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All You Need To Know About Bitcoin

All You Need To Know About Bitcoin

What is Bitcoin?

Bitcoin is a new currency known as a “cryptocurrency.” It was introduced in 2009 by a person, who still remains unknown, using the alias “Satoshi Nakamoto.” Bitcoin transactions are made from one bitcoin address to another without a middle man, and banks are not involved. When you decide to start buying and selling with bitcoins, you have to sign up for a bitcoin address. You are then given a string of numbers and letters (your bitcoin address) with which you can carry out online payment transactions with other users. Consequently, there are no transaction fees and users do not even have to provide their real names.

Why choose Bitcoin?

Bitcoins are used to purchase merchandise anonymously. Moreover, international bitcoin payments are convenient and cheap because bitcoins are not affiliated with any country or under any rule. Small businesses seem to benefit as there are no credit card fees. You can even buy bitcoins as an investment, since they have the potential to increase in value. This is apparent in the steady rise in the value of bitcoins since their inception.

Getting Bitcoins

Purchase on Exchange

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You may easily buy or sell bitcoins by using their associated currencies in markets which are known as “bitcoin exchanges.” There are lots of places to purchase bitcoins. Two examples of these markets are Blockchain and localbitcoins.

Transferring Bitcoins

Bitcoins can also very easily be transferred from one account to another simply by using computers or mobile apps. These provide a convenient method of transaction, as your bitcoins can then be used as basically digitized cash.

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Mining

People are involved in competing to “mine” bitcoins by using computers to solve complex math puzzles. This is the way bitcoins are produced. At the moment, a winner is rewarded with 25 bitcoins roughly every 10 minutes with every complex puzzle solved.

Owning Bitcoins

Bitcoins can easily be stored in a “digitalized wallet” which is either on the “cloud” or on your mobile or computer. This wallet is like a virtual bank account which is primarily used to keep your bitcoins safe. With a bitcoin wallet, you can transfer bitcoins between other users and yourself, or you can pay for the products and services that you have purchased, all in a very convenient and quick manner. However, one must remember that these digital wallets are not insured the way typical bank accounts are insured by the FDIC.

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The bitcoins on the cloud or servers are also vulnerable in that they are susceptible to being hacked by other users, groups or even companies. Not only this, but the bitcoins in your mobile phone or computer may be deleted accidentally or eliminated by a virus that has infected your software.

Maintaining Anonymity

Although every bitcoin transfer is recorded in a public log, the names of respective buyers and sellers are never disclosed, only their wallet IDs are. Because of this established anonymity, which allows bitcoin users to keep their transactions private, it also lets them purchase or sell off anything without a trace leading back to them. While this has some advantages, it also has disadvantages because it is now the transaction method for shady people. These people use bitcoin as the currency of choice for dealing with transfers regarding illegal activities, such as drugs and other banned products or services. The anonymity has made room for misuse, and this is one of the concerns being discussed regarding what the future of bitcoin could be.

What is the future of bitcoin?

Because governments have little control over these transactions, because of the problems they potentially present in terms of continuing illegal matters, and because of the lack of taxation of this currency, there is a general rise in concern towards the use of bitcoin. As bitcoin is unregulated, the future is still hazy in terms of how bitcoin will be dealt with. However, this is also a very uncertain matter that can change anytime.

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What do you think about bitcoin? Do you think it is a good investment plan? Let me know in the comments.

Featured photo credit: Gwopr via bitbillions.com

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Elise Bauer

Freelance Writer, Lawyer & Blogger

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Last Updated on March 4, 2019

How to Use Credit Cards While Staying Out of Debt

How to Use Credit Cards While Staying Out of Debt

Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

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Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

Do Not Treat Credit Cards as Your Funding Sources

Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

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I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

Make Sure to Always Pay Off Balances in Full Each Month

The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

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Using Credit Cards with Rewards

Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

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So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

Featured photo credit: Artem Bali via unsplash.com

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