Decoding Cryptocurrencies

What is Bitcoin?

Bitcoin is digital money used for secure and instant transfer of value anywhere in the world. It is not controlled or issued by any bank or government – instead it is an open network which is managed by its users. Much in the way email improved communication by making it fast and cheap, bitcoin is an improvement on existing payment methods which were not designed for the internet era.

Is Bitcoin safe?

Bitcoin’s core protocol is viewable by anyone, has been vetted by thousands of security researchers around the world, and has proven to be robust and reliable after immense scrutiny. Using bitcoin is similar to using other private applications on the internet, such as email or online banking. Just like these other web services, you must access your bitcoin with a password in order to ensure only you have access to your money.

Is it tied to the value of the dollar?

The value of a bitcoin is not tied or pegged to the value of any other currency. Similar to stocks or property, bitcoin’s value is determined by buying and selling in the open market. A bitcoin’s price changes in real time based on the number of people who want to buy or sell it at a given moment.

Why does it change value?

Bitcoin is traded for dollars, euros, yen, and other currencies in real time 24 hours a day. Depending on the demand for buying or selling bitcoin, the price can fluctuate from day to day. This is similar to the manner in which the value of a stock or property can go up or down based on supply and demand. Bitcoin’s value can be volatile compared to traditional currencies such as the US dollar because it is still an emerging technology.

Is it similar to a credit card or paypal?

Unlike credit card networks like Visa and payment processors like Paypal, bitcoin is not owned by an individual or company. Bitcoin is the world’s first completely open payment network which anyone with an internet connection can participate in. Bitcoin was designed to be used on the internet, and doesn’t depend on banks or private companies to process transactions.

Why would I use bitcoin?

Bitcoin allows you to instantly send any amount of money to anyone in the world without needing a bank. It allows you to access your money without needing an ATM or credit card – bitcoin gives you back control over your money. Plus you can pay friends back for dinner, buy your next computer, and donate to charity, all using bitcoin.

Where can I spend bitcoin?

Many large online businesses accept bitcoin, such as Overstock, Expedia, and Dell. Non-profits such as Wikipedia and the United Way also accept bitcoin donations. Look for a bitcoin payment option at many of your favorite websites and you’ll be surprised how many accept bitcoin! You can view a list of merchants here.

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HOW TO BUY BITCOIN?

Coinbase makes it easy to convert your local currency into and out of bitcoin. On this page, you’ll learn how to buy bitcoin and store it securely in a wallet.

 

1. Sign up for Coinbase

This first step is to sign up for a Coinbase account. This will give you a secure place to store your bitcoin, and easy payment methods to convert your local currency into or out of bitcoin.

Sign up here ›

Coinbase
2. Connect Your Bank Account

After you sign up, connect your bank account. You’ll need to complete some verification steps before you can use the account. Once the verification steps are complete, you can start a purchase.

Add A Bank Account ›

Account
3. Buy and Sell Bitcoin

After starting your first purchase, we’ll complete your buy and deliver your bitcoin. (Sells work the same way but in reverse). The price of bitcoin changes over time, so we’ll show you the current exchange rate before you buy.

Buy Bitcoin ›

Exchange
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What is Ethereum?

To understand Ethereum, let’s compare it to a currency we already understand – Bitcoin. Ethereum is a decentralized platform for applications. Both Bitcoin and Ethereum are decentralized platforms, but they differ in a few key ways.

While Bitcoin is designed to process transactions and help people exchange money, Ethereum aims to function as a kind of decentralized computer, supporting a new type of application (a “dApp”) in the process.  A good analogy is to think of Ethereum as the blockchain version of the “App Store”.

 

What is Ether?

Ether is the currency that allows the Ethereum network to run.  In the same way that your computer uses electricity to run, Ethereum requires small amounts of Ether to process transactions. Ether powers the Ethereum network and is a unit of currency that you can buy and sell.

Technically, you aren’t buying Ethereum when you try and buy their token online, Ethereum is the name of the network – you’re actually buying Ether, Ethereum’s unit of currency.

 

Who created Ethereum?

Ethereum was first proposed by Canadian programmer Vitalik Buterin in 2013, when he was only 19 years old. When first publicly announced in January 2014, the core Ethereum team was Vitalik Buterin, fellow Canadian Anthony Di Iorio, Mihai Alisie, and Charles Hoskinson. The system officially went live on July 30th, 2015.

 

Is Ethereum like Bitcoin?

Well, sort of, but not really. Like Bitcoin, Ethereum is a distributed public blockchain network. Although there are some significant technical differences between the two, the most important distinction to note is that Bitcoin and Ethereum differ substantially in purpose and capability.

Bitcoin offers one particular application of blockchain technology, a peer to peer electronic cash system that enables online Bitcoin payments. While the Bitcoin blockchain is used to track ownership of digital currency (bitcoins), the Ethereum blockchain focuses on running the programming code of any decentralized application. These decentralized applications have a wide array of use cases, including but not limited to financial transactions.

 

How does Ethereum work?

Ethereum’s core innovation, the Ethereum Virtual Machine (EVM) is a Turing-complete software that runs on the Ethereum network. It enables anyone to run any program, regardless of the programming language given enough time and memory.

The Ethereum Virtual Machine makes the process of creating blockchain applications much easier and efficient than ever before. Instead of having to build an entirely original blockchain for each new application, Ethereum enables the development of potentially thousands of different applications all on one platform.

 

What is a decentralized application?

Any services that are centralized can be decentralized using Ethereum. Think about all the intermediary services that exist across hundreds of different industries. From obvious services like loans provided by banks to intermediary services rarely thought about by most people like title registries, voting systems, regulatory compliance and much more.

