Are we Trying to Sell Something?
In this series of articles we explore how people make money on the Internet. We will attempt to give an objective view on every subject we investigate – we have no affiliate relationship to anyone specific mentioned in this series. Don’t be surprised if we conclude that this subject might not be a good way to make money. All opinions expressed here are just that – our opinions.
Bitcoin and a Bit of History
BitCoin, simply put, is decentralized digital currency, or cryptocurrency. They can be sent from person to person through the Internet, making fees lower because there are no middlemen such as banks or clearinghouses. Anyone can purchase these funds through Internet exchanges like BitCoin Classic or BitCoin XT, just to name a couple.
This currency was developed in 2009 by Japanese developer(s) Satoshi Nakamoto. There is a swirl of mystery because it is unsure who this is. There have been claims that this is one person or a group of people, but no one is really sure. Some research suggests that companies Like Samsung, Nokia and others had something to do with this currency. Personally, this leads a little doubt about BitCoin because people, in general, want to know that something is real and where it came from. A name is just a name until you can put a person or persons behind it. It only hurts the exchange to mystify the creator or creators.
How Is Bitcoin Used?
When purchased or mined, BitCoin can virtually be used similarly to your currency through any payment online service that accepts this currency, including businesses and person-to-person exchanges. There are claims that this currency can transcend to “anything that can exist,” as expressed by Craig Wright, the person that was first thought to be Satoshi Nakamoto. This means that you will be able to shop with them in day-to-day transactions. Some BitCoin users already do this. There are stores and shops that take this currency, as well as a few Internet sites. There are also places on the Internet where you can gamble with them, trade them, purchase them, or pay for commodities with them.
How Can You Make Money Using Bitcoin?
Aside from gaming, as mentioned above, there are quite a few of other ways that can but BitCoins in your wallet. Entrepreneurs have been brainstorming to get into the BitCoin market one-way or the other. There are several ways to produce BitCoins that they have found:
One such way is to build your own website and teach courses about BitCoins for a nominal fee. There is also the option of placing BitCoin advertisements on your own website where you get a small fee when others access the ad through your site.
Faucets for BitCoins can be more than just a game once you know how to use them. Setting up a faucet can be found in tutorials on YouTube.
Of course, you can always take a chance and gamble with BitCoins but unless you understand that you can lose just as well as any other currency and if you plan on using BitCoins it is better to stay away from that. There are odds in gambling with BitCoins, just like any other currency.
There are even faucets that you can just hit a ‘claim’ button on that will give you free Satoshi after a waiting for a certain amount of time. The two I chose to sign up for have a waiting period of 15 and 20 minutes before I can tap the button again. Of course, Satoshi that can be harvested from some of these free sites but there are many that you will never be able to withdraw from. I do not hold out any hope of gaining from these faucets. Signing up is more about research and satoshi from these sites are like picking up pennies, anyway.
There are websites that will micro-pay in satoshi for small analytical tasks. This is similar to MechanicalTurk at Amazon.
Another passive option is to use bots that will automatically trade, for you. The convenience of letting a BitCoin bot trade for you seven days a week, 24 hours a day is as passive as it can get. There is a market for trading the BitCoin, so this is another way to make money if you understand the core of the stock market and the concept of supply and demand.
Originally, mining for BitCoins was the main source of building the market for BitCoins. Since there is only 30% of the total 21 million left to mine, other options to add to your wallet had to be found. Since BitCoins are treated as currency, the concept of loaning with a fee is also a way to make money. Banks give loans to charge interest and make money. Following that model is pretty easy to do.
But Watch Out….
After researching the many types of ways to accumulate wealth, there are a couple types of websites to steer clear of. Any website that wants a plug-in added to your computer should be a red flag. There is just too much of a risk that your computer will be infected or hacked.
Is Bitcoin Currency Safe And How To Store Bitcoins?
The way BitCoins are stored is a “wallet” that you can have on your computer or cloud storage. This is similar to a bank account online. It is with a critical eye that anyone can say for sure that BitCoins are safe or secure. Breaches have occurred by unsecured wallets, not at the blockchain. Make sure your password is able to protect what you have in your BitCoin wallet. Make sure you never share it and it is strong. There are several different ‘wallets’ available. There is the paper wallet, mobile wallets, desktop wallets, online wallets, hardware wallets and USB wallets. They have varying security, based on your decision and price range.
How Does A Bitcoin Wallet Work?
There are some variations of this, but a BitCoin wallet is simple to set up. It takes a few pieces of your information but is relatively secure, based on your password. Once the account is set up, the wallet becomes a text file that is specific to you. It is protected by encryption through the browser you use. This is simply like opening your very own bank because you are the only one that knows how much you have in your account and the encryption stops everyone else from accessing the account. Wallets online are usually stored in the online cloud and still there is no way someone can access it unless your sign in protocols are weak or you shared the information. The wallet offered through Blockchain is connected to its namesake to look up your account when you log in and there is no need to download the blockchain at all. No one can view your account balance, addresses you have in the wallet, and transactions can only happen when you make them. No one is able to make any transaction except you. When your wallet is saved in the cloud there is no way that anyone can steal it. You don’t even have to use the blockchain.com website.
