Bitcoins – Is this the future of money?

If you haven’t heard about Bitcoins then where have you been?

It seems this is a digital currency that is taking off. Originally I thought it was something you gained whilst playing games, naive I know but now I know better. I found this YouTube video helpful in trying to understand what bitcoins are, how you can get them and what you can do with them.

Like anything you need a wallet to keep your money in. It’s no different for this virtual currency for which you will need a Bitcoin Wallet to store your digital currency in, this can be downloaded from http://www.bitcoin.org onto your computer. Be careful with your digital wallet you don’t want to end up like this person who managed to throw out his computer’s hard drive which held his digital wallet containing more than $9million in bitcoin with no way of him being able to get them back. The value of a bitcoin is based on supply and demand. As the demand for bitcoins increase so does its value.

How to get hold of some bitcoins?

There is more than one way to get your hands on some bitcoins. You can ‘mine’ them yourself, join a pool, they are also becoming an accepted from of payment be some online companies.

To mine for bitcoins you will need to download software, from there you can start to virtually chip away at the ‘math problems’ till you find some bitcoins. From what I’ve read this can be time consuming and you’re not likely to gain any bitcoins any time soon. The alternative is to join a pool.  ‘In a pool, you are given smaller and easier algorithms to solve and all of your combined work will make you more likely to solve the bigger algorithm’ Basically being part of a pool you’ll be able to make more bitcoins quicker than if you were going it alone.

Another way of gaining bitcoins is to accept them as payment method for goods and services, they can be transferred from person to person with no middle person and from nearly any country. Still confused about how to gain bitcoins? So was I, fortunately this video can help clear up some confusion.

There is tons of information out there on how to start gaining your own bitcoin collection, some of it is more techie than others. if it’s something that interests you then persevere. Or find someone that can start it up for you! 😉

Future of bitcoins

At the moment bitcoins are gaining some good and some bad attention.

If not already doing so some online retailers are accepting bitcoins which in itself is opening up a whole different can of worms. As a virtual currency there are no banks involved but there is still the concern of fluctuating currency rates. One day your bitcoin can be one value only for it to drop the next day, how will this affect the purchase prices of goods? Not just the purchase price but also the return of items, will consumers get the same value back or will it be in accordance to the currency rate of that moment?

Bitcoins are being viewed as virtual currency which then leads to the issue of tax. HMRC in the UK is still deciding if bitcoins are to be seen as an investment for which they will add capital gains tax or as a form of currency to which to add VAT on purchased goods. USA IRS haven’t decided yet and China has banned the use of bitcoins as payment method.

Security

The security of bitcoins is a concern for some. This month has seen a drop in the value of bitcoins as a flaw in the software has been discovered; ‘It said an investigation had revealed it was possible for thieves to fool the transaction process so that double the correct amount of bitcoins would be sent

Bitcoin transactions are recorded onto a ledger but there is nothing in place to stop this currency being used in illegal acitivites such as the purchase of drugs.

To protect users bitcoin wallets a Biometrics startup Bionym have created the Nymi wristband which links your bitcoin wallet to your heartbeat.

Bitcoin requires two keys to make transactions. One key, which is public, allows people to receive bitcoins, while another, a private key, is required to spend bitcoins. By using the Nymi, the wristband wearer’s private keys are tied to their heartbeat so the key can be stored offline, yet still easily accessed by the owner.

I have gained a bit more understanding of what bitcoins are, how to obtain them and what I can use them for. Do I feel empowered to go forth and get some myself? No, it’s evident that the popularity of bitcoins is on the rise and you don’t necessarily have to ‘mine’ them yourself to get your hands on some. At this moment in time I don’t feel this currency is for me, I have enough trouble maintaining my own virtual money known as the credit card let alone adding bitcoins to the mix!

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