{"id":241,"date":"2014-05-30T13:21:00","date_gmt":"2014-05-30T13:21:00","guid":{"rendered":"http:\/\/blog.holytransaction.com\/10-things-you-should-know-about-bitcoin\/"},"modified":"2022-12-12T21:42:02","modified_gmt":"2022-12-12T19:42:02","slug":"10-things-you-should-know-about-bitcoin","status":"publish","type":"post","link":"https:\/\/holytransaction.com\/blog\/2014\/05\/10-things-you-should-know-about-bitcoin.html","title":{"rendered":"10 things you should know about Bitcoin and digital currencies"},"content":{"rendered":"<div style=\"text-align: left;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: left;\"><i><b>After reading these 10 things to know about the confusing world of digital currencies, you\u2019ll feel confident joining the conversation.<\/b><\/i><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><\/div>\n<div class=\"separator\" style=\"clear: both; text-align: center;\"><a style=\"margin-left: 1em; margin-right: 1em;\" href=\"https:\/\/holytransaction.com\/blog\/wp-content\/uploads\/2014\/05\/TryBTC-bitcoin-starters-guide.png\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/holytransaction.com\/blog\/wp-content\/uploads\/2014\/05\/TryBTC-bitcoin-starters-guide.png\" width=\"400\" height=\"132\" border=\"0\" \/><\/a><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><b>1. The difference between virtual, digital, and cryptocurrencies<\/b><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\">(<a href=\"https:\/\/www.techrepublic.com\/article\/10-things-you-should-know-about-bitcoin-and-digital-currencies\/\">TechRepublic<\/a>) Virtual currencies were developed because of trust issues with financial institutions and digital transactions. Though they aren\u2019t even considered to be \u201cmoney\u201d by everyone, virtual currencies are independent of traditional banks and could eventually pose competition for them.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\">First, there are three terms that are sometimes used interchangeably that we need to sort out: virtual currency, digital currency, and cryptocurrency.<\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><b>Virtual currency<\/b> was defined in 2012 by the European Central Bank as \u201ca type of unregulated, digital money, which is issued and usually controlled by its developers, and used and accepted among the members of a specific virtual community.\u201d Last year, the US Department of Treasury said that digital currency operates like traditional currency, but does not have all the same attributes \u2014 as in, it doesn\u2019t have legal tender.<\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><b>Digital currency<\/b>, however, is a form of virtual currency that is electronically created and stored. Some types of digital currencies are<br \/>\ncryptocurrencies, but not all of them are.<\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\">So that leads us to the more specific definition of a <b>cryptocurrency<\/b>, which is a subset of digital currencies that uses cryptography for security so that it is extremely difficult to counterfeit. A <a href=\"https:\/\/holytransaction.com\/page\/defining-bitcoin\">defining<\/a> feature of these is the fact they are not issued by any central authority.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><b>2. The origin of Bitcoin<\/b><\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\">Bitcoin is a cryptocurrency, a number associated with a <a href=\"https:\/\/holytransaction.com\/page\/what-is-bitcoin\">Bitcoin<\/a> address. In 2008, a programmer (or group of programmers) under the pseudonym Satoshi Nakamoto <a href=\"https:\/\/bitcoin.org\/bitcoin.pdf\">published a paper<\/a> describing digital currencies. Then in 2009, it launched software that created the first Bitcoin network and cryptocurrency. Bitcoin was created to take power out of the hands of the government and central bankers, and put it back into the hands of the people.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\">There are currently about 12 million Bitcoins in circulation, though when it was created, the programmer said there is a finite limit of 21 million Bitcoins out there. They are currently valued at around $460 each, according to <a href=\"https:\/\/bitcoincharts.com\/\">Bitcoin Charts<\/a>, which tracks the activity. The value surged as high as $1000 each in December 2013.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><b>3. The origin of Dogecoin<\/b><\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><a href=\"https:\/\/holytransaction.com\/page\/what-is-dogecoin\">Dogecoin<\/a> is a form of cryptocurrency that was created in December 2013. It features <a href=\"https:\/\/flyp.me\/en\/top-cryptocurrencies\/what-is-dogecoin\/\">Doge<\/a>, the Shiba Inu that has turned into a famous internet meme. It was created by Billy Markus from Portland, Oregon, who wanted<br \/>\nto reach a broader demographic than Bitcoin did. As of March, more than 65 billion Dogecoins have been mined, and the production schedule of this<br \/>\ncryptocurrency is in production faster than most.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\">Earlier this year, the <a href=\"https:\/\/holytransaction.com\/blog\/2014\/05\/the-rise-of-cryptosponsorships.html\">Dogecoin community raised funds<\/a> for the Jamaican bobsled team to attend the 2014 Winter Olympics when they could not afford to go. The community also raised 67.8 million coins (about $55,000) to sponsor NASCAR driver Josh Wise, who drove the <a href=\"https:\/\/media.coindesk.com\/2014\/04\/Doge-Nascar3.jpg\">Doge-themed car<\/a> in several races.