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What is bitcoin? and

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What is bitcoin? And should you invest in it?

Hows this for a heros journey: In July 2010, one bitcoin cost just 5 cents. In December 2017, that figure had risen to nearly $20,000. And just three months ago, the price fell to around $6,000 meaning the global cryptocurrency market has lost more than $600 billion from its peak.Despite the recent downturn and fluctuations in the market, the top 100 cryptocurrencies boast a current market cap of $219 billion, and the majority of Americans 69 percent expect the price of cryptocurrencies to rise in the next five years, according to a survey by the Global Blockchain Business Council. That same study showed that 21 percent of people are considering adding bitcoin to their portfolios, but 38 percent of Americans see bitcoin as a bubble thats ready to pop so what gives? If youre considering putting money into bitcoin (or just want to talk intelligently about it at a cocktail party) heres what you need to know.WHAT IS BITCOIN?Bitcoin is one type of digital currency, or cryptocurrency, that was dreamed up by an anonymous inventor (known as Satoshi Nakamoto) in the wake of the 2008 financial crisis. Think about digital currencies like viewing your checking account balance online you see the number on your screen, but you dont have the bills in your hands. In the case of bitcoin and other digital currencies, however, there is no standardized physical representation (like a dollar bill) the assets exist only in digital form. There’s also no regulation. The payment network that allows the digital tokens to move between individuals isnt managed by any one entity (like the government) or company (like Visa, Wells Fargo or Venmo). Instead, its decentralized, made possible by a system of computers around the world, and transactions are private; in fact, many users value the degree of anonymity that digital currencies offer.While purchase options with bitcoin have historically been limited, today you can use it at hundreds of online retailers including Overstock, Expedia, Newegg and Etsy, and its become increasingly popular to purchase gift card using bitcoin, on sites like Gyft and eGifter, where you can purchase gift cards to virtually any retailer, thus making bitcoin infinitely more spendable.Before you invest in bitcoin, consider thisSep.26.201801:01HOW DOES BITCOIN WORK?The technology that makes bitcoin and other digital currencies work is called blockchain, which Mercina Tillemann, chief operating officer at the Global Blockchain Business Council, says is kind of like a set of railroad tracks. “In order to get something from me to anywhere else, I need that framework [those tracks] to exist. Bitcoin is like a train car that travels on top of the tracks. When you send bitcoin to someone, the transaction is verified by computers all over the world. The computer or data center that verifies the transaction first (it involves solving a complex mathematical equation) is rewarded in the form of a bitcoin payment, says Kyle Forkey, general partner at Amentum, a cryptocurrency investment firm. (People and groups who race to do this can turn a significant profit.)Until recently, it was difficult to move something digitally without the risk of it being copied or altered in the process. For example, think about when you send someone an email you retain the original, and they receive a copy. If the same thing happened when you sent money, itd be a real problem, says Tilleman. Thats why we currently rely on intermediaries banks, credit unions, companies like PayPal to make sure that doubling-up issue never occurs. These middlemen charge fees for ensuring that when you send someone money, youre parting ways with it completely, and the other person is legitimately receiving it. With bitcoin, there’s also always an intermediary it’s whoever is managing the transaction, whether its an exchange or other platform. But because there are no restrictions on who can participate (and no account minimums), they’re not the traditional financial services players.SHOULD YOU INVEST IN BITCOIN?Before diving into bitcoin or other digital currencies, you need to understand the risks. One: volatility. It’s normal in the world of cryptocurrencies for prices to go up and down 30 percent in a single day, says Bobby Ong, co-founder of CoinGecko, a cryptocurrency valuation and ranking website. Two: The fuzzy future. I do fundamentally believe that blockchain technology will ultimately change the way money moves from one place to another, says David Bach, author of “Smart Couples Finish Rich. But he also thinks that 90 percent of the cryptocurrencies out there will be worthless within less than five years.That means only investing as much as youre comfortable losing, which Bach says should be no more than 1 to 2 percent of your overall portfolio. If you decide to go forward, dollar-cost averaging could be a good way to do it, since each prices vary widely from day to day. (How? Take the amount of money you decided to put in, then divide it by 12. On the first of every month for a year, buy that amount of your chosen currency.) Two top digital currencies are currently bitcoin and Ethereum, so Ong says hed likely look at those first, putting 70 to 80 percent of his portfolio in those two coins, then invest the remaining 20 to 30 percent in smaller cryptocurrencies. Diversity in this sector is as important as it is in the markets overall. Several other cryptocurrencies have made it into the American consciousness over the last few years, including Litecoin, Ripple, and Dodgecoin.Bitcoin ExplainedJan.19.201801:37HOW DO YOU INVEST IN CRYPTOCURRENCIES?If youre looking for an easy way to buy bitcoin or another digital currency, there are user-friendly exchange services that allow you to use money in your bank account to make the purchase. Coinbase is kind of the gold standard, but there are a lot of other really great exchanges that offer a wider range of currencies, says Tilleman. You create an account, input the account information youd like to use, then make your purchase. Know that if you do use an exchange, just like transferring to any currency, you will be charged a transaction fee for example, Coinbases averages 1.5% for bitcoin, says Dan Romero, vice president and general manager of Coinbase.Finally, let’s talk about security risk here and the extra steps you need to take to keep your assets safe. When you buy stocks, a registry is kept of all the shareholders. But since bitcoin isnt controlled by any one entity, if your coins are stolen by a hacker, theyre likely gone forever. Whoever has it owns it, says Ong.Once you buy units of a digital currency, theyre kept in your digital wallet, which can be easily stored on the exchange you purchased it on. The site gives you a unique key (a string of letters and numbers) to use for access. But keeping your bitcoin in the exchange-provided digital wallet might not be the most secure option for example, in January of this year, hackers stole upwards of $500 million in digital currency when they broke into an exchange called Coincheck. You can read the fine print on any exchanges security policy to see if they offer insurance, but thats rare most insurance companies shy away from insuring digital currencies since its almost impossible to retrieve stolen coins. Instead, look into using a hardware wallet like Ledger or Trezor, says Ong. These cost around $100 and are protected with a PIN and a backup called a “seed” in case you forget your PIN. Suffice it to say you’ll have to keep this device as safe as possible. Ironically, the best place to do that might be an old-fashioned safety deposit box at an old-fashioned institution called a bank.With Hayden Field & Kathryn Tuggle NEXT: These changes to your 401k can boost your retirement savingsWant more tips like these? NBC News BETTER is obsessed with finding easier, healthier and smarter ways to live. Sign up for our newsletter and follow us on Facebook, Twitter and Instagram.

