Like many of you, the first time I heard the words “Crypto Currency” (Crypto), otherwise known as Bitcoin, I had no idea what these terms even meant. Since then, I have developed insight into this cryptic world which has been nothing less than eye-opening. As you read, my hope is that you as well can make sense of what “Crypto Currency” actually is and, even more importantly, how you can profit from it. First, let’s begin with a more formal definition:
A digital currency in which transactions are verified and records maintained by a decentralized system using cryptography, rather than by a centralized authority: “decentralized cryptocurrencies such as bitcoin now provide an outlet for personal wealth that is beyond restriction and confiscation”
OXFORD DICTIONARY
For those of you that appreciate simplicity like I do, let’s begin to unpack this definition. Essentially, Crypto is digital data that represents a currency, and is maintained by individual users instead of a centralized authority. This makes its value based purely on what someone believes it’s worth. Crypto is often referred to as digital gold because of the similarity of how their value is determined.
How Do I Get Bitcoin?
There are literally thousands of different types of crypto currency. This term is usually interchangeable with the words crypto, crypto coin, coin, or bitcoin. Some of them are exactly the same, while others have subtle differences to encourage you to buy one over another. Some of the big coin names are Bitcoin, Etherium, Litecoin, XRP, or Bitcoin Cash. These are some of the more valuable and highly traded crypto, but by no means are these the only ones.
Below, I have outlined the three most common ways to obtain crypto , and how I personally would rank the difficulty level associated with each one.
Buying Bitcoin:
The easiest way to obtain crypto is to just buy it on an exchange. Exchanges are virtual market places wherein you buy/sell crypto with other users. These “exchanges” hold the crypto currency while users exchange one currency for another. An example would be using cash to buy bitcoin or trading your bitcoin for another currency such as Etherium. Although there are many exchanges to choose from, it is important that you decide on one which will help you avoid losing your currency if the exchange is hacked or closes down. If you live in the United States, I recommend using Coinbase. It is the largest American exchange and has to be compliant with all the financial regulations you would expect from an American financial company. Find out more.
Mining Bitcoin:
Crypto can also be acquired by digitally mining currency. This can be a bit difficult to comprehend, but essentially, this involves using a computer to solve cryptographic equations. Once solved, a digital currency is produced. The longer a currency is mined, the more challenging the equations get, which takes longer and requires more computer power. All crypto currency is produced by mining of some sort. Find out more.
Earning Bitcoin:
The last way to obtain crypto is to get it from someone else, either free or in exchange for a product/service. In some ways, this is the easiest way to get access to crypto, but there are challenges to this method as well. It does provide almost a limitless amount of options to get crypto, so if you are trying to enter the crypto currency world and don’t have any capital to start with, then this is the best way. Find out more.
What do I do with Bitcoin after I buy it?
The first thing you have to do is to put your bitcoin in a wallet until you are ready to sell or spend it; however, many financial advisors suggest you hold onto your Bitcoin and keep it as part of your retirement portfolio. If you want to learn more about Bitcoin Wallets click here.
Do I Have to Pay Taxes on Bitcoin?
Finally, you have to pay taxes on crypto that you own. Always consult a professional before filing your taxes. With that said, I will give you the run down on what I’ve learned on the topic. Find out more.
Summary
What I have told you so far just minimally scratches the surface of what cryptocurrency is. You should now have at least a basic understanding of what Bitcoin is, where to get it, and what your options are once you have it. Feel free to click on the links above to better understand in more detail the different aspects of cryptocurrency. Disclaimer: I am an affiliate partner with several of the companies at the links throughout this page (i.e., I earn some revenue, at no additional cost to you, when you purchase using my links).