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Why Virtual Currency is a Wave of the Future

Why Virtual Currency is a Wave of the Future

While it has only been around for a few years, there are very few people today who haven’t heard of virtual currency, usually in the form of BitCoins.

A Brief History of Virtual Currency

The first mention of virtual currency was defined by Wei Dai in 1998 on the cypherpunks mailing list. This mailing list is an un-moderated list dedicated to discussing cryptography and its effect on society. In his original post, Wei Dai explained his idea of a virtual currency that would free people from government imposed restrictions and manipulations. He described a system where people could buy and sell products and services anonymously, using advanced cryptography which would control the virtual currency’s creation and transactions.

The first specifications and proof of concept of a virtual currency (called Bitcoin) were published in 2009 by Satoshi Nakamoto. However, nobody really knows who this “Satoshi Nakamoto” is. While there has been much speculation and investigations, there is still many questions on the originator of Bitcoin, but we do know that since its original conception as Bitcoin, virtual currency has grown by leaps and bounds! As a matter of fact, at the time of writing this article, there are almost 800 different Crypto-Currencies available for trading and that number is expected to keep rising.

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Why does Virtual Currency remain so popular?

There are several factors that make Virtual Currency so popular. One of the main attraction to virtual currency is the anonymity factor. The way virtual currency (aka crypto-currency) is set up makes it almost impossible to match up a person with a transaction. This is a good thing for those who want to set up a nest egg, but don’t want their government to know about it.

Although Cryptocurrency can often be spent like any other currency, the government can only tax it when and if you are ready to cash out or make a purchase. This makes virtual currency something of a tax haven! Of course, many governments are now trying to figure out ways to tax virtual currency: To this day, however, it remains very difficult (if not impossible) to impose any taxes on a currency that does not have legal tender status in any jurisdiction.

Another thing that makes virtual currency such an attractive option is that, since it’s conception, many places across the world have actually started accepting Bitcoins (and other virtual currency) as payments. According to an article in Technology Review, there are tens of thousands of Bitcoin transactions every day, with hundreds of businesses (mostly online) accepting bitcoins (and other virtual currencies) as payment.

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As Virtual Currency becomes more entrenched in the world, we will find more and more businesses, vending machines, grocery stores, etc. accepting this type of currency.

What does the Future hold for Virtual Currency?

    While there may be hundreds of virtual currencies out there right now, only a few are really viable currencies. We’ve already discussed the most popular virtual currency, BitCoin, but few others seem to be making waves.

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    For instance, shortly after bitcoin’s emergence, we saw another virtual currency called Litecoin. Unlike the creator of the Bitcoin, however, the creator of Litecoin (the second most successful virtual currency) is well known. Charles Lee successfully launched Litecoin in 2011, based in part on the Bitcoin code, but using Scrypt as a proof of work function, instead of the SHA-256 function that Bitcoin uses. Basically, what this means is that it takes less computing power to generate the Litecoin, so more people can “mine” it.

    Other virtual currencies are appearing on the horizon every day that may give LiteCoin and even BitCoin a run for their money. The creators of virtual currencies are always coming up with new and inventive ways of mining and distributing these “coins,” such as OneCoin and YoCoin, which use different methodologies for distribution.

    As virtual currencies catch on, we will probably see many innovations and new ideas that will propel the virtual currency world further and further. Who knows, we may see a global currency, some day, based on the concepts of virtual currency, that will make real currencies a thing of the past. While many virtual currencies are a flash in the pan (based on poor coding or poor planning), you would do well to keep your eye out on emerging virtual currencies, as you never know what might be the next BIG thing. If you get in on the right one early, you can easily see a 500% or higher return on your investment. Take BitCoin as an example. When it first came out, BitCoin was trading at $1 per coin. Today, a bitcoin is worth over $500 (though this can fluctuate daily) and has fluctuated as high $1,242! So, you can see, although it may be considered ‘high-risk’ it’s definitely something to keep in mind as you consider making an investment in the future.

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    Featured photo credit: thewealthwatchman.com via thewealthwatchman.com

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    Erick Clifford

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    Last Updated on July 10, 2020

    The Definitive Guide to Get out of Debt Fast (and Forever)

    The Definitive Guide to Get out of Debt Fast (and Forever)

    Debt can feel crushing, like a weight that is always weighing you down. Looking at those numbers, it can feel as if you’ll never get out from under it. However, if you really want to learn how to get out of debt, it is possible with a great deal of focus and self-control.

