Virtual, and CryptocurrenciesVirtual, digital, and cryptocurrency are three terms that need to sort out before you invest in cryptocurrency mining.
Virtual Currency In the year 2012, the European Central Bank described virtual currency as digital money. Thereafter, the virtual currency is issued by developers and accepted by virtual community members. In addition, according to US Department of Treasury, digital currency is similar to traditional currency, but have different attributes.
Digital Currency Digital currency has electronically created a form of virtual currency. A few digital currencies are listed as cryptocurrencies not all.
Therefore, it leads to the clear definition of cryptocurrency. Besides this, no defining feature is issued by any government or other authority.
Origin of BitcoinBitcoin is an internet money or cryptocurrency that is related to a Bitcoin address. A programmer or a group of programmers published a white paper that described how Bitcoin will work. Later in 2009, a software is launched that created the Bitcoin and cryptocurrency network. The idea behind creating Bitcoin was to take the power from central bankers, government, and any other authority.
At present, there are approximately 12 million Bitcoins in the network from the day it was created. A programmer said that there is a fixed limit of 21 million Bitcoins in the network. The Bitcoin value was $1000 in December 2013 and now it has reached up to $2734.91.
Other CryptocurrenciesExcept for Bitcoin, most of the people have not heard about other cryptocurrencies. The most popular cryptocurrency that is accepted by online retailers is Litecoin. Inspired by Bitcoin, Litecoin was created in order to improve open source design.
In addition, Peercoin, Ripple, Namecoin, and Mastercoin are some other cryptocurrencies.
Bitcoin RegulationsAs the digital currency is decentralized, so the legalities differ as per the country. Tax authorities and law enforcement are more concerned about the Bitcoin use due to its anonymous nature and ease of use.
The Security and Exchange Commission (SEC) of US has not issued any regulations on the digital currencies; however, they often warn regarding fraud and investment schemes. In 2013, the agency of Department of Treasury, Financial Crimes Enforcement Network (FinCEN) published virtual currency guidelines. However, most of the countries are still in confusion state that how to tax the virtual currencies.
How to Get BitcoinsTo get Bitcoins, there are three ways buy them through exchange sites, mine them, and accept Bitcoins. There are numerous websites or apps from where you can download a Bitcoin wallet and store them as well. The wallet runs on the phone and tablet. The three options for storing the Bitcoins include
Desktop Wallets These wallets helps in storing your backups and protecting the cryptocurrency.Mobile Wallets They allow to travel Bitcoins anywhere. You just have to scan the QR code and pay.Web Wallets Web Wallets are conducted by a third-party service provider. If in case, the wallet gets hacked, then there is a complete risk of loss of Bitcoins. Therefore, proper backups and security of passwords are much needed.The major problem is that Bitcoin might get stolen similar to the physical cash and affect not only the user but the whole Bitcoin network. And no central bank and authority can help in recouping the losses. For a secure exchange, there are various Bitcoin ATMs across the world that exchange Bitcoins in place of fiat currencies. These machines are rare and expensive, they range from $2000 to $5000.