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\">Because there\u2019s a lot of them, Dogecoin is valued pretty low \u2014 1,000 Dogecoins are worth $0.46.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><b>4. Other types of digital currencies<\/b><\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\">There are other types of digital currencies, though we don\u2019t hear much about them. The next most popular is probably <a href=\"https:\/\/flyp.me\/en\/top-cryptocurrencies\/what-is-litecoin\/\">Litecoin<\/a>, which is accepted by some online retailers. It was inspired by Bitcoin and is nearly identical, but it was created to improve upon Bitcoin by using open source design.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\">There are many other types of cryptocurrencies, such as <a href=\"https:\/\/holytransaction.com\/page\/what-is-peercoin\">Peercoin<\/a>, <a href=\"https:\/\/ripple.com\/\">Ripple<\/a>, <a href=\"https:\/\/www.mastercoin.org\/\">Mastercoin<\/a>, and <a href=\"https:\/\/namecoin.info\/\">Namecoin<\/a>. Cryptocurrencies get some flack because they are often replicates of other versions, with no real improvements.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><b>5. Bitcoin regulations<\/b><\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\">Who is in charge of Bitcoin? The point of the currency is that it is decentralized, but there are legalities that differ in every country. Law enforcement and tax authorities are concerned about the use of this cryptocurrency because of its anonymity and the ease of using it for money laundering and other illegal activities. Bitcoin was the prime currency on Silk Road, which was used to sell illegal goods, including drugs. It was <a href=\"https:\/\/money.cnn.com\/2014\/02\/14\/technology\/security\/silk-road-bitcoin\/\">shut down in 2013 by the FBI.<\/a><\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\">The US Security and Exchange Commission (SEC) hasn\u2019t yet issued specific<br \/>\nregulations on digital currencies, but it often warns about investment schemes and fraud. The Financial Crimes Enforcement Network (FinCEN), an agency under the Department of Treasury, took initiative and published <a href=\"https:\/\/selectra.co.uk\/sites\/selectra.co.uk\/files\/pdf\/FIN-2013-G001.pdf\">virtual currency guidelines<\/a> in 2013. Many countries are still deciding how they will tax virtual currencies. The IRS is specifically concerned with virtual currencies being used for unreported income.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><b>6. How Ben Bernanke changed the Bitcoin game<\/b><\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\">In late 2013, the first congressional hearing on virtual currency was held to<br \/>\noutline the pros and cons of Bitcoin. The hearing ended up providing a<br \/>\nfinancial boost for the currency, because US officials talked about it as a<br \/>\nlegitimate source of money, as opposed to only discussing its role in illegal<br \/>\nactivities.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\">Although he didn\u2019t attend, Federal Reserve Chairman Ben Bernanke <a href=\"https:\/\/online.wsj.com\/news\/articles\/SB10001424052702304439804579205740125297358\">said in a letter to US senators<\/a> that virtual currencies \u201cmay hold long-term promise, particularly if the innovations promote a faster, more secure, and more efficient payment system.\u201d Bitcoin, which was valued around $13 in the beginning of 2013, <a href=\"https:\/\/www.newrepublic.com\/article\/115801\/bernankes-bitcoin-comments-signal-growing-acceptance\">jumped sharply<\/a> after news of his comments broke.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><b>7. How to get Bitcoins<\/b><\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\">There are three ways you can get Bitcoins: buy them on an exchange like HolyTransaction, accept them for products and services, and mine them. We\u2019ll get to the latter process in the next section.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\">To start, download a Bitcoin wallet. There are many websites where you can download an app on your phone or computer to store Bitcoins. <a href=\"https:\/\/multibit.org\/\">MultiBit<\/a> is an app you can download for Windows, Mac and Linux. <a href=\"https:\/\/bitcoin.org\/en\/choose-your-wallet\">Bitcoin<br \/>\nWallet<\/a> for Android runs on your phone or tablet. To store the Bitcoins, you have three options:<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\">1. <b>Desktop wallets<\/b> leave you responsible for protecting the currency and<br \/>\ndoing your own backups.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\">2. <b>Mobile wallets<\/b> allow you to travel with the Bitcoins anywhere, and you<br \/>\nare responsible for them. Mobile apps allow you to scan a QR code or tap to<br \/>\npay.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\">3. <b>Web wallets<\/b> are transacted through a third party service provider. If<br \/>\nanything happens on their side or it gets hacked, you run the risk of losing<br \/>\nthe Bitcoins, so extra backups and secure passwords are suggested.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\">Problem<br \/>\nis, Bitcoins can be stolen in huge quantities, just like money, and with no<br \/>\ncentralized bank, there\u2019s no way to recoup the losses. There are several types of Bitcoin ATMs, which exchange Bitcoins for flat currencies. Most machines are expensive and rare, ranging from $5,000 to $2,000. <a href=\"https:\/\/projectskyhook.com\/\">Skyhook<\/a>,<br \/>\na Portland, Oregon-based company, demoed a $1,000, machine <a href=\"https:\/\/www.coindesk.com\/tag\/bitcoin2014\/\">at a conference<\/a> this month. It is the first portable, open source ATM.