1 thought on “What is bitcoin? and”

  1. Sanjeev Singh says:

    By way of 56 hunger deaths, children religion at crush, superseded democracy and fraud development jai ho MODI
    Dear Chandrashekhar Azad Ravan, Bhim Sena, India
    Dear Sir,
    I like to draw your kind attention that Narendra Modis Government with the limited vision of malicious women and money has scattered the resolutions of United Nation and yet want to win the 2019 general election.
    Right to Food, an organization claim that in last 4 years 56 people died due to hunger. 42 hunger deaths occurred during 2017 and 2018. In most of the cases due to unavailability of pension or rations from PDS were the causes for the deaths. Out of 42 deaths (2017 and 2018) 25 deaths was associated with problem of Aadhaar. (The Hindi daily Hindustan Ranchi edition dated September 22, 2018 in Page 06)
    The investigation of trafficking for religion conversion of 300 children belonging to Bihar and Jharkhand has been shifted to CID. Since 2006 through trafficking 300 children were supplied to Pakeyam Marshy Cross Home, Ludhiana. The Home is not registered under J J Act. Children were lured from poor tribal in name of education and jobs. The children were exploited and kept in misery conditions. (The Hindi daily Hindustan Ranchi edition dated September 22, 2018 in Page 08). The question is what BJP Government in Punjab was doing.
    The 7 km long tatisilway road ( Jharkhand) constructed with the cost of 14 crores two years back has slandered. Approximately five thousand heavy vehicles pass the road daily. (The Hindi daily Hindustan Ranchi edition dated September 22, 2018 in Page 08).
    Birsha Munda, Bus Terminal constructed with crores of rupees has only one public toilet complex. Daily 750 buses run, 15 thousand passengers travel and reach Ranchi. Though, Ranchi Nagar Nigam collects annual tax of more than one crore rupees from the same terminal. Same is the condition in two other bus stands of Ranchi. In morning people are in long queue waiting for own turn. (The Hindi daily Hindustan Ranchi edition dated September 22, 2018 in Page 06).
    दखए मद क भम आरम क चदरशखर आजद उरफ रवण क चनत

    The challenge in front of HINDU is how to question the dominance system. Who consider themselves possessing great general knowledge in compare to HINDU and enjoy smartness certificate issued by women of Rotary Club. Mr. Narendra Modi lack understanding on sanitation, public utility, convenient, urban planning, maintenance and environment. He is simply using name of Mahatma Gandhi, thinking occasionally doing drama of swiping public places he has given Swatch Bharat. Under such circumstances how Ranchi District can be declare ODF in October 02, 2018.
    Through all round dialogues, considering the suffering of all, inclusive development and ownership can be only restore democracy in HINDU of which Mr. Narendra Modi is in oppose for survival factor. He very well know if HINDU get together the dominance will lost and his government will vanish.
    I agree with you that poor dalits do not have money to fight cases. In such situations they suffer from seeking justice. You and your family have also suffered due to prolong detain in Jail due to political reason. The suffering of poor especially dalits has increased in recent times due to surpass of democracy by horrid women and Mr. Narendra Modi. I can understand very well because I have also been subjugated by dominance politic and system. My well wishes are with you.
    Regards
    Sanjeev

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