You’ve probably been seeing all this talk online and in the news about Bitcoin and you’re probably asking yourself “What is Bitcoin?”. Bitcoin has been appearing a lot in the news lately both because of the skyrocketing price and recent malware attacks, such as WannaCry ransomeware, demanding bitcoin in exchange for your own personal data.
Bitcoin, like other cryptocurricies, operate on a decentralized currency model. This basically means no banks, no government regulations and total privacy with transactions. By cutting out banks and government regulations, you can avoid many of the fees associated with traditional banks. What does that mean for you? More of your hard earned money stays in your pocket. You avoid transaction fees, overdraft fees, fees for keeping your account active and fees for not maintaining a minimum balance. You also keep your privacy, as all transactions are anonymous, requiring no name to transfer money from one account to the other. Everything is secure, encrypted and free.
No into the technical aspects. Bitcoin, along with many other cryptocurricies, operate on a block chain. You can think of a block chain as a bank ledger. Each block contains transaction records, ie the money being moved around. The blocks are processed by miners, who are people with powerful computers solving complex math problems. When someone solves the math problem all the pending transactions in the block are processed and the person solving the problem is rewarded with a set number of Bitcoins. This occurs roughly every 10 minutes, meaning transactions can take a bit to process. Not as fast as a debit card, but still pretty fast for a totally decentralized currency.
Instead of a traditional bank, all your Bitcoins are stored in a digital wallet. This means there’s no middle man managing your money. You’re in control. Your digital wallet can be stored in the cloud, on your computer, or you can have a company like coinbase manage them for you.
So why should you use them? Aren’t they a little complicated to get started with? Not at all! You can have a coinbase account setup within minutes, and after linking your physical bank account you can begin buying Bitcoins or transferring them to your local currency. If you’d prefer not to link a bank account you are still able to send and receive Bitcoins from other people. This is easily done online or on a mobile app, and more and more places are beginning to accept Bitcoin. For example, Steam now accepts Bitcoins to buy games on their platform.
So don’t be shy and get on board with bitcoin and starting building your decentralized bank account now!