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><b>8. How to mine for Bitcoins<\/b><\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\">It\u2019s like mining for gold, just on the computer. You need a Bitcoin wallet and<br \/>\nspecific software, which is free and open source. The most popular is <a href=\"https:\/\/guiminer.org\/\">GUIMiner<\/a>, which searches for the special number combination to unlock a transaction. The more powerful your PC is, the faster you can mine. In the early days, it was easy to find Bitcoins, and some people found hundreds of thousands of dollars worth of the cryptocurrency using their computers. Now, though, more expensive hardware is required to find them. Each Bitcoin <a href=\"https:\/\/en.bitcoin.it\/wiki\/Block_chain\">blockchain<\/a> is 25 Bitcoin addresses, so it takes a lot of time to find them on your own. The exact amount of time ranges depending on the <a href=\"https:\/\/en.bitcoin.it\/wiki\/Mining_hardware_comparison\">hardware power<\/a>, but mining all day could <a href=\"https:\/\/arstechnica.com\/gadgets\/2013\/06\/how-a-total-n00b-mined-700-in-bitcoins\/\">drive your energy bill up<\/a> and only mine a tiny fraction of a Bitcoin \u2014 it may take days to mine enough to purchase anything.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\">To tackle that problem, there are now mining pools. Miners around the world can band together to combine the power of their computer systems and then share the profits between participants. The most popular one is <a href=\"https:\/\/mining.bitcoin.cz\/\">Slush\u2019s Pool<\/a>, where smaller, more steady payouts are given instead of a lump sum.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><b>9. Where you can use Bitcoin<\/b><\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\">There are many places you can use Bitcoin to purchase products or services. There\u2019s no real rhyme or reason to the list, which includes big corporations and smaller, independent retailers including bakeries and restaurants. You can also use the currencies to buy flights, train tickets, and hotels on <a href=\"http:\/\/www.cheapair.com\/\">CheapAir<\/a>; upgrades to your <a href=\"https:\/\/www.okcupid.com\/\">OK Cupid<\/a> profile; products on <a href=\"http:\/\/www.overstock.com\/\">Overstock.com<\/a>; gift cards on <a href=\"https:\/\/www.egifter.com\/\">eGifter<\/a>. There\u2019s a list on <a href=\"https:\/\/spendbitcoins.com\/places\/\">SpendBitcoins<\/a> that shows all the places that accept the cryptocurrency.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\"><b>10. The future of virtual currency<\/b><\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\">The value of Bitcoin has fluctuated drastically throughout the last year, and there are still 9 million of the coins out there in cyberspace. However, many<br \/>\nsecurity issues remain, and that will continue to be a problem. In 2013, <a href=\"http:\/\/en.wikipedia.org\/wiki\/Mt._Gox\">Mt. Gox<\/a>, a Japanese exchange, handled 70% of all Bitcoin transactions, but they <a href=\"http:\/\/www.zdnet.com\/the-mt-gox-bitcoin-debacle-whats-happening-7000026750\/\">lost some 750,000 Bitcoins in February 2014 and filed for bankruptcy<\/a>, and nothing has been proven in the case. Since it\u2019s universal, it\u2019s useful for international transactions, and could be helpful for transactions in developing countries.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div class=\"MsoNormal\" style=\"text-align: justify;\">Some experts suggest putting a few aside if you have them and see what happens in the coming months and years, because there are sure to be regulations on the currency soon. With businesses jumping on the bandwagon and investors becoming interested in cryptocurrency, look for momentum to grow, but it will take time for the situation to stabilize as governments, the international community, and the people of the internet decide on how the next generation of currency will transition to a digital world.<\/div>\n<p>Open your free digital wallet <a href=\"https:\/\/holytransaction.com\/app#!\/signup\">here<\/a> to store your cryptocurrencies in a safe place.<\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>After reading these 10 things to know about the confusing world of digital currencies, you\u2019ll feel confident joining the conversation. 1. The difference between virtual, digital, and cryptocurrencies (TechRepublic) Virtual currencies were developed because of trust issues with financial institutions and digital transactions. Though they aren\u2019t even considered to be \u201cmoney\u201d by everyone, virtual currencies [&hellip;]<!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":1,"featured_media":799,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37,76,191,337,679],"tags":[764,871,919,1012,1332],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v19.6 (Yoast SEO v22.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>10 things you should know about Bitcoin and digital currencies -<\/title>\n<meta name=\"description\" content=\"10 things to know about the confusing world of digital currencies, you\u2019ll feel confident joining the conversation.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" 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