How To Buy Bitcoins

Happily, the process to buy bitcoins has become considerably easier as time has progressed. The large number of startups in the space, coupled with venture capital funding have been able to make the entire ecosystem much more user friendly.

That said, it still takes some effort to get started. However, understanding how to buy bitcoins online is now easy enough that most people with a little computer savvy should be able to manage it.

Additionally, the process has been opened up to many more countries, meaning that there is a much wider geographic reach without needing technical skills.

Buy Bitcoins OnlineSo let’s look at the options:

How To Buy Bitcoins Online

The main locations are known as bitcoin exchanges. In their format, they are a little like a stockbroker – they are a central location for buyers and sellers to trade. Obviously they are virtual locations, website only.

When getting started I used three different exchanges to try and understand what was happening and why. One of those exchanges was just too complex for me to manage. The second was usable, just.

The third was – you can find a link to the site in the sidebar. Coinbase is now the de facto leader in this space after raising lots of VC finance and using the money to solve the security problem. Their “vault” is about as safe as you are likely to get without taking some very major steps yourself.

Coinbase is an American firm, which means that ID is needed to open an account and buy bitcoins, but as the very first step they are a great place to start and to learn from.

Interestingly, they employ buying limits in the early period of your account. The reasons for this re explained below, but the result is that you can’t just open an account and buy 100k on day one. It takes some time to get going, but this is the safest place to buy bitcoins online for beginners.

buy bitcoinsTheir size means that they offer very keen prices with a low buy and sell spread.

To buy your first bitcoins it is possible to transfer money into your account or use a debit card. Yes, you can buy today!

How To Buy Bitcoins With A Credit Card

One of the strengths of Bitcoin has been that the system is unencumbered. This means that there is no debt attached, unlike in the fiat currency system where debt is actually how the money is created.

For a long time it was not possible to buy BTC with any instrument that could be reversed. Thus, PayPal could not be used since transactions can be reversed within 60 days. Similarly, credit cards could not be used, because most credit card transactions can be queried and potentially stopped.

This had the impact of making BTC much more trustworthy than most other currencies because whatever the price was, it was a real price with no debt or risk of default (no options, futures, swaps or derivatives).

Now it is possible to buy bitcoins with credit cards, however, generally your account needs to be in good standing at the exchange. This means that it is unlikely that you can purchase with a credit card on day one, but by month two (depending upon the exchange and it’s rules), you will probably be able to buy this way.

Additionally, the possibility is opening up constantly. For example, in late 2015, Coinify announced that it is possible to buy with a credit card in 34 counties.

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What Are Bitcoin ATMs?

Bitcoin ATM

In March 2015 it was announced that there were almost 400 Bitcoin ATMs worldwide. Their use is growing, actually quite quickly, but they are still very niche. Despite this, it is possible to buy and sell through a Bitcoin ATM. Some machines allow both buying and selling, however the majority only make it possible to buy, being one-way machines.

For now, given the size of the world and the low number of ATMs, it seems unlikely that this will be your first option to get started.

How To Buy Bitcoins With Cash

Any community as strongly independent as this is going to have an underground element to it. For us, yes, it is possible to buy bitcoins for cash. Mostly, this happens locally by meeting up with a seller in person and making an exchange.

Obviously, we don’t all know who is willing to trade with us, so there is a useful site to help bring people together. uses the geo information from your IP address to suggest people willing to purchase or sell that are nearest to you. They might actually be a long way away, depending upon where you live, but the site will recommend the closest.

It is worth pointing out that if you are new to this, you will need to have yourself organised in advance. In other words, you will need to know the address of your wallet to have coins transferred into…

In some US states, selling BTC for cash needs a license, if the regular sales are above a pre-determined limit. The regulations differ from state to state, so just be warned that it may be that your seller needs to be registered.

Can I Buy Fractions Or Part Of A Bitcoin?

Each coin is split into 100 million parts (seriously) called a Satoshi. In theory, it is possible to purchase, sell and transact with just one Satoshi. In reality, it will take a very long time before a single Satoshi is valuable enough to use.

When you use an exchange like Coinbase, the money that you are willing to spend buys as much BTC as possible, using the current market price. This means that your actual transaction will purchase a very unusual amount – something like 0.24058729. Gradually as you buy more and more, those numbers add up until you have some real wealth!

How Long Does It Take To Buy Bitcoins?

On most exchanges a transaction should be virtually instantaneous. Everything ought to be confirmed in just a couple of seconds. This really comes down to the liquidity of the exchange, which means that bigger exchanges have more buyers and sellers so trades can be matched immediately. It is worth noting that your home currency can play a role in the speed of your transaction. This is because there might be few buyers and sellers in smaller currencies. If, however, you buy and sell in the major global currencies such as US dollars, euros, sterling or yen, your transaction ought to be priced keenly and concluded instantly.

