The Five Things You Need to Know About Bitcoins

Bitcoin GreenFlare_IMG_8289” (CC BY 2.0) by btckeychain

It seems like there’s been a lot in the news recently about Bitcoins and the internet is full of stories about them. But a lot of Canadians don’t really know what they are or how to use them. So here are the answers to five of the most important questions about the currency that’s taking the world by storm.

What are they?

Bitcoins are what is known as a cryptocurrency. They’re not tied to any particular bank or country but, just like an ordinary currency like US Dollars or Euros, you can exchange your Canadian Dollars for them, and use them to make purchases on the internet and even in some retail stores. The Bitcoin was invented in 2009 by someone operating under the assumed name of Satoshi Nakamoto and was intended to be a secure currency which would by-pass the need to conduct transactions through banks and other financial institutions.

Is it a legal currency in Canada?

At the moment, no, as the only currency that the government regards as legal for use in the country is the Canadian Dollar. However it is seen as an official commodity by the Canada Revenue Agency so any profits made from trading in Bitcoins are subject to income tax. The Bank of Canada is also taking a keen interest in the currency and recently published a report which concluded that greater regulation was going to be needed if it was to succeed in this country.

Where can I spend them?

bitcoin accepted here” (CC BY-SA 2.0) by Francis Storr

There’s an ever-growing list of places that are now accepting Bitcoins as payment in Canada. These range from tech companies like Fortress Geek to “bricks and mortar” businesses like the Remedy Café in Edmonton. Several online gaming companies have also started accepting Bitcoins as a payment method. Their security and anonymity are what particularly appeal to players and one of the leading sites is BitCasino, whose home page features a line-up of slot and casino games that players can wager on using the currency.

Are Bitcoins a good investment?

On the evidence so far, they may be. 2017 has seen their value rise to record levels – so much so that it’s been calculated that if you had bought US$5 worth of Bitcoins in 2010 they would be worth an incredible US$4.4 million today. But analysts have also predicted that the bubble could burst at any time and, throughout the 8 years that they have been in circulation their value has certainly fluctuated a great deal.

Are they the only cryptocurrency out there?

No. They were certainly the first but since their introduction numerous other kinds have sprung up. Many of these have taken the Bitcoin model and improved on it. For example Litecoin claims that its transactions can be carried out faster while Dash offers higher levels of anonymity for users. But the one that everyone’s talking about at the moment is Ethereum which is the second most popular cryptocurrency after Bitcoin – and catching up fast.

So there you are – a whistle-stop tour of the phenomenon that is the Bitcoin. What the future holds for the currency no-one can be quite sure, but one thing is for sure – cryptocurrencies have arrived and they’re certainly here to stay.

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