TABLE OF CONTENTS
- What Is Bitcoin Then? Is Bitcoin a Security?
- What Technology Is Used to Store and Use Bitcoin?
- How Do You Purchase Bitcoin Safely?
- Is Bitcoin a Safe Store of Value for Your Hard Earned Dollars?
- Stay Informed About the Latest Developments in Bitcoin Investing
A recent article published by Investopedia titled ” SEC Chair Says Bitcoin Is Not A Security” will tell you right away how Bitcoin and other cryptocurrencies are viewed and understood as financial instruments by the Securities and Exchange Commission of the United States of America.
With the continuous surge in the value of Bitcoin, rising in price from $.08 a coin in July 2010 to $12,987.57 today, it’s no wonder that top financial experts and economists are taking a closer look at how Bitcoin and cryptocurrencies will act as stores of value moving into the year 2021.
So, is Bitcoin a security? Well, not according to the SEC. But that doesn’t mean we can’t find out what Bitcoin is, right? What technology allows Bitcoin to be securely purchased, exchanged, and stored? What other properties of Bitcoin would enable it to be seen as a security outside of the SEC?
What Is Bitcoin Then? Is Bitcoin a Security?
Bitcoin, as defined by the informational website for the cryptocurrency Bitcoin.org, is:
“A consensus network that enables a new payment system and completely digital money. It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen. From a user perspective, Bitcoin is pretty much like cash for the Internet. Bitcoin can also be seen as the most prominent triple entry bookkeeping system in existence.”
That definition may sound foreign to you; if Bitcoin is a new technology you are coming to terms with — that’s okay.
What this means for you is that Bitcoin can be used to make purchases anonymously online between individuals and businesses — securely. No personal information is ever exchanged, and your transaction is stored within a digital ledger known as a blockchain.
International payments are made easy because bitcoins are not related to a specific country or regulatory agency. Businesses can benefit from using Bitcoin because, unlike credit card payments, there are no processing fees. Many individuals and hedge funds buy bitcoins as an investment, a store of value against fiat currencies, hoping that Bitcoin will go upward in value.
What Technology Is Used to Store and Use Bitcoin?
How do you store all of your Bitcoin safely? With a wallet, of course! No, not a billfold wallet but a digital wallet or private “cold storage” thumb drive. A crypto-wallet is needed before you can begin purchasing and using any cryptocurrency across P2P and trading exchange networks.
Your digital wallet will be the program you use to conduct transactions across the Bitcoin network. Bitcoin is not an actual, tangible coin, but a series of transactional keys, or strands of numbers and letters stored within a mathematical programming algorithm known as the blockchain.
A public key and a private key is required to complete transactions across the network. Your public key is where deposits and withdrawals are made in the blockchain ledger. It is your unique “username” that identifies your transaction, while your private key is essentially the password required to buy, sell, and trade Bitcoins from your digital wallet. It is essential to keep your private key, well, private!
The best way to accomplish the privacy of your password is by creating an encrypted password online or purchasing an offline wallet.
Are you still thinking, “Is bitcoin safe?” we hope not.
How Do You Purchase Bitcoin Safely?
Once you have a safe place to store your Bitcoin, there are essentially three different ways to acquire or buy Bitcoin safely:
1. Bitcoin Exchanges:
The marketplaces for purchasing bitcoin are called “bitcoin exchanges” and allow individuals to buy or sell bitcoins using different currencies worldwide.
2. P2P Transfers:
Individuals can send Bitcoins to peers using mobile technology applications or their personal computers. It’s very similar to sending digital cash across the Internet to your friends and family.
3. Bitcoin Mining:
Competitive technology companies compete to mine bitcoins using a series of computers to solve complex algorithms across the Bitcoin blockchain. This is essentially how bitcoins are created for the marketplace.
Many Bitcoin mining startup companies allow individuals to make partial investments in the technology needed to create a mining facility – thus rewarding the investor with a fractional amount of Bitcoin for their investment contribution.
4. Bitcoin ATMs:
Bitcoin ATMs are simply a way to purchase and exchange Bitcoin in-person. Individuals insert cash into the ATM and use it to buy Bitcoin. Your purchase is then sent to your secure digital wallet.
Use the Coin ATM Radar to find a Bitcoin ATM near you.
Is Bitcoin a Safe Store of Value for Your Hard Earned Dollars?
If you trust your local bank with securing your money, then you shouldn’t have any worries about the safety and storage of your Bitcoins, either!
There are three main reasons why Bitcoin is safe, and here they are:
1. Bitcoin Is a Securely Encrypted Network:
Bitcoin is encrypted and backed by what you should know now as the Blockchain. The Blockchain requires many, many volunteers to work together to encrypt the transactions within the system. By doing this, they make sure that all personal information is kept safe, and if hackers get into the system, there’s nothing of value they can steal.
2. Bitcoin Is a Public Ledger:
No, your Bitcoin currency is not public. The transactions themselves are made available and transparent and are seen as anonymous. This means that no one can “hack” the ledger or find a way to commit fraud like in classical accounting or bookkeeping.
These transactions are irreversible. Imagine having thousands of people watching over your wallet for you, making sure no one else can steal it. Pretty cool, right?
3. Bitcoin Is a Decentralized Currency:
Bitcoin has computer servers worldwide and over 10,000 nodes tracking the system and its transactions daily. Why is this important? It means that if one of the servers or nodes goes down, the others go into overdrive to keep the system operational.
Are you trying to hack into a server or node? Go for it! Only thousands of others keep track of the same ledger that can verify the hacking attempt and keep the ledger in order!
Stay Informed About the Latest Developments in Bitcoin Investing
So, have we answered the question, “Is Bitcoin a security?” We can confidently say, “No, Bitcoin is not a security; it is so much more!”
Make sure that you stay informed about the latest developments in Bitcoin and cryptocurrency investing through NewsLo, your go-to source for investment advice, and business news and opinions.