online merchants will sign up for a bitcoin payment service provider, such as BitPay or Coinbase. You can send bitcoin in payment for goods or services once you have some in your account. I think people are looking more to sell bitcoins than buying.
☞ Bitcoin is Scam or Legit? Should I Buy Bitcoin?
It’s up to you, but you should first ensure that wallets are legitimate. Often many aspects of bitcoin can be hidden from view. What happens if you send bitcoin to someone, or send something in return for coin but you never get it? You may be out of luck, whereas when you deal with an actual bank or credit card company, they will resolve the issue quickly for you.
☞ 6 realities of this multi-billionaire scam industry.
- You could be the victim of a Ponzi scheme
A Ponzi scheme is a specific form of fraud. Basically, someone creates a nonexistent company. They get investors to sign up. In the beginning, real payments are sent to these investors to create an illusion of trust. These first investors enjoy quick returns. Later, these numbers are given to future investors who forward substantially larger amounts of funds. But since the company isn’t real, the original scammers take the money and run.
Bitcoin can also be used in this type of scheme. The first investors may put forward bitcoin and receive dividends in return. Then the next set of investors comes forward with vast amounts of bitcoin. But one day, the bitcoin is gone with nothing gained.
- Pyramid Scheme Issues
Pyramid schemes are illegal in many countries, but this doesn’t stop people from doing them online, or bypassing the rules a bit. The Swiss Federal Council even considered that bitcoin itself was a pyramid scheme. After all, the coin moves from hand to hand without any profits promised. Read our popular article Why 98% People Fail In Network Marketing? here
In 2014, the World Bank declared that bitcoin did meet the usual definition of a speculative bubble, but they would not conclusively declare it a pyramid scheme. But it’s important to be aware if someone is trying to get you to sign up, and then get you to sign up your friends, who sign up their friends…
- Ginormous Energy Consumption
In order to run the servers and data banks that must keep track of all the miners, a vast amount of electricity is required. This can have a significant impact upon the environment which many experts are concerned about. This leads to pollution and environmental spillovers.
But it can also be argued that simply using the internet can also result in the same.
- Bitcoin is Used by Criminals
Bitcoin is being used to purchase illegal goods. Now that we know bitcoin is being actively used by criminals, it’s attracted the attention of financial regulators, law enforcement, and the FBI. If you’ve been using it for something you shouldn’t, chances are you’re being watched.
Interestingly, the negative aspects of bitcoin seem to fuel its increase in popularity and value.
- Attracts the Notice of Hackers
Hackers are always looking for a way into a computer or network. The goal is cash which can easily be transferred into their offshore banking account that can’t be tracked. But bitcoin is just as attractive.
If you’re trading in bitcoin, you may attract the notice of a hacker. You could be subject to more than your share of malware and viruses. These hackers want into your bitcoin account so they can send all the coin to their accounts.
Another way hackers try to get your coin is by posting fake bitcoin sites that try to encourage the sale of bitcoin. You try to buy them, but all that happens is that your wallet is emptied.
Since it’s a crypto currency, where are you going to go if someone hacks your account and steals all your coin? There’s not a lot of support for an industry that is fueled by scams.
- Bitcoin Multipliers That Don’t Deliver
Another big online scam is where you navigate to a website bitcoin wallet. Here you’re tempted with promises that if you send them BTC, that they’ll send you the same back and more in just minutes.
This is totally not how bitcoin works. It’s taken years for the value of 1 bitcoin to work its way up to $70,000 USD. The value isn’t going to increase all that much in the minutes that it take for you to enter your bitcoin details and send it to a scammer.
Oh, and by the way, they now have your personal information too!
☞ Closing Thoughts & Advice
In September 2017, the CEO of JP Morgan Chase called bitcoin “a fraud” and said he would fire anyone in his firm who got caught trading it.
Bitcoin isn’t backed up by gold like other types of currency. It’s something that’s been completely made up. It seems like its value lies in its popularity, much like the last century when Beanie Babies sold for hundreds of dollars! Today, an old Beanie Baby is worthless.
While more businesses are accepting bitcoin, it remains in question for how long this will happen. Will the bitcoin bubble burst, and if it does, how many businesses will shut down? Or, is it possible that businesses will continue to thrive on this payment system?
It’s possible that one day, bitcoin may even end up on the stock exchange. Perhaps there will even be bitcoin ATMs where you can deposit or withdraw bitcoin. Read Secret To Get Success In The Trading World With Right Help to understand where and how to invest right way.
Proceed at your own peril. Do your research before sending bitcoin to any type of business, company, or individual. The last thing you want is to have a red face in front of your friends or colleagues when you find out you’ve been scammed!
One thing’s for certain, bitcoin isn’t going to leave us any time soon. If you choose to do bitcoin trading, do it in only small amounts and just for fun.