Have you heard about Bitcoin? It’s an online “cryptocurrency” meaning it has no physical presence like the U.S. Dollar or similar currencies. Instead it’s simply a long sequence of random numbers and letters that’s supposed to be unique and not replicable. If you want to purchase something and the merchant on the other end of the transaction is willing to accept Bitcoins, you simply send that person Bitcoins through an online exchange. An “electronic signature” is added (the random sequence of letters and numbers) which supposedly makes the transaction secure and not duplicable.
How does someone get Bitcoins?
There are three ways to get Bitcoins.
- You can acquire Bitcoins by converting local currency (U.S. Dollars, Euro’s, British Pound Etc…) for Bitcoins on an online exchange.
- If you are a merchant you can advertise that you accept Bitcoins for goods and services.
- Finally, you can “mine” for Bitcoins by dedicating your computer to the Bitcoin network. When your computer solves math problems, you earn Bitcoins. Anyone can take part but without a computer technology background, it can be extremely confusing. I candidly admit I don’t entirely understand it. For further information: http://www.bitcoinmining.com/
What is a Bitcoin worth?
The value of Bitcoins fluctuates dramatically on a day-to-day basis due to the emerging nature of the currency. At the time of this writing 1 Bitcoin was worth $915.48 U.S. Dollars. Unlike other currencies Bitcoin is not backed by the full faith and credit of any sovereign government so the “value” is only what the users are willing to pay for it.
Where to store Bitcoin money?
There are several “wallets” currently available:
- Web wallets are stored on the world wide web, but apparently are less secure then other forms of wallets.
- Software wallets are downloaded and stored on your personal computer, and are considered more secure because the user has more control and doesn’t depend on a 3rd party service.
- Mobile Phone Wallets are available on iPhones and Android devices.
How does someone spend Bitcoins?
Bitcoins can be spent anywhere that they are accepted. There are two commonly used websites to find Bitcoin-friendly merchants near you http://coinmap.org/ and https://bitpay.com/directory#/#search . By current estimates there are over 12,000 vendors that accept Bitcoins.
Where to find more information?
Here are some good places to keep up with Bitcoin news and discussion:
- Coindesk.com - An excellent source of Bitcoin news
- BitcoinMagazine.com - Insightful articles with deep technical credentials
- BitcoinX.com - Bitcoin headlines, market rates & charting resources
Matthew Trujillo is a Registered Support Associate at Center for Financial Planning, Inc. Matt currently assists Center planners and clients, and is a contributor to Money Centered.
This article and its links are being provided for information purposes only. It is not a recommendation to buy or sell Bitcoins. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. #C14-001113