    Getting out of debt isn’t impossible. Like any big goal, all that it takes is an action plan to identify where you are and creating a plan to zero out your debt.

    Identifying All of Your Debts

    The first part of paying off your debt is getting a complete picture of what you owe. When you have everything written out in front of you, it makes it much easier to create an action plan. Depending on how much you owe, it might also help you realize it’s not as bad you might have originally thought.

    Here’s how you can get started identifying your debts:

    1. Own Your Debt

    Before you start identifying all of your debts, take a moment to process that you have debt but want to get out of it.

    Forgive yourself for any past mistakes, missed payments, or overspending. It might be painful to accept how much debt you have at first, but you must own it.

    2. Make a Debt Tracker

    It’s astonishing how few people ever created a tracker to understand their total debts. Most likely, it comes from not wanting to accept the guilt of having debt, but, if avoided, it can make it nearly impossible to get out of debt.

    Open up a new Google or Microsoft Excel sheet and list out all of your debts. Start with the name of the creditor, interest rates, total balance, loan term length (if any), and the minimum amount due each payment. This will include student loans, credit cards, and any other type of debt owed.

    3. Get Your Debt Number

    Once you’ve made your debt tracker and taken the other steps, identify your total payoff number. This is crucial, as you will have a starting point and a clear goal that you are trying to achieve.

    Prioritizing Your Debts

    All debt is not created equal. It’s imperative to understand that there are different types of debt.

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    1. Understand Bad and Good Debts

    Bad debts are usually paying for things you want instead of always need. While there might be some emergencies that max out your credit cards, often times it’s excessive spending[1].

    There are three main types of bad debt:

    • Credit Card Debt: The average American household owes over $16,000 in credit card debt!
    • Auto Loan Debt: According to CNBC , the average auto loan in the US is $30,032!
    • Consumer Loan Debt: Consumer loan debt isn’t as common as credit card and auto loan debt, but it’s still considered bad as interest rates are usually between 10-28%.

    Good debt is identified as investments in your future. Here are three common types of good debt:

    • Student Loan Debt
    • Mortgage Loan
    • Business Loans

    2. Decide Which Debt to Pay off First

    Once you know each type of debt and their interest rates, you can begin to pay off debt quickly.

    Focus on paying off bad debt first, regardless of if it is a credit card or auto loan. Start by paying off the loan with the highest interest rate first.

    If you have several credit cards with different interest rates, you want to focus on the one with a higher APR. You will actually save more money by eliminating the card with the highest interest rate.

    3. Don’t Pay the Minimum Amount

    Paying the minimum amount digs you into a hole as interest rates will offset your payment. Even a small amount more than the minimum can help you pay off debt much faster.

    Removing Obstacles to Pay off Debt Quickly

    Creating a debt tracker and prioritizing a plan is simple, but avoiding temptation can be difficult.

    1. Set a Reminder to Track Your Debt

    “If you can’t measure it you can’t manage it.” -Peter Drucker

    It’s so important to track your debt to ensure that you get it paid off quickly. Similar to working out and measuring your results, you need to track your debt constantly. Start with a weekly reminder, where you sign on and log your updated number. Did you increase, decrease, or stay the same?

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    Regularly tracking your student loan balance can be incredibly motivating, as well. You will get a huge confidence boost each time you see your total debt amount decreases.

    Set weekly and monthly goals so you can have short term wins and keep the momentum going.

    2. Hide Your Credit Cards

    If your biggest debt is credit cards, you need to eliminate temptation and remove them from your wallet.

    Some people have gone to extreme measures by freezing their credit cards. Why? This would create an ice block around your card, which would require you to chip away at it slowly. This will give you time to think if it’s the best idea to buy that thing you’re about to buy.

    3. Automate Everything

    Willpower can be a huge downfall to paying off your debt. By automating your bills each month, you will ensure that willpower isn’t involved.

    4. Plan Ahead

    Getting out of debt will require some sacrifices, but with enough planning, you can make it work.