Where Can I Buy Bitcoin The Cheapest?

The current market prices quoted by exchanges represent the price globally in your respective currency. However, it might be possible to find good deals if you buy from an individual for cash as described above. Of course, it might be possible to find very bad deals as well!

In terms of mass market transactions, the more buyers and sellers an exchange has, the better their prices can and should be. This is because they can offer their pricing power as a marketing strength and combine it with competitive fees to win market share.

If you happen to have had any experience in the stock market, say in smaller companies, then you might be familiar with the idea of liquidity. If you are, then apply some of the same ideas to bitcoin. As time goes on, BTC becomes more liquid in larger amounts in more currencies, but that is a process of time and development.

For this reason, Coinbase is a great place to transact because they are the largest exchange with a wide range of available currency options and countries serviced.

How To Buy Bitcoin Anonymously?

If you are reading this because you are just getting started, I would suggest that you find a way to purchase through the normal channels first. There is quite a learning curve – as you must have noticed by now – so I recommend that you start with normal transactions and then, once you are more comfortable with the process, move up to more complexity. The blockchain means that most transactions are only semi-anonymous, so if you hope that by buying bitcoins the world will never find out, it isn’t quite that simple. To buy with complete anonymity requires a little more skill and effort.

There are also tumblers – I’ll leave you to do your own research and due diligence – that enable coin to be sent between wallets and shuffled numerous times in between to make the ultimate transaction almost impossible to trace.

If anonymity is your number one priority – then there are other alternative cryptos, Dash and Monero – that might be more suitable. Other currencies obviously have different investment profiles and associated risks.

Can Anyone Buy Bitcoin?

One of the overarching goals that people have for the currency is that because it is decentralised, it can cross borders and barriers and be a global form of digital money. Therefore in theory, yes, anyone can buy bitcoin.

However, there are some obvious limits. The buyer needs to have funds available and some kind of digital connection to enable access to a wallet.

This would seem to put some real world limits in place, but there are a number of African countries where digital money is growing strongly in use and popularity and the technology driving that adoption are low cost smart phones!

Depending upon what survey you read, there are perhaps 2 billion people globally that are considered to be “unbanked”. These people do not have access to a bank account or many of the other services that can accompany an account, such as savings or transfers.

There is a real chance that bitcoin, low cost mobile telephones and solar chargers have the combined leverage to bring tens of millions, or more, of these people into the global economy. Clearly this would be a huge achievement and a massive boost to reducing poverty levels.

Or to put that another way, if someone in Eritrea with a phone and a solar charger can buy bitcoin, so can you!

There are some countries that have existing currency controls in place and as such all cryptocurrencies might be viewed dimly, but these situations are generally in a state of evolution as more and more governments are trying to decide upon their philosophical position to digital coins.

Can You Buy A Physical Bitcoin?

Not a real one, no. The only physical bitcoins that exist are curiosities to be sold in joke shops or on eBay. If you want to get one with actual value that can be used, then it is virtual only!

There have, however, been a number of documented situations where officials at airport security have stopped travellers and specifically told them that they are looking for bitcoins! Needless to say the individuals were rather shocked since the officials were searching for something that has no physical form.

Can You Buy Bitcoin Stock?

Although it has exchanges and it’s own market, Bitcoin is distributed which means that it does not have an owner per se. There is no controlling company or individual, therefore, there is no stock that can be invested in. There are a number of fast growing companies that have raised venture capital, so in the future there may be exchanges or blockchain companies that can be invested in.

Can You Buy Bitcoin Investment Funds?

It is a little early in the overall development for bitcoin funds as I write this (late 2015). There are only perhaps two or three bitcoin investment funds, such as ETFs, worldwide in existence currently.

These funds are designed to provide a way for private or institutional investors to buy without needing to own and secure the coins themselves. This area is one being pioneered by the Winklevoss twins (of facebook fame), otherwise known as the Winklevii. In time, it seems quite reasonable to presume that there will be many funds offering long-term low cost investment opportunities to be packaged into stockbroker and nominee service offerings. If and when that does happen, the additional funds that will flow into the ecosystem will be very good for the price.

For now, any fund will be following one price, up and down. In the future there will almost certainly be funds that invest in a “basket” of cryptos, just as happens now with metals, commodities and other currencies.

how to buy bitcoinsRound up…

If you would like to get started today, I suggest that you click on the ad below and visit Coinbase to begin there. Presuming that they operate in your country, once you are over the hurdle of providing ID, it is a fairly fast and easy process. This will at least get you started and help you to really understand what is happening.

Once you have that start underway, moving on to other exchanges, other currencies, other wallets will be another step, but not quite so scary. Good luck!

What Is A Bitcoin And Is Bitcoin Money?

