5 Questions about cryptocurrencies you were too embarrassed to ask.
Sick of hearing your friends talking about Bitcoin, Ethereum and Ripple while you sit there eating your cheeseburger? We will help to explain the basics on day 17 of our Advent calendar.
Note: As this article is targeted at people who are extremely new to cryptocurrencies, we have heavily simplified concepts.
1. What is a bitcoin?
Bitcoin was the first true cryptocurrency. It is a payment network (Bitcoin) and it is a cryptocurrency (bitcoin).
Perhaps the simplest definition we’ve found is:
“Bitcoin is digital money that is tamperproof and openly traded.” — Steven Dryall
2. OK Great… So why is it valuable?
Even though it started off being worth next to nothing, over time, as trust grew in the platform and the number of people using it increased, so to did the value of Bitcoin.
Despite it not being backed by a government (like the Australian dollar) or something like gold, the value of Bitcoin has gone from below a dollar, to $25,000 AUD at the time of writing this post.
Bitcoin’s value is rising due to more and more people betting that it’s value will continue to go up over time. Today most people have never purchased a Bitcoin, so this bet may just work out. But if history is anything to go by, there will be a few more ups and downs along the way.
3. Why should I care?
Due to the nature of Bitcoin and many other cryptocurrencies, there are many ways that you will benefit from these new technologies over time. But here are five key benefits that will effect you:
- Quick and Easy Payments: Money can be transferred in seconds, not days.
- Significantly Reduced Fees: Avoid heavy merchant or credit card fees.
- Private & Secure: Payments can be made without sharing your identity or location. Your transactions are secure thanks to encrypted messaging known as cryptography (thats why they call them cryptocurrencies)
- No third party: The assets you hold are yours, you don’t need a bank! No one can take them away from you, no government can freeze your ‘account’.
- No boundaries: Easily pay someone on the other side of the world without worrying about fee’s, delays and exchange rates.
When you begin to think about it you end up asking why isn’t it already like this? It almost seems silly to think we can send emails across the world in seconds but not currency.
4. Is it illegal?
No. Despite what you may have heard, Bitcoin and other cryptocurrencies are definitely not illegal.
In the early days, many people heard stories of SilkRoad and the use of Bitcoin to participate in illegal activities, but today, 10’s of billions of dollars are being traded by business, investment groups and everyday people.
5. What about the other ones?
Bitcoin is the first cryptocurrency, but today there are over 1360* cryptocurrencies. This collection of digital currencies are known as the cryptocurrency market. If you can trade it, it is apart of the market.
The vast majority of these ‘projects’ don’t have any real purpose other than to capitalise on this newly created marketplace. You can think of it similar to the dotcom bubble in the early 2000’s. Thousands of domains began flooding the market with huge sums of money being thrown at these pioneers. Most of whom failed to thrive but the result of this influx of interest in the world wide web created the world we have today.
From this emerged the likes of Facebook, Amazon, Google, Microsoft, eBay, Paypal, LinkedIn and these are just a few of the giants.
6. OK…. How do I get some?
There are a number of ways to get started the most common of which is creating an account on coinbase.
The process seems complicated from the outset but with some curious patience is achievable.
Want an even easier option?
At Bamboo we are creating a platform aimed to achieve just this by automating the purchasing of these digital assets through spare change that is collected from your everyday purchases!
- Jump in our telegram group to ask questions and receive up to date information on the project!