Some notable decentralized applications today are hoping to decentralize industries like cloud storage, home rentals, and even social media.

 

How do I buy and sell Ether in Canada?

In Canada there are a few options for buying and selling Ether.

Online Exchange: If you want to buy or trade Ether at the best avialable rate, you‘ll want to use an online exchange like Coinsquare. Exchanges act as an escrow by storing both Ether and fiat currency on behalf of their customers. Here you can make your own orders to buy or sell Ether at the best rates with the click of a button. On exchanges, fees and the spread are low, however you are required to submit personal information like your address to comply with Canadian regulations.

ATM: Maybe the most private method to acquire Ether is a Bitcoin ATM. They are referred to as Bitcoin ATMs only because that is the most popular digital currency. Most of these ATMs work with Ether as well. These machines where you can get money with your card. Some companies also produce ATMs where you can buy Ether with cash. ATMs have very high fees of 5-8% percent or even more.

Gift Cards/Voucher: This is another easy method to buy Ether. In Canada you can use cash or debit to buy a Flexepin voucher at thousands of retail purchase locations. These vouchers can be redeemed on exchanges like Coinsquare for Ether. Like ATMs, these voucher cards tend to charge relatively high fees.

 

How do I store Ether?

To store your Ether, you will use some form of an Ether wallet. Ether wallets function similar to traditional wallets except it’s not a physical wallet and it doesn’t actually store currency – digital currency wallets simply interact with the blockchain to keep track of your funds. Ether wallets work almost exactly the same as Bitcoin wallets.

You’ll find wallets come in many types including desktop, mobile, web, paper and hardware wallets. Each of these has its advantages and disadvantages.

When you buy Ether on Coinsquare, you are automatically given a web wallet to track your Ether so you don’t have to worry about setting one up.

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What are altcoins?

‘Altcoins’ is the term given to the hundreds of digital currencies that have launched in the last couple years. Today, new digital currencies are launched every day. Some of these altcoins emulate Bitcoin as peer-to-peer digital currencies, while others represent application tokens for dApps built on the Ethereum blockchain.

 

What are altcoins used for?

Altcoins serve a wide variety of functions. They are typically used as tokens for very specific applications. The owner of these tokens may hold on to them as an investment or use these tokens to perform a function within the application.

An example of this is Filecoin, one of the world’s largest token sales to date. Filecoin is a decentralized application built on the Ethereum network. Users will be able to exchange their unused computer storage for Filecoin’s token.

 

How do I buy and sell altcoins in Canada?

In Canada there are a few options for buying and selling altcoins.

Online Exchange: If you want to buy or trade altcoins at the best avialable rate, you‘ll want to use an online exchange like Coinsquare. Exchanges act as an escrow by storing altcoins and fiat currency on behalf of their customers. Here you can make your own orders to buy or sell altcoins at the best rates with the click of a button. On exchanges, fees and the spread are low, however you are required to submit personal information like your address to comply with Canadian regulations. Some altcoins are only available on specific exchanges. While you can find the most popular altcoins on almost all exchanges, some of the newer or more obscure altcoins can only be found on certain exchanges.

Gift Cards/Voucher: This is another easy method to buy altcoins. In Canada you can use cash or debit to buy a Flexepin voucher at thousands of retail purchase locations. These vouchers can be redeemed on exchanges like Coinsquare for altcoins. These voucher cards tend to charge relatively high fees.

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What are wallets?

A digital currency wallet is a software program that interacts with blockchains allowing people to send and receive digital currency and monitor their balance. If you want to use Bitcoin or any other digital currency, you will need to have a digital wallet.

When a person sends you bitcoins or any other digital currency, they are essentially signing off ownership of the coins to your wallet’s address. To be able to spend those coins and unlock the funds, the private key stored in your wallet must match the public address the currency is assigned to.

If public and private keys match, the balance in your digital wallet will increase, and the senders will decrease accordingly. There is no actual exchange of real coins. The transaction is signified by a transaction record on the blockchain and a change in balance in your digital currency wallet.

 

What kind of wallet should I use?

There are two main categories of digital currency wallets, hot wallets and cold wallets. Hot wallets are wallets that are connected to the internet. These hot wallets run on the cloud and are accessible from any computing device in any location. While they are more convenient to access, these online wallets store your private keys online and are controlled by a third party which makes them more vulnerable to hacking attacks and theft.

Cold wallets on the other hand store a user’s private keys on a hardware device like a USB device or even on a piece of paper. These wallets tend to be more secure since private keys are stored offline and aren’t vulnerable to hacks. Coinsquare automatically gives you a wallet to keep track of your digital currency and stores over 95% of all user funds in cold wallets to make sure your money is safe from hacks.

 

Are digital currencies safe to use?

Digital currencies are incredibly safe when used and stored correctly, and networks like Bitcoin and Ethereum have inherent security features that make the networks incredibly resistant to hacks – far more safe than any bank or third party.

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This is just a taste of information about the growingly popular digital currency. It is very interesting, and as it increases in popularity, it has major implications not just to our financial system but to society as a whole! I would recommend doing some extra reading on your own!

So what are you waiting for? Start trading today! The above information was summarized from two of the most popular Crypto wallets: Coinbase and Coinsquare.

Links: https://coinsquare.io/   +   https://www.coinbase.com/

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**This blog is not all original content- I do not own all the content. The purpose of this blog is to collect valuable insights across various channels, publications, and articles, and present them in a digestible and current way. Some material has been copied, and referenced in some articles, and should not be treated as original work.