Bitcoin Heading back up to 20k?! | CNBC Fast Money
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Bitcoin has been described as a decentralized, peer-to-peer version of electronic cash that facilitates the purchase of online goods and services without an intermediate financial institution.
Bitcoin can be directly exchanged from one party to another, and the transaction does not require an intermediate bank or clearinghouse to validate the transfer. Bitcoin has primarily been used as a medium of exchange for online purchases. In order to begin using Bitcoin, a consumer must first create a virtual wallet.
It is helpful to think of a virtual wallet as a combination of a traditional wallet and an email address. Similar to a traditional wallet, the virtual wallet stores the bitcoins of the consumer and allows the bitcoin heading back up to 20kcnbc fast money to keep track of their Bitcoin balance. Buyer B purchases a product from Seller S for a price of two bitcoins.
S gives B his public key, which enables B to send two encrypted bitcoins to pay for the product. S then accepts the two bitcoins by inputting his private key, which decrypts the transaction and places the bitcoins into his virtual wallet.
All Bitcoin users can view the exchange of the two bitcoins, but only S is able to accept the bitcoins because of his unique private key. After the creation of a virtual wallet, a consumer can begin the acquisition of bitcoins using any of the following methods:. Mining is an integral part of Bitcoin and serves multiple purposes. The process of mining creates additional bitcoins, validates transactions, and maintains the record of transactions within Bitcoin.
In order to complete this transaction, a miner bitcoin heading back up to 20kcnbc fast money ensure that B is in possession of two bitcoins. A miner utilizes programming software to solve a complex Bitcoin algorithm to ensure B has the two bitcoins. If B has the bitcoins, the miner then records the transaction between B and S in a general ledger, known as a block chain. The block chain is the record of all transactions that have occurred on the Bitcoin network.
Just as the supply of gold is limited, the number of Bitcoins is limited to 21 million; the last bitcoins will be mined in A consumer can purchase bitcoins through an online exchange. The going rate of bitcoins, which fluctuates dramatically, is exchanged for a traditional currency. An individual can also acquire bitcoins by accepting the currency in exchange for goods and services. As with many systems that operate online, the Bitcoin network is susceptible to hacking.
Hackers can steal the bitcoin heading back up to 20kcnbc fast money of consumers by gaining access to Bitcoin platforms or by compromising the virtual wallets of the consumer. Gox, a Tokyo-based exchange, was once the dominant platform for Bitcoin exchange. Bitcoin is not backed by a government and is not based on any real-world commodity, such as gold or a central bank, and consequently the value of Bitcoin fluctuates dramatically.
Consumers are often drawn to invest in Bitcoin because of the perception that it will mirror other innovative investment opportunities by increasing in value over time. The newness of Bitcoin makes it attractive to fraudsters because of the evolving nature of the system. Fraudsters have perpetuated fraudulent investment schemes that promise consumers access to cutting-edge opportunities with bitcoin heading back up to 20kcnbc fast money high returns on investments. Securities and Exchange Commission SEC has taken measures to combat such fraudulent investment opportunities.
Shavers for an alleged Ponzi scheme that involved Bitcoin. Consumers are left with little or no legal recourse when the aforementioned risks materialize.
Law enforcement faces substantial obstacles in identifying and punishing individuals responsible for theft or fraud of Bitcoin. Firstly, the anonymity of Bitcoin makes it difficult to trace the currency. Consumers also have limited options in recovering lost or stolen bitcoins. For example, consumers were unable to recover their bitcoins after the breach of Mt.
Gox would not be able to pay any judgments that the court would enforce to remedy the injuries of consumers. Consumers bitcoin heading back up to 20kcnbc fast money take preventive measures to protect themselves from potential loses.
Such measures are of little cost to the consumer and include:. A consumer should perform thorough research before making monetary commitments to an investment opportunity. The average consumer does not bitcoin heading back up to 20kcnbc fast money carry thousands of dollars in their wallet, purse or pocket and the same should hold true for virtual wallets. Moreover, an offline wallet that is encrypted, backed up regularly, and stored on alterative media bitcoin heading back up to 20kcnbc fast money as a USB drive will greatly reduce the likelihood of Bitcoin theft.
The most important tip for consumers is to only invest money that they can afford to lose. Essentially, consumers should invest an amount in Bitcoin that they are fiscally comfortable with losing. Consumers should make sound investments while conscious of the reality that if fraud or theft occurs, they will likely be unable to recover any losses.
The potential for Bitcoin is vast, and unfortunately so too are the risks to consumers. Law enforcement faces several obstacles in providing recourse for injured Bitcoin users and the international scope of Bitcoin magnifies the issues.
There is minimal regulation in the area of digital currencies, and until sufficient regulation exists, informed and cautious consumers are the best defense against the shortcomings of Bitcoin. More than a Bit RiskyFinra Investors, http: Penrose, Banking on Bitcoin: Gox Files for Bankruptcy Protectionfinancial times Feb.
Find the attorney general who represents you. Patrick Morrisey has been the attorney general of West Virginia since National Association of Attorneys General. Mining Mining is an integral part of Bitcoin and serves multiple purposes. The most notable risks include: Hacking As with many systems that operate online, the Bitcoin network is susceptible to hacking.
Fraud The newness of Bitcoin makes it attractive to fraudsters because of the evolving nature of the system. Such measures are of little cost to the consumer and include: Broker Investigation A consumer should perform thorough research before making monetary commitments to an investment opportunity.
Protection of Virtual Wallets The average consumer does not typically carry thousands of dollars in their wallet, purse or pocket and the same should hold true for virtual wallets. Acquiring Minimal Amounts of Bitcoin The most important tip for consumers is to only invest money that they can afford to lose.