Let’s start at the beginning… Hopefully by asking “What is a Bitcoin?” it is possible for you to begin to decide whether or not to be involved in this phenomenon.

In the last few years there has been a surge in what are known as crypto currencies or alt coins. A crypto currency is a form of digital money that uses strong cryptography to protect it. Just as a real bank note has a wide range of special features that are designed to make it difficult or impossible to copy or forge, cryptography makes it virtually impossible to fake a digital transaction.

In that last paragraph I described it as being “virtually impossible” to fake. The reality is that there are some very smart minds around the world that have focused on hacking and stealing Bitcoins and other currencies, with some success. So while at the moment, in early 2014 as I write this, it is not possible to fake crypto coins, that might change in the future. Your wallet ought to be secure if you take the correct precautions.

Bitcoin was the first of this new generation of crypto currency. There have been others in the past, such as egold, but they did not prove to be secure enough and ultimately failed. The history of those earlier currencies was one of fraud (the notorious HYIPs) and problems.

Bitcoin was introduced in January 2009 by someone named Satoshi Nakamoto. There has been much controversy since as to whether he is a real person, or a group of people, what his real name is and where he or they might live. There are reasons for this confusion.

For example, the initial published research papers that the currency was founded upon have been analysed and there seem to be some grammatical differences between the use of American and English English, leading some people to suggest that Satoshi Nakamoto is actually a collective name for more than one person. Additionally, the original Satoshi needed to have a very deep understanding of cryptography, technology and hardware, mathematics, economics and currencies. Understandably, many people feel that there can be very few people with such a deep understanding, so a group of people is more plausible.

In early 2014 there was significant progress made when a reporter for Newsweek claimed to have found1 the real Satoshi Nakamoto. There have since been counter claims and denials, so the truth may still be untold.

How does Bitcoin work?

His currency uses a complex algorithm that protects each transaction. The algorithm and cryptography are the underlying essence of what is a Bitcoin. This algorithm requires mathematical problems to be solved to authenticate transactions. Over time, the complexity of these math problems is increasing. Each time a group of problems is solved, the person or group of people providing the computing power earns a fee of 25 BTC.

Each of these puzzles enables a group of transactions to be authenticated. Since they are a group, they are known as a block. These Bitcoin blocks can be solved by anyone around the world, meaning that the currency and transactions are visible to anyone, making it impossible for one person, or a small group, to control the currency. Freedom is at the heart of what is a Bitcoin.

The original algorithm was designed to limit the number of BTC that can be created. That number is set at 21 million which does not sound like a lot for the whole world to share. The rate at which new Bitcoins can be created halves every year, meaning that new coins will be created for another 100 years or so. However, as the mathematical problems to be solved become harder and the number of coins being created slowly drops, the value of each coin can reasonably be expected to increase.

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BitCoinFastStart Homepage

The breakthroughs made by Satoshi Nakamoto have enabled the other alt coins to flourish. There are now many more lesser known alternatives. The majority use similar architecture, but with slight modification. For example, Litecoin is one of the major crypto currencies and is almost identical in form, except that the total number of coins to be mined is much larger.

The solving of these maths problems takes some really serious hardware. At the very beginning, new Bitcoin mining could be done on most home computers, but this is not so any more. I have read estimates that suggest that now (2014) if a new miner were to spend US$50,000 on hardware that they might not be able to break even! The hardware is known as a Bitcoin GPU Miner, or a mining rig.

Should You Mine Bitcoins?

This link shows the level of technology now being used to mine new Bitcoins. If the level of sophistication doesn’t prove that the is an arms race against top technology professionals, nothing will…

However, it is worth pointing out that there are many other crypto currencies in existence. Crypto currency mining is still very possible and profitable with some of the newer coins. This is actually quite a complex area because not only do miners need to understand the hardware requirements, but they also need to calculate carefully which is the best cryptocurrency to mine on a day by day basis. They need to do this by calculating the amount of coins they think they can mine in a day and the value of those coins, against the cost of their equipment and the high electricity bills they will need to pay. Not only do miners pay for to run their equipment, but they need to have some serious cooling in place. The power that runs through their mining rig is focused on the graphics card. A graphics card is expensive and if they overheat and die, they are costly to replace.

What is really interesting is that these new currencies have the potential to make a huge change in the world. Historically, each king and then each nation controlled the coins and supply of money used by their subjects. International trade has operated for hundreds of years between known banks, companies and individuals with national currencies.

Instead, crypto currencies are devolved and owned by no one entity or person – think peer to peer or p2p – and so it is very difficult to imagine exactly how any one person or government could control one. Since many coins are held by the earliest miners, it would take quite an act of will for any one entity to acquire Bitcoins in a large enough quantity to control the market or price.

Have People Got Rich Because Of Bitcoin?

