This is all you need to know about Bitcoin and how it works

Not perfect, but I found this write up pretty solid:

"If you don’t “get” Bitcoin, you’re not alone. A Rutgers University study found that even people who use it don’t fully understand how it functions. But if you don’t know, you’re missing out on a commodity that’s risen over 72 per cent since March. Most notably, a single Bitcoin has surpassed an ounce of gold in value. As of May 28, one Bitcoin is worth US$2,265. "

It then goes into the basics, if not a bit simplified.

https://ca.finance.yahoo.com/news/need-know-bitcoin-works-114550598.html

You can find Canadian friendly exchanges here: https://coinforum.ca/discussion/1850/list-of-canadian-bitcoin-exchanges

Comments

  • This is a very useful information you have here CoinGuy! The thing i love about BTC is its functionality and how it enables us to delve more into technology and how it truly works. I am aware that it has a value that matches up to gold and it is the perfect currency for online businesses like online gambling because it can move fast. Thanks for educating us more about it. :)
  • If there is a run at the Coin Exchange to cash in, how does the Exchange acquire such funds?
    If the Exchange cannot meet the demand & becomes insolvent, do the coin owners'
    Bitcoins survive the insolvency?
  • That's why you don't store you coins on an exchange, but your personal wallet
  • Thanks for this site, CoinGuy. I'm a Canadian wanting to buy & safely Hold 6-10 diversified cryptocurrencies. I have read Bitcoins 101, this topic & the Yahoo.ca & weusecoins.com articles and would appreciate your feedback on my initial attempt at a summary:
    Due to blockchain private key technology, any mined cryptocurrency coin ("coin" or "coins") is likely secure;
    I could buy coins on any Canadian or American exchange, once my Canadian or US-based US bank account was verified by the exchange.
    There is no easy way to compare the various exchanges' fees, so I have no way to pick an exchange based on that (unknown) cost; don't know if I'd be paying 1%, 10% or ?
    Once I bought some coins on an exchange, if I kept them in my account with the exchange like I keep currency in my bank accounts, the exchange would be storing the coins for me. Like banks, exchanges could become insolvent, by a run on the exchange for example. Unlike banks, there is no gov't insurance on my deposits with the exchange, so I could lose all my coins and exchanges are not a safe place to store my coins; I would need a personal wallet.
    There are several kinds of personal wallets:
    Online wallets - accessed on the web from any internet connected device with a digital key (a 64 character personal ID number known as a hexadecimal code); could be hacked more easily than coins stored on an exchange.
    Software wallets - accessed via an app downloaded to my phone, computer or tablet; could be hacked more easily than coins stored on an exchange.
    Hardware wallets - a physical device that would need to be stored in my physical safety deposit box, meaning two trips to my bank every time I bought more coins, and requiring an on-line transaction to move the coins onto the hardware wallet and therefore could be hacked more easily than coins stored on an exchange.
    Secure offline wallets like Armory - requires an on-line transaction to move coins into the secure offline wallet and therefore could be hacked more easily than coins stored on an exchange.
    Paper wallet - blockchain private key(s) printed from an off-line device; print-out would need to be stored in my physical safety deposit box, meaning two trips to my bank every time I bought more coins, and requiring a brief on-line transaction to move the coins out of the exchange account (not sure where they go to; a device that is then taken & permanently kept off-line?) and therefore could be hacked more easily than coins stored on an exchange.
    Conclusion:
    As exchanges are not safe to store coins (due to insolvency risk), and personal wallets are not safe (as at some point in moving the coins from the exchange to the wallet, any device used would have to go on-line & could be hacked more easily than coins stored on an exchange), there is currently no way to safely store cryptocurrencies. Any money invested could be lost or stolen, so I shouldn't buy more than I can afford to lose.
    As I have no idea how far up the cryptocurrency learning cliff I have climbed, or whether I have fallen off completely,
    please point the strengths, weaknesses or outright errors in my summary.
    All the best, DWM1957
  • edited August 1
    Your conclusion seems okay @DWM1957

    Some things to consider

    Don't worry about fees, in my opinion, as much as stability (within reason). Sure you can have low fees, but that comes at the cost of exchanges who may cut corners. I stand behind Quadrigacx, because they don't hide who owns the company and seem to offer the best options for Canadians. Mybtc, quickbt and coinsquare are also good options in my view.

    Keep in mind, exchanges can be hacked, or freeze funds. I am careful to never keep anyone in the exchange accounts that I can't afford to lose. It's not a bank or a wallet. It's a place to trade. Like a currency exchange. Do your business and take your money. I am very conservative that way, but so far I have avoided seeing funds frozen in accounts I can't get out. As you rightly point out there is no protection for you as a consumer, so take precautio.


    My only comment on hardware wallet or paper wallet is that it doesn't need to be in a safety deposit box, but some do choose to have one. It could be in a fireproof safe box in your house or just stored somewhere you trust. It's more about physical access than anything.

    Think of it like cash. You could be robbed, however the chance of being robbed is also being noticeable to robbers or leaving your money out. I think either a hardware wallet or paper wallet would be fine. Just don't tell/brag about your holdings in crypto.

    Finally the last bit. Don't invest money you can't afford to lose, is really about the volatility. I have seen Bitcoin go from $1500 to $300 over a matter of days. So keep in mind it's a roller coaster. It's fun as heck, but risky. The chances of theft, if you are discreet, are less likely than the market just tanking and you panic selling.

    The best bet is to jump in with $20 or $100 and just understand how it works. What works for you and what you are comfortable with. Take the normal precautions you mentioned about storage and be discreet in who you share the info about your crypto currency dealings with. Hope that helps :)
  • Coinguy, Thanks for you quick response & advice, especially about the fees & storage options.
    I said I shouldn't invest more than I can afford to lose, and you echoed that, so I hope all readers will take note.
    I am unusual in having a 10-15 year planned investment period that will allow me to ride out any roller coaster peaks & valleys along the way.
    As there is no way to predict which cryptocurrencies will fail, muddle along or dominate, I won't be putting all my eggs in one basket, or even in just 3 like bitcoin, ethereum & litecoin.
    Here's my diversification starting point:
    Bitcoin to surge nearly 80% to $5,000, ethereum to double, Standpoint's Moas predicts

    If there are any other long-term investors out there, please comment on your plans / strategies.
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