Introduction of Cryptocurrency

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When did it start? Who owns it?

Cryptocurrency occurred as a failed attempt of another invention by an anonymous person by the name of Satoshi Nakamoto (Frankenfield, 2018). Satoshi Nakamoto is the creator of Bitcoin, the first cryptocurrency born in late 2008. The most vital part of Satoshi‘s invention was building a digital cash system without a central entity like a Peer-to-Peer network for file sharing (Frankenfield, 2018). This brilliant idea lead to the announcement of Cryptocurrency – Bitcoin a Peer-to-Peer Electronic Cash System.

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1. How does Bitcoin work?

According to Frankenfield, Bitcoin was the first digital currencies to simplify immediate payments use peer-to-peer technology. New bitcoin is being released to the miners at a fixed, but sporadically decreasing rate, such that the total supply of bitcoins approaches 21 million. One bitcoin is divisible to eight decimal places (100 millionth of one bitcoin), and this unit is referred to as a Satoshi. (Frankenfield, 2018).

Coindesk example, if a person sent bitcoin to another individual, this initiates the intent and the nodes scan the entire bitcoin network to confirm the sender in fact has the bitcoin that was initially sent, and has not initiated a transaction someone else using that bitcoin. After the data is validated the operation gets incorporated in a what is called a block. This block will then be attached to the preceding block creating the a blockchain as blocks are added to the blockchain it makes the mining activities more problematic.

2. Where do you get it?

Bitcoins can be purchased from bitcoin exchanges across the world. There are several reputable high-volume US based exchanges such as Bitfinex, Coinbase, Bitstamp and Poloniex (Coindesk, 2018). However, each exchange will have different operating procedure for set-up and transactions, the interested parties should get sufficient details before choosing a service provider (Coindesk, 2018).

3. What is a Bitcoin wallet?

A bitcoin wallet stores bitcoin addresses, and these addresses document all of the previous transaction along with the balance. There two keys in conjunction, and is impossible to determine the private key from the public key. The public key address is a string of 34 letters and numbers. Each address/public key has an equivalent private key of 64 letters and numbers and should be kept secure at all times.

According to Coindesk, there are several types of wallets and can be housed on computers, mobile device, on paper, or on physical storage devices.

  • Electronic wallets – Electronic wallets can be downloaded software, or hosted in the cloud.
  • Software wallet – Installing a wallet directly on a computer gives the security that the individual control your keys.
  • Online wallet – Online wallets offer increased convenience access your bitcoin from any device.
  • Mobile wallets – Mobile wallets are available as an app on a smartphone to allow shopping on the go.
  • Hardware wallets – Hardware wallets are small devices that occasionally connect to the web to enact bitcoin transactions.
  • Paper Wallet – Paper documents which the private and public keys of a bitcoin address are printed.

4. What is Bitcoin mining?

Mining will permit Bitcoin nodes to achieve a protected, tamper-free position. The only way to generate a valid Bitcoin, miners are required find a product of a cryptographic function called a hash this attaches the new block with its prototype (BlockGeeks, 2019). This is method is called the Proof-of-Work and will help avoid duplicate transactions. Blockgeek states, after the miner solves the cryptologic puzzle, they can assemble a block and combine it with the blockchain. The miner can also add a coinbase transaction in exchange for a certain number of Bitcoins.

5. Can you convert Bitcoin to cash? If so, how?

There are several ways to convert bitcoins into cash according to Banks.com, selling bitcoins to a cryptocurrency exchange and transferring the cash straight to a bank account, using a bitcoin debit card will permit the individual to sell bitcoin and receive a prepaid debit card, or sell bitcoin to friend or family member for cash. Bitcoin conversion to bank account techniques defined above require exchange fees.

6. Does Bitcoin have other cryptocurrency rivals? If so, who?

There are hundreds of different cryptocurrencies used for all types of different submissions. Bitcoin remains to be by far the most popular and presently utmost useful for day-to-day transactions. Ethereum, Ripple, Litecoin, Monero, are just a few of the most popular cryptocurrency next to bitcoin (BlockGeeks, 2019).

7. How much is a Bitcoin worth in dollars?

As of January 11, 2019, 1 bitcoin is worth 3,673.24 US dollars (Coindesk, 2018)

8. How big is the Bitcoin market in dollars?

The bitcoin market is currently at 64.8 Billion US dollars. (Coindesk, 2018)

9. Which companies will take Bitcoin as a form of currency?

There are many merchants that accept bitcoin currency to buy gift cards, via Gyft or eGifter, pay for flights and hotels, through Expedia, CheapAir and Surf Air. Microsoft accepts bitcoin in its app stores and the list continues of other retailers that excepts bitcoin currency (Coindesk, 2018) .

10. Is it legal to use Bitcoin in the United States?

The U.S. is inundated by a patchy regulatory system, with legislators at both the state and the federal level accountable for covered jurisdictions and a complex separation of powers. It is legal to use bitcoin in the United States with the same reporting requirements as other currencies that are subject to taxes. (Coindesk, 2018)

11. How do you trade Bitcoin?

As stated before, Bitcoins can be purchased or traded from bitcoin exchanges across the world there are several reputable high-volume US based exchanges such as Bitfinex, Coinbase, Bitstamp and Poloniex (Coindesk, 2018)

12. Would Bitcoin be a good investment? Why or why not?

Short term yes, the exchange rate against the dollar attracts possible investors and traders attracted to currency profits.

13. Would Bitcoin be considered a conservative or risky investment? Why?

Bitcoin is a risky investment like any other exchange market. Volatile and not yet governed by regulations.

14. Should Bitcoin be regulated? If so, by whom?

Bitcoin should be regulated by the government to prevent white collar crimes like black market transactions, money laundering, or unlawful activities (Frankenfield, 2018).

15. Will Bitcoin be successful over the long term? Why or why not?

I think long term would prove unfavorable because there is a staggering amount of competition in the market. Bitcoin is extremely volatile and history proves one-days price drop in 2014 to be a whopping 80% (Frankenfield, 2018).

16. Anything else that you think is interesting about Bitcoin.

I find it very interesting that the government found a way to subject people’s bitcoin profits to taxes, but not put regulations in place to prevent white collar crimes.

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Introduction of cryptocurrency. (2019, Dec 30). Retrieved September 26, 2022 , from
https://studydriver.com/introduction-of-cryptocurrency/

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