The earliest miners have been able to amass incredible fortunes in just a few years. The earliest computational problems could be solved by using a normal personal computer and coins could be created at a fast rate. At the time, each coin was valued at a few cents, then tens of cents and then upwards towards one dollar. Those that mined and have held onto coins now have amassed personal fortunes as the price of one coin can sometimes swing wildly by one hundred dollars per day and the Bitcoin price is now in the hundreds of dollars each.

In fact, there are a few wallets that are watched very closely by the alt coin and mining community – they are the wallets believed to belong to Satoshi Nakamoto! I have read reports suggesting that the total value of these coins is over US$400 million.

With the early believers holding large blocks of coins like this, it is very difficult to imagine that any one organisation could own enough to control the price. However, if those blocks are never used or sold, they do act as a constraint on supply, supporting higher prices.

The peer to peer nature and the fact that they are virtual and exist on the internet which is now everywhere, means that in years to come they could be a direct threat to central banks and governments. The entire nature of politics, philosophy and economics (as studied at major universities), known as PPE, could be due for a change. While this seems fanciful now, the path of future development is unknown. There will be many business owners, politicians, policy experts, investors and members of the public that are still to ask, “What is a Bitcoin?”.

Is Bitcoin A Currency?

At the time of writing, the answer to that question is a qualified “perhaps”. The number of merchants that accept the coins on their websites is still relatively low, though their numbers are growing quickly. Additionally, the daily prices to convert from BTC to USD or from USD to BTC are still very volatile. Until the Bitcoin value is more stable – prompting users to feel more confident in it – and there are many more stores – both online and offline – that accept it, it’s adoption will be limited. It needs to be an easily spendable form of digital money to really take off. Until then, it will probably remain the techies and early adopters that are making money from this opportunity.

However, we probably judge these issues quite harshly. The major currencies of the world took hundreds of years to evolve into their current form and the first BTC research paper was only published in January 2009. For now, it looks as though it will become the money of the internet.

However, the role of gold was as an early medium of exchange that made transactions possible. In many places, gold was the first form of money. It has since evolved into something else – a store of wealth – and is only really used for transactions by governments. The overall evolution of digital and alt coins might involve something similar. Who can say? Perhaps Bitcoins are the first permanent and successful form of digital money?

One area that is often overlooked is that alt coins have the power to greatly reduce the role of banks. If their adoption were to really take off, not only are they a threat to central banks and political structures, but normal banks would also see their business models threatened. This is a huge opportunity for exchanges – because currencies can be traded into and out of BTC sidestepping the traditional banking system – but also for international transfers. Typically, international wire transfers take several days and the costs can be high, especially for relatively small amounts of money. Cryptocoins offer an alternative to that entire system. In the internet era, there is no real reason why transfers should take so long for most people.

Is Bitcoin Real Money?

This is the ultimate question and one that you will read online almost anywhere where crypto currencies are mentioned. There are certainly some very fanatical people in the BTC world and some equally hardcore deniers3 on the other side of the fence.

A quick visit to a site like will open your eyes. There are two things that will strike you immediately. Firstly, it is a crypto currency list that (at the time of writing) has 100 currencies. If it is such a flash in the pan, why are there more than 100 coins competing for attention? Secondly, the list shows the value (market capitalisation) of each entire currency in US dollars. Today, as I write this, the market cap of BTC is US$6,988,357,616. Yep, that is almost US$7 BILLION. This stuff is real.

Another great example of the faith being put into this world was shown when, in early February 2014, it was announced that the domain name had been sold for US$250,0004. Then in April 2014 it was reported that had been sold for US$1m5.

Can You Trust Bitcoin?

While you might not feel that you trust Dogecoin, Ripple, Quark or any of the others yet, it is difficult to deny that there is nothing going on in this space. The world hasn’t really taken notice yet, but it will have to at some point.

There is certainly a trust issue for most people when it comes to digital currency. Having read about the subject extensively, my take is that this is simply a lack of understanding on their part. Governments complain that these new currencies are anonymous, but they invented cash!6 They claim that they are used mainly for illicit purchases, which might have been true initially, but is certainly not the case now.

To make a point about a lack of understanding, in early 2014, a man was stopped and searched by TSA in the United States7. The searchers were looking for his Bitcoins. There seemed to be a moment of confusion while the agents looked for something that does not physically exist and the man being searched couldn’t figure out what they were doing.

This level of confusion probably was not helped in March 2014 when the IRS declared that BTC is property and not currency, for the purposes of taxation8 in the United States.

Is Bitcoin Secure?

For the public at large, cash is almost certainly less secure – anyone can pick up a banknote or coin and steal it. However, we have a much better understanding of physical security, such as locks and safety deposit boxes, than we do of cryptography and digital wallets. It seems reasonable to presume that at some point in the future, the security of a Bitcoin wallet will be much more clearly explained to lay people and so trust will naturally increase. When that happens, use will increase, demand will rise and, one presumes, the price per BTC will go up dramatically.

