Have you ever looked to the internet for a simple question and then discover that the answer leads to more questions? Well, such is the case with my understanding of how and why coins are an option for online merchants. It turns out that these coins or tokens aren’t solely used in the gaming industry- either to earn points, get more clues, or to reward us for high scores-you can actually make money mining them too. (Mining will be covered in a future post.)
Cryptocurrency has been around for decades and is used by financial entities to conduct digital transactions which we then turn cash, bonds, CDs and so on. All of these items are produced distributed and controlled by our federal reserve in paper form. Paper is not durable, is difficult to convert into foreign exchanges, and is the easiest to counterfeit. Also, we have no control over the expensive fees charged to our accounts. And, let’s not forget all the developing countries that lack access to traditional brick and mortar banks. It wasn’t until the late nineties that technology was designed to put cryptocurrency in what’s known as peer-to-peer blockchains. Think of these as a form of advanced algebra in that the end result depends on the sequence of events being performed correctly. This system, for now anyway, is decentralized. Peer controlled blockchains prevent errors like a canceled check or payment from being processed. Transactions are maintained on a public ledger that all participants have a copy of making fraud much more difficult while still remaining anonymous. Each cryptocurrency software distributor, or brand of coins, uses two keys. One is public which is changed for every transaction, unlike an email address on Paypal. The other computer-generated number acts as your personal digital signature. It remains static and if lost, so is your money. The value of coins fluctuates just as the dollar does according to supply and demand. However, digital coins are currently divisible by eight decimals, relies on the number people using digital currency, and mining trends. Whereas If the federal reserve needs more money in circulation, it just prints more.
In order to use digital coins, you need a place to store them, a digital wallet. (This is different from the pre-installed phone apps that store coupons via QR scanning.) First, think of whether you prefer to access the internet front home with a computer or on the go with a mobile device. The latter is more economical because the gadget for storage plugs into any phone making it safer than a desktop that’s continuously connected to the internet. Either method requires research similar to choosing a cell phone: such as brand preference, ease of use, price, compatibility with other wallets and security features, etc. The most popular wallets aka distributors are Bitcoin, Ethereum, and Litecoin. Lastly, you can use these companies as well as other vendors to convert your cash to bitcoin by using google to locate an ATM using virtual currency.
There you have it-the what and why bitcoin is used and how to get started: it’s peer-driven, decentralized, fraud-proof, and has universal appeal. Its usage is gradually becoming more prevalent in the dot.com marketplace and tech giants as well.