The easy Bitcoin guide for early adopters
Bitcoin – The currency that could shake the pillars of central banks
Bitcoins are taking parts of the world by storm. An article carried in The Guardian in UK was titled “Why Bitcoin scares banks and governments“. If you have never heard about it, don’t worry. This article will serve as a primer, its time for you to know.
What is Bitcoin?
Bitcoin is a decentralized form of money that is based in the internet. It was created by an anonymous developer called Satoshi Nakamoto. Framework for Bitcoins was put in place in 2008 and the first transaction was done in 2009. It is described as a “cryptocurrency” and is made up of complex code created by computers in a process called “mining”. In theory, mining can be carried out by anyone with a computer. Its currency symbol is BTC.
- The world’s fastest appreciating currency. (The first Bitcoin transaction took place in 2009 at the exchange rate of 1 USD = 1,309.03 BTC. The current exchange rate is 116.7 USD = 1 BTC, this means Bitcoin has grown 15,276,380% in approx 3.5 years.)
- Not legal tender
- Not backed by any resources
- Not issued by any government or bank
- Exists only on the internet
How can I get Bitcoins?
- Anyone can “mine” for bitcoins using a ‘mining rig’ like this one.There are also mass-produced rigs available for sale.
- Bitcoins were programed so that it gets harder to mine as it grows. There is a imposed limit of 21 million coins in circulation.
- Individuals can choose to buy Bitcoins instead of DIY mining, the current exchange vs the US Dollar being 1 BTC=USD 116.7 at the moment while the exchange vs the Singapore Dolloar is 1 BTC = SGD144.6
What can I buy with Bitcoins?
- There are many things you can buy online with Bitcoins, such as a house in Canada, electronic goods, Gold and even a goat.
- I have not encountered Singapore retailers who accept Bitcoin as a mode of payment although you can still convert your stash of Bitcoins into hard currency through an exchange.
Will I get Taxed?
- In many countries where people have adopted bitcoins, governments are looking at ways to introduce legislation.
Can I possibly get interest out of Bitcoin?
- bank” for Bitcoins where you can get an “interest” on your balance.
Here is the most important question for us to even discuss Bitcoin: Can trade or not?
- At this point, you can trade Bitcoins through an exchange.
- Mt. Gox is the largest exchange for Bitcoin in the world.
- Price charts are available.
- Unfortunately, there does not seem to be any price feeds for Bitcoin on a MT4 platform at this moment, though there is a way to see the charts through an EA.
So am I too late to get into Bitcoins?
Use of Bitcoin is still at the infancy stage. While it is certainly generating excitement, it is hard to see that there is widespread adoption. It could continue its very exciting run or it could remain a novelty. Technically savvy individuals who do not mind the costs involved might consider building a mining rig to give it a try.
Update 30th Oct 2013 – Bitcoin
Since I wrote this article about 5 months ago, Bitcoin got more popularity.
- In fact, today the world’s first Bitcoin ATM was installed in a coffee shop in Canada.
- Some brokers have included Bitcoins in their MT4 platform.
- Public awareness has been starting to rise, especially when news broke of a man who became a millionaire with an initial investment of $27 worth of Bitcoins
- Non-profit organisations have also been setup to bring more awareness to the masses about this new age currency.
If there is any right time to take a look at Bitcoin, why not now?