Am I the only person who is confused by Bitcoin? I get that it’s a currency, but how did that happen? Can you use it to buy stuff? How do you get it? Do normal people use it?
So, I forced myself to read up on it, and here’s my executive summary in case you, like me, are interested in bitcoin but simultaneously find it too boring to read about.
What is it? A virtual currency that is not politically regulated.
Virtual currency? This means you can’t ‘hold it.’ You send or receive payment electronically via phone or computer. This is basically how we pay for everything nowadays anyway.
Not politically regulated? This means that no country is regulating the value/inflation/creation of the currency. it also means the value of a bitcoin is international.
How do you get bitcoins? You can buy them on an exchange, or receive them as payment.
What can you buy with bitcoins? Lots of retailers are starting to accept them, including Overstock, Expedia, and DELL. Paypal is now integrated to transact in bitcoins too.
How are bitcoins created? Some complicated system of ‘mining’ where someone has a computer set up to validate transactions, and as a payment for that work they receive newly created bitcoins. This started as something that normal people could do, but now it requires super high-tech equipment.
Are bitcoin transactions anonymous? Kind of, but nothing is really anonymous anymore, so I wouldn’t trust it.
How volatile is the price of a bitcoin? Very. 18% more volatile than the US dollar. In 2011 one bitcoin cost $.30. In November of 2013 one bitcoin cost $1,242. Today one bitcoin costs $355.
Is it on the stock market? Not on the main exchanges. Lots of people buy bitcoins as an investment, though.
What do economists think will happen? Some think it’s a good investment, some think it will be worth $0 within the year.
Do normal people use bitcoins? Since mainstream retailers are accepting them, I would say yes. Also, Al Gore and Bill Gates among other notables are fans of the currency.
Should I buy some bitcoins? I have no idea.
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