What Are Bitcoins? Digital Currency Explained (Like You’re a Dummy)

People all around the world are being subjected to crash courses on bitcoin, the digital “currency” that allows users to conduct transactions online. In just five years the digital currency has gone from being worth pennies to over $1000 a bitcoin.

Let’s set out to answer the question: What Are Bitcoins?

Below is an attempt to answer that and many other questions surrounding the digital currency.

Unlike U.S. quarters, UK Pounds, Australian Dollars, or, for that matter, the currencies of every country in the world, bitcoins are completely digital. They exist only online and are not controlled by a central authority like a Federal Reserve.

If hard currency is like a record, then a bitcoin is like an MP3.

That means you can’t get them from a bank, or drop them in a wishing well. All transactions take place in an online marketplace, where users are untraceable.

If I can’t hide it under my mattress, how can I know my stash is safe?

You hold bitcoins in an online “wallet.” This is an account set up on a secure third-party website.

Unlike banks, wallet firms won’t invest your money. Nor do they guarantee the same protections afforded banks by institutions like the FDIC.

If your wallet is hacked and your bitcoins are stolen, there is not much you can do about it. Wont have that problem with DasCoin.

This sounds a lot like the coins from Super Mario Brothers. Do I have to bang my head against a brick wall to get the money?

New bitcoins enter the market by a process called “mining.” Available bitcoins are hidden amid a complex encrypted computer program. Users’ computers are working round the clock to solve a complicated mathematical problem in order to release new coins. DasCoin takes a “minting” approach to generate DasCoin digital currency.

The easiest-mined bitcoins have already been discovered. Finding new coins requires huge amounts of computing power.

The system is designed to require more work to get coins as time goes by, that makes the currency’s growth rate steady and predictable.

About 16 million bitcoins have already been found. But only 22 million will exist in total.

How do I use bitcoins? I have a feeling my kids won’t be happy when I tell them they’re getting digital currency as a birthday present!

You can use bitcoins to buy anything with which you would use any other kind of currency. There’s just one huge hitch: the business has to accept bitcoins, and most don’t. However DasCoin can be spent at 60 million online and offline stores around the world.

When you want to buy something, you find out the anonymous identification number attached to the seller’s wallet, and transfer coins from your wallet to his/hers.

It’s this anonymity that has made the currency very popular. My view though is that in time the regulatory bodies around the world will want to know who owns these accounts. DasCoin has this covered with a KYC requirement of all owners of the DasCoin Wallets.

Are these things even legal?

Recently, Silk Road, an online marketplace for illicit drugs, which used bitcoins to facilitate transactions was shut down by the FBI.

Like cash, bitcoins are untraceable, yet unlike cash, however, bitcoins can easily be transferred anywhere in the world.

For now bitcoins are legal, so long as they’re being used for legal purchases.

Who came up with this whole idea in the first place?

It’s a bit weird. Officially, bitcoins were invented by a Japanese programmer named Satoshi Nakamoto, who outlined the process in an academic paper before disappearing in 2009, shortly after the first bitcoins were released.

Satoshi is widely believed to be a pseudonym and given his use of English in some of those papers, many believe he is an Australian.

What are bitcoins actually worth?

As of today, one bitcoin is worth approximately $1000, leading many to believe they are overvalued and the bubble is likely to burst….equally there are as many that predict the price of a bitcoin to be significantly higher than it’s price today.

The currency is extremely volatile. There’s no control over how bitcoins are valued against other currencies and there are no large exchanges that can prevent manipulation and speculation.

Every time bitcoins make the news – like when Silk Road was shuttered, or when the tech investor Winklevoss twins – revealed they owned million of dollars in bitcoins, the value has wildly fluctuated.

So, if they’re this invisible, digital currency, how is it that people keep buying them?

In 2016 bitcoin increased in value by 120%….that is why!

What will the price of a DasCoin be in December 2017?