What Is A Blockchain?
Basically, the blockchain is a list of transactions concerning BitCoins. The problem here is that in order to use BitCoin, you will need to download the blockchain. This can be a problem because the blockchain is so long and takes up the memory of the user’s computer. Unless you decide to save it in the cloud, there will be many users that will be unable to access their BitCoins except by leaving their wallet in the cloud. Since the blockchain has been in place since the inception of BitCoins in 2009, there is a pretty good chance that your computer will not be able to hold the Blockchain at all. Wallets can, however, be used to house the Blockchain. A better option here is to use the cloud to keep it in. Another problem, there is no central database to house this. From this perspective, there is no known regulation. The only option is the BitCoin wallet. Of course, this is one of the solutions at present, unless you want to purchase storage beyond the capacity of your computer. To sum up what a Blockchain is, think of it as the checkbook register or ledger that everyone uses when using BitCoins.
What Is A Bitcoin Miner?
This started with algorithms (mathematical equations or processes) that could be easily answered, producing BitCoins. Of course, over time, answering these algorithms has become more difficult. Some people have grouped together to solve these equations and receive BitCoins based on their input to solve them. In some cases, people purchase mining software. There have been 14 million BitCoins mined with a limit of 21 million in existence. Since that represents 70%, realistically, mining is a harder process than thought. Mining was designed to be difficult, which limits the amount found. By 2140, miners will end up being dependent on transaction fees, based on the projection of the last BitCoin to be found.
What Are The Risks Of Bitcoin?
Depending on how you use BitCoins, and the market, they are similar to stock markets. The risk here is that BitCoins can vary over the course of time. BitCoin value can and does fluctuate. Of course, as previously stated, the security of BitCoins is as secure as your password but there has not been a problem with the BitCoin blockchain. They are also not a common use of currency. There are many places that look at the BitCoin and refuse it because their governments do not recognize the value. In order for governments to recognize this medium, there have to be certain criteria.
Another risk is the volatility of the market of BitCoins. At the beginning, there wasn’t a market so there wasn’t a cost. This allowed people to collect them, like Craig Wright. Supply and demand determine the cost.
Right now in the US, the Financial Crimes Enforcement Network (FinCEN) monitors any converted BitCoins to USD because banks report it. Of course, the problem we have here is that the government takes the stand that BitCoins are not legal tender and cannot be considered real because the population does not use it as a whole. Otherwise, the government would make policies and rules to govern this form of currency. What makes this more difficult for governments is that the BitCoin is used worldwide and cannot be tracked in usual ways, online.
To be fair, there have been rumors that just aren’t true about this system of currency. The idea that this is a Ponzi scheme is just not true. A Ponzi scheme has to do with the payment to older shareholders by using the money from new shareholders, in substitution of profits. This does not make any sense, since this has no centralization, like a bank, it is just not possible.
There have been rumors that drug dealers use BitCoin and that the system has been hacked. These are just rumors. What isn’t a rumor is that money can be taken when the website has been attacked by hackers, not your BitCoin wallet. There is always going to be a downside to something that is not widely understood. BitCoins are no different. We all need to explore and research for information to make the best decision possible.
The BitCoin has been scrutinized because they are not considered legal tender in many jurisdictions. This is true because it has been restricted or banned for use in some countries. There are many governments that are looking into how or if they want BitCoins regulated.
When looking at the BitCoin era, this currency has been off to a slow start. This form of currency is still in its childhood with the potential to survive and thrive, if and when it is accepted. The software is still in development to make it better by developing better security and accessibility. Time will tell. There are some websites that give you the option to learn by giving you a simulated account before if you are unsure of the BitCoin cycle. Whether this technology survives or sinks, look up a website where you can use a simulation to see if this is something you can understand and get accustomed to. This may or may not be the next step for all of us. It is definitely better to be prepared, just in case.
If you want to sell a product or service, BitCoin is a viable alternative to normal dollars. But beware, BitCoin is an attractive option for people in need of an unregulated currency. Many pyramid schemes deal in Bitcoin as sole means of payment. Their promises to get rich quick are tempting and will more often than not cost you.
Unfortunately our world economy is based more and more on virtual pillars – in Bitcoin’s case the fact that the brain wallet password cannot easily be broken. Keep in mind that any technology can suffer a disruption. In fact technology begs disruption. We don’t want our financial system to suffer if the unthinkable happens and BitCoin is breached. Might this new generation of learning processor contribute to the coming disruption?
Let the buyer beware. Cryptocurrencies are still in its Wild West days, keep your head low pardner.