By Helen Ruhlin
Recently a friend asked me, “So what do you think about all this bitcoin stuff?” Cue nervous sweating and incoherent mumbles. As I not-so-casually attempted to change the subject through awkward laughs and a sudden need to use the bathroom, I realized I knew diddly-squat about bitcoin. So just what is this elusive bitcoin, and why is your third cousin who invested in them years ago suddenly rich?
We’ve all heard the name and seen the headlines. If you’re anything like me, your definition of bitcoin comes from Netflix sci-fis, which are a heck of a lot cooler than Webster’s definition: “A type of digital currency in which encryption techniques are used to regulate the generation of units of currency.” To bring things back to earth, I finally found some answers on a website article candidly titled, Still don’t get bitcoin? Here’s an Explanation Even a Five-Year-Old Will Understand.
Bitcoins themselves are, in short, a digital-currency. We can equate them to money, bananas, pencils; something of value. Think of bitcoin simply as a different way to pay for your morning coffee: instead of cash or a card, there’s bitcoin. To begin, you need to create an account online, which is done by inserting an email address and bank info to make your “digital wallet.” From there, money can be transferred from your bank account into your digital wallet to give you a bitcoin balance. On the contrary, you can also accept bitcoins from other users and either transfer them into hard cash through bitcoin exchange services, or keep them in your account.
The interesting piece of this online money, is that its value is always changing. Much like the fluctuation of euros to the U.S dollar, bitcoins also increase and decrease in value. Today, one bitcoin is worth over $11,000 – but they weren’t always that valuable. In 2010, one bitcoin would’ve only run you about ten cents, hence why savvy investors from a few years back are suddenly loaded. Five years ago, if you spent five dollars on some bitcoins, you’d be a multi-millionaire today.
Despite its true value, this crypto-goldmine has a bit of a bad rep due to deceitful media representation as being an illicit tool for hackers. In contrast, every bitcoin exchange and transaction is recorded on a public ledger, accessible by anyone online. The tricky bits fall under the loopholes of using pseudonyms for account names and hiding illicit money in other users’ accounts. Whether you like it or not, bitcoins won’t be going anywhere in the near future. So next time you happen to acquire a windfall of 11,000 dollars, be sure to check out the latest in cryptocurrency investments.