The news is ablaze with stories of bitcoin. Everyday I see something new, whether it’s wild volatility, to some fraudulent transaction or other.
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I’ve been digging into them myself of late, and learned a few surprising facts about them. Read on!
1. It’s disrupting banking itself
That’s right, it’s bitcoin is not just an experiment anymore. Cyptocurrencies (of which Bitcoin is just one example), are ruffling the feathers of the IMF. Managing Director Christine Lagarde predicts the end of banking. Now that’s pretty big.
Meanwhile Chris Skinner outlines the major use cases for blockchains. These are the scaffolding of digital currencies, the financial plumbing if you will. Among those uses include smart contracts & assets, digital identity, clearing & settlement & of course payments.
2. There are many digital currencies
Although Bitcoin was the first, and the one you hear about in the news a lot, there are many more. Etherium is one. Take a look at this colorful map of all the current cryptocurrencies out there. There are hundreds!
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3. Banks are already using it
UBS-led 6 bank clearing house initiative
4. You can mine them & spend them
Coins can be mined like gold in the real world, and of course spent using a digital wallet.
A. Mining: This requires either a physical device or a contract with a provider such as Genesis Mining. The more coins in the world that are mined, the harder it becomes to discover more. My early results show that, if the price remains stable, my contract will become profitable in about 18 months. In other words, I will have ‘made my money’ back on the original upfront price to get started. From then on it’s profit, but not stellar… about 20% per year. If the value of the coin itself goes up, it becomes more profitable, if the value of coin goes down, well then mining pauses, or ceases entirely.
B. Wallets: You get a website and a phone app, that allows you to pay/receive person-to-person. One thing I noticed is that there is a LOT of security, because they must be a target of a lot of hacking. My online bitcoin wallet, CoinBase provides not only 2-factor authentication (text to phone) but after your account reaches $1000 USD value you unlock a ‘vault’ in which you can store coins. You don’t earn any interest, instead you get extra security: you must verify your withdrawl/transfer request from TWO different email addresses.
5. You can build your own
With Build a Coin project you can build your own currency. This isn’t building an app for Etherium or an API to some existing currency. This project helps you build the code to support your own virtual digital fiat currency!
We’ll be back soon with 5 more. Don’t worry!