Any sign of a developed society can be measured by its currency.
Throughout history, we started out as simple barter. Then we moved on to banknotes and coins. As the Internet developed at a rapid pace, the next phase of currency evolution was inevitable just around the corner. Of course, I’m talking about cryptocurrency, in particular bitcoins.
What is Bitcoin?
Like the Dark Web, the reputation of the cryptocurrency suffers a bit as it is most often associated with Dark Web transactions such as drugs and weapons. In addition, the exchange rate is known to be volatile, which makes long-term trust extremely difficult.
When it comes to cryptocurrency, Bitcoin is the largest in the world, accounting for nearly 50% of the digital currency market. Of course, Bitcoin has competitors like Ethereum, Litecoin, and Dogecoin, each with their own exchange rate. But Bitcoin is widely known and there are 16.5 million bitcoins in circulation.
Peer-to-peer system
There are no real banknotes or coins in bitcoins. This means that no government controls it, because these are just numbers on the screen. Since governments can manipulate currencies for political purposes, this makes Bitcoin extremely attractive to many people.
Instead, it is a peer-to-peer (p2p) currency. This means that instead of being controlled by its financial institution, Bitcoin is decentralized. It is transmitted from one user to another on the Internet.
Bitcoin transactions are publicly recorded in a ledger called a “blockchain”. This information is permanently and publicly available for viewing on Blockchain.info and cannot be edited or deleted. Thus, the blockchain serves as proof of the transaction.
Is it really anonymous?
Yes and no. It is anonymous in the sense that you can send and receive bitcoins without revealing your name, address, and bank details to the payee. There will also be no bank with your personal details in the file to link that bitcoin address.
This is an example of a Bitcoin address:
1AnnbrPdrmoKBGFdkr1k9A8SSLYANzhHkhts
Obviously, this means that no one can see who owns this particular Bitcoin address. You are just a sequence of letters and numbers. But if something later discovers that this is your address (say, law enforcement is tracking drugs at your address and can link a bitcoin address to those drugs), then all transactions to that bitcoin address will be linked to you.
This is why it is generally recommended to use multiple wallets and not reuse a bitcoin address for multiple transactions. This makes it harder to bind a specific transaction to you.
Bitcoin Wallets
Since you cannot go to a bank and withdraw Bitcoin bills and coins, the only way to get currency is to buy them online. This is done using a “wallet”. This allows you to pay someone in currency as well as receive payments.
There are so many wallet options out there that I’m going to recommend two of each type that I think are the best in my opinion.
Desktop Wallets
Desktop Wallets
The two desktop wallet options are Electrum and Armory
Electrum (Windows, Mac, Linux, Android)
Whenever I asked for recommendations for a desktop bitcoin wallet, it gets mentioned the most. It seems that everyone is striving for Electrum, and I have not heard anything bad about it yet.
The encrypted keys remain on your computer. You can get your funds back using your passphrase. Multiple wallets are supported as well as third party plugins.
Armory (Windows, Mac, Linux, Raspberry Pi)
The Armory is highly regarded, but it is geared more towards people with slightly more advanced technical knowledge. Armory is free and open source, which means you can hack it and check its code. You can see how good it is and don’t take the company’s word for it.
You can manage multiple wallets, which, as we said, helps make it harder to link payments to you. But the nicest feature is what’s called Cold Storage. All private encryption key data is stored on an offline computer, making it impossible to hack and steal accounts.
Mobile Wallets
Mobile Wallets
Again, there are many options for mobile cryptocurrency wallets. But I focused exclusively on the ones available for both iOS and Android.
CoPay
CoPay is a free open source cryptocurrency smartphone app where you can easily manage multiple bitcoin wallets.
The best part about CoPay is that the account is owned by a group of people (like you and your friends). Any transaction requires the permission of each account holder. This is a really useful feature that prevents one of the account holders from emptying it and leaving.
CoPay is available even for Windows Phone. But honestly, who uses it these days? I doubt even Bill Gates knows.
Xapo
When you sign up with the Xapo app, it automatically comes with its own debit card, so you can withdraw your balance from ATMs. But you don’t have to use the card if you don’t want to. You can use the app yourself. But a debit card is a nice touch.
Xapo is also actively promoting its robust security vault for storing customers’ bitcoin balances. The vault is located in a decommissioned Swiss military bunker. Defeat this Doctor Evil.
Exchange Rate Tracking
Track the exchange rate
The exchange rate for buying bitcoin will measure your blood pressure. If you don’t believe me, this is the current exchange rate (April 12, 2019) if you want to convert one bitcoin to USD.
Yes, just over $ 5,000 for one bitcoin. And in the last five minutes, that number has bounced up and down like a kangaroo on crystal meth.
However, it is obvious that you can have shares of bitcoin, just like you can have a hundred cents for every dollar. So if you go to Preev and enter your desired amount (and currency) on the right-hand side, it will automatically tell you in real-time on the left-hand side how many bitcoins will turn out.
So one dollar:
Cryptocurrency trading is definitely not for the faint of heart. You can make a fortune from the appreciation of the exchange rate. But in the blink of an eye, everything can collapse, leaving you penniless. So, the golden rule: don’t leave a lot of money in your bitcoin wallet, unless you lose it if necessary.
Conclusion
As everything else in the world moves online, it was logical for the financial sector to follow suit. The digital currency has a myriad of teething problems and many major flaws (lack of regulation and laws to name two), but it exists nonetheless.
When it has better security protocols, a more stable exchange rate, and merchants willing to trust it and accept it as payment, that’s when it really works.
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