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By Stephen Sellner | Citizens Bank Staff
Bitcoin and cryptocurrencies have certainly taken the world by storm these past few years. Even those living under a rock have probably caught wind of the buzz by now.
Now, you might be asking yourself, What the heck is Bitcoin anyway? You’re not alone. True, the cryptocurrency concept can be difficult to understand, no matter how many Netflix documentaries you’ve watched about it. But is there a way to sound smart about a topic that’s inherently difficult to interpret?
Well, unlike most of your friends, you’ll have these five handy tidbits to share at your next gathering. Watch how impressed your friends will be when you start rattling off these quick facts about Bitcoin.
This one is sure to ‘wow’ your friends. Did you know there’s a big difference between those who earn Bitcoin (and other cryptocurrencies) and those who purchase them?
That’s because Bitcoin was originally distributed as a reward to people who performed calculations or verified transactions on a blockchain. We’ll spare you the rest of the details.
Meanwhile, buying Bitcoin (or other cryptocurrencies) is as simple as signing up for an exchange, creating an account, and purchasing it — just like a share of any other stock.
That number is 21 million. No more can be created once all 21 million have been earned.
Did you (or your friends) know? Only 21 million Bitcoin exist.
Back in 2010-12, it was hard for people to liquidate their Bitcoin. Then, in 2016, it started to pick up in market value. People started noticing those with Bitcoin or other cryptocurrencies turn their modest investments into hundreds of thousands of dollars. These stories started appearing in the news cycle.
That buzz and awareness naturally led to Fear Of Missing Out (FOMO). No one wanted to be left out while others made a fortune through Bitcoin. That psychological effect also increased demand. The crypto exchanges — which have to vet each applicant — couldn’t keep up with everyone wanting in on the action. That exclusivity factor only added to the Bitcoin buzz. It also explains why it’s so volatile.
Follow us on this one. Cryptocurrencies were created with the idea that, one day, they could be used to buy pizza or any other purchase. Doesn’t that seem a lot like the peer-to-peer payments you use all the time today? So, in a way, banks and other financial institutions have already adopted the spirit behind cryptocurrencies.
However, the very nature of cryptocurrencies is to be unregulated by government, banks, and financial institutions. So, can banks ever truly provide cryptocurrencies if they’re regulated by the federal government?
In theory, you could copy and deploy your own blockchain, thus creating your own cryptocurrency. That doesn’t mean anyone will use it or do any computational work for you, but hey, if that’s what you want to do …
How Bitcoin and cryptocurrency exchanges work isn’t easy to explain or understand. But try tossing a couple of these nuggets into conversation to see how people react.
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