For now, there is a growing but very limited number of merchants selling goods and services in BTC, with even less in Litecoin. There are a few Bitcoin ATMs in the world, but their use and acceptance will likely grow. Some of the earliest locations for an ATM were Austin Texas and Singapore.

Does Bitcoin Have Multiple Uses?

My own personal take on this is that the alt coin world has a lot of development still to come. If we think back to reading about the earliest uses of currency, it was mostly gold that was being used. Then silver and finally other metals such as copper and tin. These days, gold is far too precious to use for a normal everyday transaction. Instead, gold mostly sits in bank vaults and safes for security. To a large extent, silver is treated the same way, though there are industrial uses for silver that make it far more useful than gold. For example, there is silver used in every television set, every mobile phone and almost every other electrical device.

Perhaps it will be the same way with Bitcoin? Perhaps in years to come, one BTC will be far too valuable to use for actually buying goods and services and instead it will be a means of investment, speculation and a store or wealth. Since the algorithmic limit for Litecoin is much higher, perhaps it will serve the role that silver serves for us – partly usable and partly a store of wealth. In which case, there may be another coin that serves the purpose of enabling everyday transactions online. Who knows how this will develop?

Obviously, this will make life more complex for merchants. The current internet economy runs mainly on US dollars. Companies have simple choices to make: do they accept PayPal? Operate their own merchant account? Accept wire transfers?

In the future, they may need to have multiple sets of accounting in place to enable them to accept PayPal and credit card transactions in US dollars, but to also manage and run their own Bitcoin wallet and perhaps other alt coin wallets as well. In the future, shop assistants might need to understand computer and digital security! Can you imagine shop assistants discussing blockchain authentication to pass the time while they calculate a BTC to USD price?

It is worth highlighting that it is not currently possible to buy Bitcoins with a credit card. Since credit card transactions can be reversed but the BTC would have changed hands permanently, the major exchanges do not want to be hit by fraudulent payments. This means that it takes real money to make a purchase, so there is no debt held against the currency. Unlike most national currencies that have some gold and asset backing but much more debt, these currencies are known as fiat, the alt coin world is all wealth. This factor makes the true believers very keen that they are involved in a new ordering of the world.

Can You Make Money Or Even Get Rich Trading Bitcoin?

There are now many people worldwide that do the alt coin equivalent of day trading to earn their living. There has been so much money flooding into the crypto world and services have become more available, making it possible to buy and sell Bitcoins and other currencies during the day to make a profit. All of this sounds just like a real stock market.

For now, the market in these coins is very volatile. It is not unheard of for coins to move in value by 70% in one day. While it is hard to describe this as a bubble, each coin is different and has different characteristics (such as the total overall supply or rate at which new coins are being mined) making it possible to buy and sell with some understanding of the impact on price of supply and demand.

It must be said though that as an “investment strategy” this is about as high risk as they come. For example, during the meltdown of Mt Gox – the world’s largest Bitcoin exchange at the time – the price of 1 BTC fell from over US$1200 to around US$150 in about two weeks. That is a crash of epic proportions as fear and uncertainty gripped the market. There were many people that literally lost the majority of their net worth when Mt Gox crashed. Having watched the Bitcoin price rise further and further they bought more and more, but were unable to sell when the problems began.

Even ignoring that crash, the price of 1 BTC fluctuated wildly during 2013. In terms of a buy and hold strategy, the long-term economics look very favourable. However, literally anything could happen to the short-term price, at any time. Caveat emptor.

What Is A Bitcoin Worth?

For anyone interested in buying Bitcoins to trade or for long-term investment, the question, “What is a Bitcoin worth?” is of vital importance. Of possibly more importance is what will a Bitcoin be worth in the future?

As with any currency or investment asset, there are many factors to consider. This page will discuss a number of important elements that will help you to understand this issue better.

Firstly, supply and demand is important in any asset class. One of the elements that holds many currencies back for long-term investment is the ability of the government of the day to produce more coins and bank notes, impacting supply. Economics has many ways of measuring the growth of money supply (such as M1, M2 and M3 rates).

Whilst old bank notes are constantly being destroyed in an organised fashion by the government, more new ones are always being printed. Additionally, the emergence of computers has made it much easier for a government to create new money without even bothering to switch the printing presses on.

Why Is Bitcoin Supply Limited?

In contrast, the Bitcoin algorithm is designed to limit the number of coins that will ever exist to 21 million. Even more than that, the problems that need to be solved to mine more coins are becoming harder over time. The algorithm is designed so that the number of coins that can be mined halves every four years. This will guarantee some new coins will come into existence annually for around another 100 years.