    For example, if you know that you have a friend’s birthday or family dinner coming up, plan ahead for the costs. Whether you need to cut back on spending the week before, pick up a side job, or meet them after dinner, do what is needed.

    5. Live Cheaply

    The only way to get out of debt is to make some sacrifices on your spending habits. Find ways to save money each month so you can apply that amount to your outstanding debts. Here are some ways to save money each month:

    • Live with roommates
    • Cook dinners and prepare lunches for work instead of eating out
    • Cut cable and choose Netflix or Amazon Prime
    • Take public transit or bike to work

    Finding the Lowest Interest Rates

    The higher your interest rates, the harder (and longer) it will take you to pay off any debt.

    If possible, you want to find ways to lower your interest rates to help get out of debt quickly. Here’s how you can get started:

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    1. Maintain a High Credit Score

    Your credit score will have a large impact on your ability to refinance your loans and receive a lower interest rate. If you have a low credit score, it’s unlikely you will be able to refinance your loans. Use these credit tips to increase and maintain an excellent score:

    • Never miss a payment
    • Don’t exceed 30% of your credit limit
    • Don’t sign up for more than one card at once
    • Limit hard inquires, like auto-loans and new credit cards
    • Monitor frequently with free credit-tracking software

    2. Find Balance Transfer Offers

    Start by opening a free account on credit.com. Credit.com offers you the chance to open a free account and see what type of balance transfer offers you can receive. Some of your existing credit cards might already have 0% or lower APR balance transfer offers available.

    Contact each of your credit card providers to ask about lowering your rate for a one-time balance transfer offer[2].

    If you do take advantage of this option, make sure that you use a balance transfer and not a cash advance. Cash advances have a ton of high interest fees (15-25%, depending on your credit card) and will only compound your debt problem.

    How to Get Rid of Debt Forever

    Setting up a plan, removing temptations, and getting the lowest interest rates is the first step to get out of debt.

    1. Keep Monitoring and Adjusting

    Once you have a plan, don’t get comfortable. Track your debt payoff plan and make the necessary adjustments when needed.

    Monitor your credit scores with a free site like CreditKarma. The higher your credit score climbs, the more likely you will be to secure a new, lower-interest loan.

    2. Earn More Money

    There are only so many ways to save money. Instead of clipping another coupon or making sacrifices for your morning coffee, find ways to earn more money!

    Think about it…it is much easier to find ways to earn an extra $1,000 per month than find $1,000 to cut from your budget.

    Here are some examples of ways to earn more money:

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    Talk to Your Boss

    Have a conversation with your boss about current salary and/or commission rates. If you’re not satisfied or want a change, don’t be afraid to look around at other positions. Some of them might even have a student loan debt reimbursement plan!

    Start a Side Hustle

    This could be coaching students on the weekends, driving for Uber, or taking paid online surveys. There are tons of ways to make money outside your 9-5. Now that you have a clear plan to pay off your debts, you’ll be more motivated than ever to figure out creative new ways to earn money.

    Build an Online Business

    There are so many websites and blogs that earn money from ads, affiliates, and other online products. Find your niche and get started.

    3. Celebrate Your Wins

    As you progress in your debt payoff journey, don’t forget to celebrate your wins. You need to always reward yourself for the hard work and discipline that is required to get out of debt.

    While you shouldn’t celebrate so big that it increases debt, make sure to factor in little rewards to keep you motivated.

    4. Set New Financial Goals

    Eventually, with a plan and these steps, you can rid yourself of your debt. Once you do, make sure to celebrate your monumental achievement, but don’t stop there.

    Now, you can focus on acquiring wealth and increasing your net worth. Set new financial goals so you have a new target to aim toward. Here’s how to set financial goals and actually meet them.

    These could be anything now that you are debt free! Think about where you want to travel, buying your first home, or saving for your future retirement. Just like before, make sure that your goals are specific, measurable, and achievable.

    Conclusion

    Congrats, you can now set a plan in motion to finally pay off your debt quickly (and hopefully forever)!

    Remember, if you want to get out of debt quickly, it’s not always easy. Just like any big goal, there will be sacrifices, challenges, and problems to overcome.

    More Tips on Getting out of Debt

    Featured photo credit: Pepi Stojanovski via unsplash.com

    Reference

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