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WTF is Bitcoin and is It Real Money?

Raise your hand if you have no idea WTF it is!

So there’s this cyber currency called bitcoin and the Internet will not STFU about it. There’s a pretty good reason for this, though.

An anonymous tech wizard, Satoshi Nakamoto created bitcoin back in 2009. It’s only accessible online and works on a ‘peer-to-peer’ system, kind of like BitTorrent.

There are long and complicated descriptions of what bitcoin actually is. There’s stuff about cryptography (a type of maths that creates secure communication – for example, the encryption in WhatsApp so people can’t hack your messages), block chains, nodes, mining, and a lot of jargon floating around the Internet. For the technologically challenged (like me), it’s basically a form of virtual money that has actual worth IRL.

money, debt, shopaholic

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We send all sorts of information out via the Web, and bitcoin is an example of the type of information you can exchange that’s worth an amount. It’s decentralised, which means it can be used anywhere in the world, kind of like a universal banking system. According to Destiny, sending and receiving bitcoin is like getting an e-mail.

Bitcoin was created to give ordinary people autonomy over how their money is controlled and provides anonymity when exchanging it. It’s trying to create a culture of privacy and choice when it comes to our finances.

Woman measuring piggy bank

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There are only 21-million bitcoins available. That means they’re high in demand with little supply so they’re worth a lot of money. If you’re keen to get in on the action, you need to already have bitcoin and a place to store them.

Once you’ve got your bitcoin, you need somewhere to store it, like a digital wallet of sorts. This can be in the form of software that you can download on your computer or cellphone or as hardware on the Web. So you can deposit money into the bitcoin exchange, get bitcoin and withdraw it from your digital wallet. If you want cash for bitcoin, just reverse the process.

Going through what’s called a bitcoin exchange will ensure you don’t get scammed by randoms on the Internet – you send the cash and get bitcoin back.

woman money

Getty Images/Blend Images

So is this cyber espionage or could bitcoin replace traditional banking systems? They both have their advantages and disadvantages, but the main point is to inform and educate yourself before making any rash decisions. You wouldn’t want to invest your life savings into bitcoin only to discover you’ve been scammed or that you don’t really know how to use it.

Here are some useful sites to get you bitcoin-savvy:

1 Bitcoin SA

2 My Broadband

Read more money.

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