This process is known as the halving. What happens is that the reward for solving problems on the blockchain that verify transactions reduces by half. This means that all the miners competing to earn coins have to compete harder for less reward. The general thinking is that as the rewards reduce, new coin creation reduces and therefore the lower supply causes higher prices that make the effort of mining worthwhile. That, at least, is the theory…

Already, it can’t be hard to see that 21 million is much smaller than the population of the world if everyone was to own just one coin. Should BTC really take off in the future and gain widespread acceptance, then there is likely to be a very serious supply crunch. That ought to send prices much higher.

Each Bitcoin is split (just like a normal dollar, euro or pound is) into smaller denominations. Each one has 100,000,000 (one hundred million) parts. The smallest denomination is known as a Satoshi.

However, it is already known that some are lost, never to be recovered. This is one of the perils of crypto currencies, if the access details are lost or stolen, the money is essentially gone forever. Am example of this happened in the UK in 20131. James Howells had been an early miner of BTC and had some 7,500 stored on the hard drive of his computer. A computer that he then threw away. Somewhere in a landfill site in Newport is a pc that is worth several million dollars. Who knows how many coins have been lost like this since the launch in 2009?

One problem is that in the early days, the price of a Bitcoin was measured in cents or single digit dollars. There was no real indication that the price would one day rise into the hundreds of dollars each and then past one thousand. Suddenly, those coins that meant very little are quite valuable. There are probably many more thousands of coins – a few dozen here and a few dozen there – that have been lost forever. Overall, this has a small, but important impact on total Bitcoin supply.

There are many people that speculate on sites like reddit that in total perhaps between 1 and 2 million coins might ultimately be lost. Therefore, if 21 million coins did not seem like many for the total population of the world, 19 million seems like a lot less!

When it comes to the total supply, it might be a good idea to imagine BTC as being like stock in a company quoted on Wall Street. Companies issue a fixed amount of shares and the value of them fluctuates related to supply and demand. The differences, of course, are that companies can increase or decrease the total supply if a motion to the existing stockholders is passed and that a company issues all their stock in one release, whereas Bitcoins will continue to be mined for many more years. For these reasons, many people that play stock market investments will recognise the similarities.

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What About Confiscated Bitcoins?

The early history of crypto currencies involves crime as people tried to make anonymous purchases online out of the sight of governments and law enforcement. The most notorious site that enabled this was called Silk Road and could only be accessed via TOR – a privacy tool.

In mid 2013, the government of the United States tracked the owner down and took the site offline. At the time of writing, the man arrested is still awaiting trial.

However, the FBI were very confident that they had been able to trace the Bitcoin wallet used by the site owner, whomever he may actually be. As such, they have been able to confiscate the wallet and prevent it’s contents from being used. While it is believed that they will never be able to spend the coins themselves, this is still more coins that are out of circulation from the overall Bitcoin supply. The number? 144,0002.

What About Stolen Bitcoins?

The events at Mt Gox in early 2014 potentially add many more coins onto this unusable list. The reports from Mt Gox about what happened are quite confusing for the lay person without a background in cryptography. However, it seems that around 744,000 coins were somehow stolen from the exchange. In a later release, it transpired that they then found 200,000 coins in an old wallet. This is a story that will unfold over the years, but the result seems to be that more coins are out of action. How many and for how long, who knows?

What About Hoarded Bitcoins?

There are a number of early miners whose wallets are relatively well known and watched for action within the public blockchain records. Several of the earliest are believed to be owned by Satoshi Nakamoto, whomever he or they may be3. It is believed that he controls around 1 million BTC4. While these coins are usable, the reality is that while they are in cold storage somewhere, they might as well be lost forever. This certainly has an impact on the value of Bitcoins.

Does Bitcoin Have ValueHowever, if they do become available and are sold into the market one day, expect the price per coin to be incredibly volatile.

Changes In Demand

In the early days, all crypto currencies were very geeky tech concepts with virtually zero public acceptance. However, as the years have passed and more people have jumped on board and more publicity has followed, the demand has increased.

One of the key elements to public take up is the ecosystem of services and websites that make the process of buying and selling BTC easier. For example, there are now ATMs around the world (information here). There are more sites whose purpose is to make trading between alt coins possible. There are more and more merchants that accept BTC as payment for goods and services. As these elements all increase and improve, more public acceptance will come.

Why Does Bitcoin Have Value?

To a certain extent, the fact that people are willing to pay money for a coin provides the value – it is a show of trust in the system. It can be argued that a coin or note issued by a government is the same. Intrinsically, a $1 note is just a piece of paper, but because we trust and expect other people to honour it’s value, it has value.

The way the algorithm and overall concept of many alt coins is designed, the more demand there is, the more prices should be expected to rise. In this regard, there is a very clear relationship between supply and demand on market value and price.

