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10 Things You Didn't Know About Cryptocurrency

Bitcoin and cryptocurrency are all the talk right now, but even if you're an expert, there are likely interesting things you didn't know about cryptocurrency.

By Leila ParkerPublished 5 years ago 5 min read
Top Story - November 2018

Is cryptocurrency the future go-to currency? Should you invest in some type of cryptocurrency such as Bitcoin or Etheruem? What should one know about digital currency? These are the questions that frequently follow the never-ending conversation about cryptocurrency. Cryptocurrency is receiving a great deal of attention from the widest variety of sources. The subject seems to come up all the time on the news, especially when investments are being discussed. Fear not; All of the questions and things you didn't know about cryptocurrency are about to be answered.

What is cryptocurrency?

Cryptocurrency works as a medium of monetary exchange using strong cryptography to secure its financial transactions. Working as a digital currency, cryptocurrency is considered an alternative form of money.

Cryptocurrency is anonymous and virtually secure, according to many experts. This type of currency is not regulated by the government or banks. There is no need for third-party involvement because the money simply transfers from one account to the other.

Bitcoin is the most popular and well-known of cryptocurrencies. However, there are popular others such as Ethereum and Ripple. Ethereum being the more well-known of the two, but they are some cool facts about Ripple, too. Since 2017, the total value of cryptocurrencies has now reached over $4 billion.

How can you use cryptocurrency?

Photo by Andre Francois on Unsplash

Cryptocurrencies can be used to buy or sell various goods and services. The usage occurs mostly within the online world. Traditional brick and mortar businesses will currently not accept it. Some people do not use cryptocurrency to make purchases. Rather, it is often used in portfolios because many believe it will increase in value over time.

Some other uses for cryptocurrency are an alternative store of wealth, private transactions, non-cash remittance, and paying for travel. Spending and investing in cryptocurrency can result in capital gains or losses.

Who is the inventor of Bitcoin?

The inventor of Bitcoin is a mystery, but the white paper of Bitcoin was created under the name Satoshi Nakamoto. The identity of this person(s) has never been established, be it an individual or a group—although they also devised blockchain technology. In 2016, an Australian entrepreneur, Craig Wright, claimed to be the inventor of Bitcoin, but his claim was later proven to be false.

If your private key is lost, your bitcoin is lost.

Photo by David Shares on Unsplash

James Howell was cleaning his desk at home one day when he threw out the hard disc containing his Bitcoin private keys. Because he could not retrieve this hard disc, he lost 7,500 Bitcoins. The worth of 7,500 Bitcoins is approximately $19.4 million. Without the private key, no one can use these funds. Though there are ways to recover lost cryptocurrencies—or at least, try to. Approximately 25 percent of Bitcoins have been lost.

An ounce of prevention is worth a pound of cure. It is highly advisable for one to keep a copy of your crypto address in a safe place.

There will never be more than 21 million Bitcoin available.

16.3 million Bitcoins have currently been mined and are now being traded. The supply is finite. By 2140, the last will be mined. After 21 million have been mined, there will be no more Bitcoins available.

Bitcoin cannot be banned.

Bitcoin and other cryptocurrencies bring about of controversy; therefore, the subject of banning tends to be raised quite frequently. Bitcoin, as well as other digital currencies, work differently than the traditional banking system. This causes many bankers and government officials to lack trust in digital currencies. Cryptocurrency threatens the power structure of currency so some would love to see the banning of Bitcoin and crypto.

In reality, the fundamental design can only be regulated, not banned. Anyone with an internet connection and a Bitcoin wallet can conduct business using Bitcoin.

The countries that have attempted to ban Bitcoin are Thailand, Vietnam, Bolivia, and Bangladesh. Other countries such as India and the United States have no clear policy concerning Bitcoin. Countries like Australia, Venezuela, Russia, and Japan have declared Bitcoin a legal tender, and these countries regulate it. No matter the controversy, it does not seem that Bitcoin is going to be banned anytime in the near future.

"How do I get started?"

To begin investing in cryptocurrency, all you need is an exchange and a wallet. The exchange will convert your local currency into cryptocurrency. The wallet is where you will store, send, and receive your cryptocurrency.

The two main types of wallets are hardware and software. Hardware wallets are devices that are used for storing cryptocurrency long-term. Software wallets are those that run on an app or other device. Hardware wallets are not as ideal for quick trade as software wallets can be more convenient.

When you begin to invest in cryptocurrency, go lightly and slowly. It's not be wise to invest large amounts of money into the process at one time.

What could go wrong?

While the lack of regulation and centralization makes cryptocurrency appealing to some investors, these factors could also prove to be great disadvantages. Your investment is relatively unprotected (beyond the smart contracts) with very little security. Cryptocurrency has no true unit of measurement, or store of value. The lack of security is a call to caution for investors. As stated before, invest lightly.

Other disadvantages are as follows: Some experts are of the opinion that blockchain technology is still not as relevant as it needs to be for stability. If blockchain technology still isn't even relevant, how stable is the Bitcoin market? It's unclear. The Security Exchange Commission will also be unable to assist you should there be a discrepancy or other issue. Finally, taxes can be an issue concerning capital gains.

The first Bitcoin purchase was for pizza.

Laszlo Hanyecz, a programmer from Hungary, made the first Bitcoin purchase in 2010. He purchased two pizzas from Papa John's. Hanyecz was reported to send his Bitcoin to a fellow collector who made the purchase for him. His purchase was rather expensive by today's standards because he paid 10,000 BTC—which is the equivalent of $180 million dollars today. What expensive pizza! In 2010, however, it was only worth $30.

The FBI has Bitcoin.

The Federal Bureau of Investigation owns one of the largest Bitcoin wallets, acquiring their assets by seizing those involved with illegal activity using blockchain technology. The worth is approximately $120 million. Satoshi Nakamoto still has more Bitcoin than anyone, but their investment is spread across many wallets.

Cryptocurrency continues to gain popularity—although Bitcoin remains limited in supply. Whether you are simply a collector waiting for value to increase, or you prefer to use cryptocurrency for buying and selling, your investment might carry some risk. That risk could prove to be worthwhile, but with the list of things you didn't know about cryptocurrency now a lot shorter, that's a risk for you to judge! Especially as blockchain technology continues to expand because the use of cryptocurrency will increase, too.


About the Creator

Leila Parker

Newly graduated Industrial-Organizational Psychologist. I'm a cyclist who works, thinks and writes about workplace culture, behavior and self-motivation.

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