Are you bamboozled by Bitcoin? Stephen Browne from Crypto IB answers the questions you want to know about crypto currency, how it works and whether you really can become a bitcoin billionaire.
What is crypto currency?
The name might be scary but it’s just a digital or virtual currency. Think of it like your air miles or iTunes credit. The only difference is that, as opposed to Asia miles or credit, the equivalent value of the digital currency can change, due to the exchange rate.
How is this different to Bitcoin?
Bitcoin is a form of pure crypto currency. It’s one of the most popular but is by no means the only one available. Much like the US dollar, it is the value people tend to look at.
So, Bitcoin is the largest of the currencies, right?
Yes, Bitcoin was started in 2009 and changed the way digital currencies worked. This is because it was decentralised, meaning that the currency wasn’t stored on one single server, but the information was shared among everyone using it. This meant it was more secure. However, there is nothing to stop another cryptocurrency overtaking Bitcoin as the most popular cryptocurrency.
What is a blockchain?
Blockchain is the technology behind the way that Bitcoin and other digital currencies are transferred. It works by using a peer-to-peer network of computers to validate transactions rather than one single server. This means there is no single source that can be hacked or corrupted, making transactions more secure. Think of Blockchain as the future of software, which will run and store all of the applications in our daily lives, from medical records to banking transactions.
How do I buy and sell digital currency?
To buy and sell digital currency you need a digital wallet. This allows you to hold your currency (Bitcoin or other) securely, and then transfer, sell or use the currency to buy things. The alternative to a wallet is to use a crypto currency exchange where someone else holds your currency for you, this allows you to buy and sell, much like shares. This is where security is important though. The hacks that have happened have been of Bitcoin exchanges and wallets, having exposed private security keys.
Does it matter what wallet I choose?
Much like any digital application there are various similarities and differences when it comes to your choice of wallet. There is a wide range of new and established ones out there. Remember that you are looking not only at functionality but also security when it comes to your wallet of choice. You can also use multiple wallets if you prefer. If you’re getting serious, you can also look at hardware wallets and offline storage as a way to keep your currency safe.
How does the Bitcoin ATM machine work?
Bitcoin ATMs, like the ones now in place in Central, Mong Kok and Tsuen Wan, allow you to buy bitcoin for cash, as easily as topping up your Octopus card. You’ll still need a digital wallet to transfer your new bitcoins into. The machines can also be used to sell Bitcoin.
Can I spend Bitcoin in the real world or just online?
Though digital currencies are primarily designed for online use, there are now plenty of places that are accepting them as payment, much like Apple or Android pay. There are many places in Hong Kong that accept Bitcoin, including the Garage Society, Raja Fashions, and The Crescent Moon Bistro.
The value of Bitcoin grew nearly 20 times in 2017… It also fell again in 2018 – have I missed the boat?
While it’s true Bitcoin did have its boom and bust moments in the past couple of years, some investors still believe that it will continue to rise. But it’s highly volatile and there’s also the chance that something else will take its place and its value will fall. We think cryptocurrency is currently somewhere around how the internet was in 1994; people knew it existed but didn’t know how it could work for them. In that regard it’s still very early days. We can’t give you advice here, but to be safe, only invest what you can afford to lose.
So, can I get rich by buying digital currency?
In theory, yes. Like any currency, there are professional traders who make money on the changing exchange rates every day, and if you’re lucky and time it right, there’s no reason why not. Remember that crypto markets do not close like traditional markets, it’s 24/7 trading, which if working by yourself, can have obvious drawbacks.
Crypto IB is a blockchain finance company headquartered in Hong Kong. It offers client services, such as creation of their own crypto currency, tokenised funds, corporate structuring, governance and regulatory compliance, market analysis and secure technology build-outs. It has a wealth of experience in the cryptocurrency, finance and legal sectors and its goal is to professionalize the global move to tokenisation of financial products.
*We can’t guarantee you’ll get rich – don’t invest more than you can afford to lose
Read more! Explore the rest of our Tech section on Localiiz.