There’s another buzz about Bitcoin. The cryptocurrency is flirting with $20,000 again and has experienced incredible gains over the last month. Consumers and even some investors have trouble wrapping their heads around a virtual currency and what someone can do with a Bitcoin.
Here’s a bit of an explanation.
Bitcoin is not as easy to understand as actual cash or gold. It isn’t even real in some respects, there is no Bitcoin coin. It’s a virtual currency.
If you buy Bitcoin, it is held in a virtual wallet you can keep track of with a smartphone or on a computer. You can buy it, sell it or even use it to purchase things.
The most popular Bitcoin purchasing app is “Coinbase” with over 800 thousand ratings in Apple’s App Store. To trade Bitcoins with Coinbase, you’ll need to give it access to your bank account, debit card or Paypal account. To trade large amounts, it’ll need to come directly from a bank account or by wire transfer. Coinbase maintains it’s secure but has had to ward off attacks by hackers in the past.
Once your account is set up, you can purchase or trade cash for Bitcoin. Even though the price of a single Bitcoin now is well over $19,000, you can purchase fractions of a Bitcoin. $50 buys .00244516 of a Bitcoin. There are fees per transaction, $2 on a $50 transfer and it goes up from there.
The balance sits in your Bitcoin portfolio or wallet. What can you do with Bitcoin? You can use it to shop but it is not widely accepted. You probably won’t be able to spend it at retailers where you normally shop. There are Bitcoin ATM’s where you can purchase or convert your Bitcoin for a cash withdrawal. Like banks, the ATM’s are specific to the companies you purchase Bitcoins from. RoboCoin went out of business, removed all ATM’s, and instructed users to withdraw their Bitcoin or transfer it to another company.
Another thing you should know about Bitcoin is that even though there’s no tangible Bitcoin, there is a limited supply. Bitcoins are ‘mined’, or created by computers completing complex equations. There will never be more than 21 million Bitcoins, which is why the price fluctuates so much.
In March of 2017, a Bitcoin was worth over $1,200. By December, it had jumped to over $14,000. Everyone got excited. A little more than a year later, it was worth about $3,500.
If you plan to purchase or invest in Bitcoin it is strongly suggested to have anti-malware on your computer and a VPN. While Bitcoin has made many people rich, some have lost a fortune when hackers installed malware on computers. With its price fluctuations, trading Bitcoin is not for the faint of heart.