Another important aspect is that for most of it’s history, it was impossible to buy using any sort of debt. Because the blockchain is immutable, transactions cannot be reversed, meaning that funding sources such as PayPal or credit cards were not allowed. Obviously, if everyone was buying with real money, this provides a certain level of faith in the system. It also made it very appealing because unlike the regular financial system that has debt and risk everywhere, there was no debt to hold the currency back. It also meant that corporate issues such and bankruptcies were not possible, removing the risk of default on company debt from the equation.

How High Can Bitcoin Prices Go?

For this reason, there are many evangelists that make wild predictions of future prices. One such evangelist, American Trace Mayer, has suggested many very high numbers for the future, from $10,000 per BTC all the way up to $2.8m per BTC5. It seems difficult now to imagine such a price, but a few years ago, when one coin was valued at under a dollar, it was difficult to imagine a price of US$1,000 each, but that came and went so who knows…?

Within the alt coin community there is an oft used saying, “to the moon!“, meaning that there is no upper price limit and that they are hoping for very big numbers in the future. What is a Bitcoin worth to these guys? Who knows, but you cannot fault their ambition!

Can Bitcoins Be Manipulated In Price?

In some respects, it could be argued that all those hoarded coins mentioned above are a form of manipulation because they limit the supply of coins to the market.

There have certainly been some examples of people trying to manipulate the price by buying or selling in very large quantities. Typically, they seem to have a short-term impact on price, but limited lasting impact. There were claims of heavy sustained buying preceeding the Mt Gox collapse and the price increased very substantially in that period. However, the price is much harder to control than physical assets with more developed markets. For example, there are many times more futures contracts in existence for both gold and silver than there is actual gold or silver. For now, the price per BTC is not influenced in this way.

Can Bitcoins Be Faked Or Forged?

The blockchain and it’s decentralized nature provides most of the trust that the system needs. Every time new coins are created, they are provided as a reward for updating and authenticating the latest transactions. Since there are miners in a number of countries, mainly with very large operations, it is highly unlikely that fake or forged transactions can be processed through the system. The system prevents double spending as it verifies transactions. In contrast, there is a constant battle between governments and criminals trying to forge bank notes.

Can Bitcoin Become A Global Currency?

Bitcoin CurrencyThis will take a great deal of time, but it is possible, yes. It may be that it can become the reserve currency for the population of the world, though it is less likely to become the reserve currency for a government. However, in 2015 a paper was published by academics suggesting that it might be appropriate for the government of Barbados to hold a small percentage of their reserves in BTC. The paper suggested that perhaps 5% should be the maximum holding. However, if a number of governments decided to buy and hold, the size of their holdings (and the purchases necessary) would be incredibly bullish for the long-term viability and price.

Can Bitcoin Replace Money?

Probably not. One of the key roles of a functioning government is to maintain control over the ability to tax, borrow and spend money on behalf of it’s citizens. The ongoing eurozone crisis shows just what problems can be caused when a country gives up these rights. The likelyhood of any government giving up these rights and replacing them with a decentralized currency that it has literally no control over would seem to be very unlikely.

Why Is The Price Of Bitcoin So Volatile?

Since the BTC price is based so clearly around trust and supply and demand, there will always be volatility. There can be many reasons for price swings, but they almost always revolve around one of those three issues. If an economy is imploding somewhere, people try to preserve their wealth by placing money into an international environment. It speaks volumes that people trust their government less than they trust BTC!

What is clear is that there are some very wild swings in price on all of the alt coins. There are many reasons for these, but as long as the price jumps around as much as it has, it will not be easy for normal people to trust in the currencies and buy and sell goods. That is a problem that needs to be solved.

It is worth noting that there are usually different prices quoted on each exchange. For example, while Mt Gox was imploding, the price to buy was several times cheaper than elsewhere, reflecting the higher levels of risk in a purchase.

You should also realise that the price to buy or sell via an exchange changes minute by minute and the market is 24 hours per day and global. If things move fast, you cannot expect the market to close and things to quieten down. This certainly offers a high octane opportunity for trading.

Will Bitcoin Fail?

As time passes and the combination of more users, more transactions and more infrastructure continues to grow, it seems less and less likely that Bitcoin will fail. There are a number of alt coins that are in the wilderness in comparison and are quite likely to fail, BTC is not one of them. This growing useage and trust reduces the risks which increases trust and brings more and more people and businesses in, helping to squeeze supply and demand further.

There are issues that come with scale though. There are technical limits to how many transactions (information here) can be processed per second. In theory this sounds fair, but when it is compared with other global transaction systems – such as VISA – the number is incredibly low. This is one of the issues that the second major crypto currency, Litecoin, has had fixed. The development community all seem to agree that changes like these can be made, they just seem to disagree on what is the best way to do it. Either way, solutions are possible to BTCs main flaws, it will just take time and effort to implement them.

Has Bitcoin Peaked In Value? Can It Rise Higher?

