Let me first attempt to define Bitcoin, after which I will explain how one actually can purchase and transact with it. Bitcoin is a crypto/digital currency, its money just like paper currency, and it fluctuates against other currencies both paper and digital. It’s a tool, a method of legal tender, to whoever agrees to accept it, no different than any other currency.
There are over 1100 crypto currencies, collectively referred to as blockchain technologies. Bitcoin is the most recognizable, because it was the first crypto currency and in many ways, acts as the unofficial world reserve digital currency. Currently, the only way most people can purchase any other crypto currency is to first convert their cash into Bitcoin after which they can exchange their Bitcoin for other digital currencies.
Most governments frown upon crypto currencies because they can’t effectively control, track or tax them, which many consider, to be crypto currency’s most attractive features. It enables people to anonymously purchase things with no paper trail. There is no doubt that eventually crypto currency will be regulated and taxed, but for now it’s the wild, wild west. In fact the largest crypto currency depository Coinbase was just told to release all the names and Bitcoin purchases under $20K to the IRS in the first week of December.
Bitcoin and crypto currencies were never intended to be an investment, but that is how the public and markets are treating them. You aren’t buying a share your buying a token, which is a digital representation of a currency that has a specific value at the moment you purchase it. Its value goes up and down against other currencies, like the dollar goes up and down against other currencies. Different digital currencies have different values, consequently the cryptos that used by more people, companies and financial institutions will tend to have a greater value and potential for gain. Thus it takes research to decide which of these digital currencies may have the greatest future potential.
Many people are interested in purchasing crypto currencies, but are uncertain about how to do it and how these currencies really work. There are many companies and crypto brokers who for $2,500 or more will be happy to help, however, a prudent investor ought not to buy what they don’t understand, because if you don’t understand it how will you know a good price to buy it or sell it or why one crypto currency is better than another. Unfortunately, the masses only look at the return they see some are getting and jump on the band wagon.
It took around 10 years for Bitcoin to reach $1,000, but it has taken only eleven months in 2017 for it to reach $16K per token. This calls for some questioning… is Bitcoin in a bubble… of course it is. Could the bubble get bigger… yes it can. Will it eventually pop… most likely. Are all cryptos in a bubble… no. Are there various reasons to look at one crypto currency as opposed to another… yes.
Bitcoin will hit a certain level and drop and its fall will likely be dramatic as its ascent. However, regardless of what happens to Bitcoin, crypto currencies are here to stay and corporations, the markets, the regulators, the IRS and even the banks know it. Physical cash will eventually be replaced by digital currencies and this likely will happen more quickly than most think. There are many pros and cons to going digital for companies, global markets, banks and individuals, but for the sake of brevity, let’s leave that for another article.
How do you get crypto currency?
The process of opening a crypto currency account, converting your cash into digital currency, purchasing specific cryptos and then storing them is complicated and cumbersome. Some people will not be able to figure it out; others will not have the patience to follow through, while others who are techies will love it. The learning curve is steep and you have to methodically go through every step to protect your assets from being hacked. This is why people are willing to pay $2,500 or more for someone to do it for them, and/or walk them through the process step by step.
- To open up a crypto currency account you will first have to select a digital currency conversion company to do the conversion. Coinbase is the largest digital conversion company com
- You will have download a google app called Authenticator which requires you to input a code within 20 seconds every time you do anything on the account or you won’t be able to move to the next step.
- After you open a digital currency account you must complete a test deposit into your digital currency conversion company from your bank account, debit card or credit card.
- You then must go online or check with your bank, debit or credit card to make sure the transaction was successful (this could take from 30 minutes to 4 days)
- Once you have confirmed the transaction amount, you repeat the process to do the actual transfer
- Once the transfer is complete you will own that amount in Bitcoin. Again, this step can take30 minutes up to 4 full days, after which point you can transfer your Bitcoin to the crypto currency platform of your choice
- To transfer to a Crypto platform (Bittrex is currently the most common with the most choices https://bittrex.com/ ) you must down load another authenticator code (which again changes every 20 seconds and must be inserted for every step)
- Then you transfer the Bitcoin from the currency conversion company to your chosen crypto currency platform. Confirmation can take from 1 to 24 hours
- After you receive confirmation, you can then purchase other crypto currencies. You have to purchase each crypto currency in Bitcoin, so if you want to purchase $200 of a specific crypto currency you have to go a website ( https://www.coindesk.com/calculator/ ) that will tell you what fraction of a Bitcoin that equates to in order to make the purchase and you must complete the transaction in 20 seconds or start over.
- After you finish your first purchase, you must place it in a “digital wallet,” which is usually a part of the digital platform company you chose.
- You can only purchase one digital currency at a time, so you have to go through the whole process each time you choose a different crypto
As you can see, it’s complicated. If you don’t have a smart phone like an android or i-phone, you can’t do this, because it’s the only way to download the Authenticator App and receives texts while making the transactions. If you are not proficient on the computer and smart phone, you should also think twice before attempting to purchase crypto currency. Regardless of what happens to Bitcoin, crypto currencies are here to stay and are the currency of the future.
Even so, crypto currencies are fiat currency backed by nothing, just like paper currency. The question is: who is really in control of it? We are told no one controls it, which is hard for me to believe. Many people lost billions when the Bitcoin exchanges got hacked, and because the transactions are not traceable, there was no recourse. The exchanges said they have fixed the problem, but that begs the question: who fixed it and how did they fix it? It is claimed that peer to peer transactions (transactions between two people or sources) can’t be hacked, which so far that seems to be true, but there is still uncertainty surrounding this new market.
How I Selected My Crypto Currency
- As with any option, I personally wouldn’t put too many eggs in one basket, like Bitcoin, but diversify into a number of different crypto currencies
- I would pay attention to those which are more functional and technologically advanced
and are being widely utilized by companies, banks and nations to transact and do business
I have gone through the process of purchasing five different crypto currencies. I did it with the knowing I could lose it. The crypto currency market is very volatile, but I wanted to have a better understanding of the process, so I could explain it to others. I think there is money to be made in crypto currency, but its not like a mutual fund, you need to pay attention to what’s happening and you have to buy, sell and transact on the account Bitcoin and crypto currencies have never experienced a downturn or a drop in the US dollar, both of which would definitely effect crypto currencies, but we don’t know how. My greatest concern in regard to this new digital currency technology this: If I wanted to create a one world currency, I would create a crypto currency that everyone would have to participate in. Once in place this system could destroy people’s ability to buy things privately and anonymously. When people ask me about Bitcoin, I tell them they should do whatever they personally feel led to do; because at this point the future of each blockchain technology is unknown.
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Is Bitcoin a Bubble Here’s What Two Bubble Experts Told Us (12.8.17)
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Bitcoin’s Wildest Rise Yet: 40% in 40 Hours (12.7.17 WSJ
Hackers Steal More Than $70 Million in Bitcoin (12.7.17) WSJ
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Bitcoin Has an Unusual Relationship With Volatility (11.19.17)
Even a $31 Million Hack Couldn’t Keep Bitcoin Down (11.21.17)
The One Way Governments Could Actually Kill Bitcoin (10.16.17) SMC
Only Buy Bitcoin if You’re Ready to Lose (10.31.17)
IMF’s Lagarde says digital currencies could boost its own SDR (9.29.17) Reuters https://uk.reuters.com/article/uk-imf-lagarde/imfs-lagarde-says-digital-currencies-could-boost-its-own-sdr-idUKKCN1C41QP
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The Future of Cryptocurrency – By Investopedia Staff | http://www.investopedia.com/articles/forex/091013/future-cryptocurrency.asp