The Skinny on Bitcoin

The financial news has been buzzing with talk about Bitcoin lately. It feels like everywhere you turn – whether it’s social media or your child’s class orientation meet and greet people are talking about this trending topic. Is it just a trend or is Bitcoin to currency what Google is to search engines? WEALTHplan has put together some of the most commonly asked questions regarding Bitcoin in hopes of dispelling some of the myths and educating our readers and clients.

Firstly, what the heck is Bitcoin exactly?

Basically Bitcoin is digital currency, also commonly referred to as digital cash, virtual currency, electronic currency or cryptocurrency. In a nutshell Bitcoin allows its users to pay or make transactions directly with one another – cutting out the middle man, in this case banking institutions. Without an intermediary involved in these transactions users are able to take complete control of their finances.

Designed and invented by Satoshi Nakamoto in 2009 Bitcoin users are now able to buy and sell goods and services without the involvement of traditional banking institutions. Saving you money in the long run.

Sounds great but is it safe?

The technology is ground breaking and transactions are made over secure networks that keep your funds safe. It’s built to be fast, convenient and safe to use. Bitcoin’s use of Cryptography allows users to create mathematical proofs that provide high levels of security and making it impossible for users to spend someone else’s currency. Cryptography is widely used by online retailers and banking institutions. Online commerce and banking already use cryptography.

Where is this digital money kept?

A Bitcoin wallet is needed when buying and selling with Bitcoin. These wallets keep a secret piece of data called a private key or seed, used to sign transactions and giving proof that the purchase has come from the owner of the wallet. Think of a wallet like a bank account. It’s an encrypted digital holding area used to store your bitcoins and keep track of your transactions.

Another term to be aware of is the Bitcoin blockchain. The blockchain is the heart of Bitcoin and is where all the important information is stored. It’s where all the transactions on the network can be found and used as proof. It may seem a bit intimidating at first but so was the world wide web when it first set sail.

Who are some of the widely known users of Bitcoin?

Currently, large multi-nationals like Microsoft, Dish Network and Expedia have all come on board with Bitcoin and there are other eager entrepreneurs and businesses that are leading the charge with their digital currency knowledge, changing the financial world dramatically. Bitcoin ATM machines are slowly appearing across Canadian cities and the planet with close to 400 Bitcoin ATMs worldwide.

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