In 2008, Satoshi Nakamoto envisioned an electronic cash system that existed outside the influence of major financial institutions, a means of sending money from one person to another without having to entrust it to a bank. He (or she – Nakomoto’s identity remains a mystery to this day) dubbed this new currency ‘bitcoin.’
Nakamoto stressed that “a certain percentage” of fraud is both unavoidable and considered acceptable by financial institutions, and created bitcoin as a safer alternative to conventional currency. Based on complex mathematics, bitcoin now represents something of an ideal; it’s immune to physical theft, fraud, counterfeiting, and inflation.
But where can you get bitcoins? And, perhaps more importantly, where can you spend them?
‘Mining’ & Currency Exchanges
If you don’t know your blockchains from your cryptographic hashes, getting on board with bitcoin can seem like a daunting process. However, bitcoin can work in much the same way as acquiring dollars or pounds – via currency exchanges.
As of September 23rd 2016, a single bitcoin costs US$598 but, as coins can be split into ‘Satoshis’, tiny units representing 0.00000001 of a bitcoin, it’s possible to convert much smaller sums into currency.
You can also ‘mine’ for your bitcoin, a term that describes using specialized computer components to provide a record-keeping service for bitcoin, and receive currency in return. The price of entry for mining is steep, as hardware can retail for upwards of $1000 – and you might lose more in electricity bills than you actually earn.
Regardless of how you choose to acquire your bitcoin, however, you will need a ‘wallet’ to store your coins in, and these range from web-based solutions to expensive pieces of hardware.
Investing your Bitcoins
But what’s the point of a new currency if you can’t spend it?
For a time, doing your shopping with bitcoin was one of the geekiest things you could do with your money but bitcoin has grown into a more mainstream currency in recent years. Brands such as Overstock, Expedia, Dell, and Microsoft are arguably the best-known companies to accept bitcoin but the popularity of the currency is growing.
Bitcoin found its niche in the online gaming community early on, with websites such as Vegas Casino accepting bitcoin for their video poker machines and allowing players to mine for free. However, it’s also possible to buy a takeaway or a new bike, hire a private jet, and book a taxi using bitcoin exclusively. And, for the truly rich and fearless, there’s always the option of going into space.
Bitcoin also presents owners with an investment opportunity. Buying bitcoin and simply saving it to sell later on when the market fluctuates is a viable money-making scheme, provided you have the funds and the stomach for investing. One Norwegian man famously turned a US$27 investment into an US$886,000 fortune in just four years.
One final bit of bitcoin trivia: although Satoshi Nakamoto disappeared in 2010, he continued to amass bitcoin worth just short of US$600m in 2016…! As you probably noticed, bitcoin price tends to fluctuate in a wide range. This volatile behavior makes bitcoins a perfect asset to profit from speculative trading. The best part of it that you don’t actually have to own any bitcoins or even set up a bitcoin wallet. Many online brokerages allow trading bitcoins via derivative instrument known as CFD (contracts for difference). Check out this btc trading platform from AvaTrade for example.