I hope that the explanations above make a good case that there is a bright future. It would not take many new big developments for the price to rise dramatically, but equally, one or two big scandals could undermine the trust that has been built up in the system. However, the pace of development and change is so fast that it is literally impossible to imagine what could come in the next 10 years or more. In a longer time frame like that, the price could concievably be much, much higher than anything we can realistically contemplate today.

What Is A Bitcoin Worth: My Opinion?

It seems to me that Bitcoin is likely to take the role of gold in the crypto world. Gold was one of the earliest currencies and over time has been transformed from day to day use into a long-term store of wealth. Silver, took over for a time and that too has become a store of wealth, though it also has many more industrial uses. Then other (more easy to manipulate) national currencies came to prominence.

I wonder whether Bitcoin is the gold and Litecoin the silver of the alt coin world and one of the others will gradually become the de facto online currency for trade. Therefore, when it comes to what is a Bitcoin worth, only time will tell…

What does seem clear is that week by week, month by month, the likelyhood of failure is receeding and that means that the long-term viability is rising and therefore, so should the price. To be incredibly simplistic, there are more than 7 billion people on earth and if BTC continues it’s march towards total dominance in the crypto currency world, 21 million does not divide easily between 7 billion. Those supply and demand numbers look very good!

Bitcoin Price Prediction 2016

These graphs show the current price of BTC in US$. The question is, what are the expert Bitcoin price predictions for 2016?

bitcoin price chart

Firstly, it cannot be denied that BTC ended 2015 in a very bullish mode. Despite a pullback of around 10% in the Christmas period, the preceding two months had seen substantial price rises. From lows in the $200s through much of 2015, Bitcoin began 2016 at around $420.

Why Is The Bitcoin Price Prediction 2016 So Bullish?

Summer 2016 will see the next halving. The algorithm that powers bitcoin produces a number of coins (25) every 10 minutes or so for miners that have solved math problems – these are the cryptography that enable the blockchain to verify all trades. Every 4 years the reward for miners halves, meaning that less news coins are created. This obviously means that new supply will become more limited.

Meanwhile, more services enable payment by bitcoin, more people are investing and trading and more money is coming in. Transaction numbers in recent months have shown that total volume of transactions is higher week after week. As demand rises – and supply becomes more limited – it seems reasonable to expect price increases. Additionally, the entire crypto currency and alt coin world has continued to grow and mature.

Bitcoins are really quite usable in the digital world. The likelyhood that bitcoin will survive and that mass adoption is coming are better than ever. The risks of BTC as a project failing are now very low. This reduced level of risk mean that more investors, more stores, more services and more users ought to continue to flood into the BTC economy in 2016 and that can only be good for business!

What Are Some 2016 Bitcoin Price Forecasts?

The end of the year saw a number of Bitcoin price forecasts in the mainstream media, some were more thought out than others, but here are a few highlights:

Reuters spoke to Daniel Masters (a hedge fund manager) who predicted “above $1,100 in 2016 and on past $4,400 by the end of 2017“. Bobby Lee from BTCC told Reuters that he thinks “as high as $3,500 by next summer“. Beyond bullish…

EconoTimes spoke to FXWirePro who suggested that “there is a probability for Bitcoin price to reach $630, and a break above could see the pair testing $680 levels“.

Bloomberg looked at some of the steps likely to be taken in 2016 by Bitcoin and their interviewed experts had some very positive thoughts, including the US government recognizing BTC as a currency, the first billion dollar startup and more. Though these are not individually price related, each one would provide another support under the price making the entire ecosystem safer and stronger.

BusinessInsider spoke to Jeremy Millar who explained hos thoughts for 2016. They include multiple blockchains and much greater adoption in emerging markets.

It wouldn’t be a real Bitcoin price prediction if there wasn’t someone shouting to the moon! So here is an opinion piece published in mid December suggesting that the price of BTC will one day pass $1 million. You can’t get more bullish than that!

My 2016 Price Prediction

I’m not totally sure that I agree with all of these forecasts, but honestly, who knows…? My personal best guess is that there is about a 30% chance that the price will double during the course of 2016 – that implies a price of around $800 to $850.

That all sounds very scientific, but it is based on “feel” as much as anything. Even if I am wildly incorrect, it seems very unlikely that there will not be strong rises, so perhaps the $630 to $680 numbers mentioned above are a good guide.

In case it is unclear so far, China is very influential in the role of Bitcoin. There are several reasons for this – one is that most of the main mining locations are in China. (They realised that rather than manufacture the equipment to mine BTC and then sell it to the west, they were better off making the equipment and then mining the coins themselves).

Plus, the Chinese have very few options when it comes to investment and diversification, so many people like the idea of buying some bitcoins. This makes it very likely that if the Chinese economy, currency or stock market starts to falter in 2016 that many Chinese will pile into crypto currency.

Additionally, there are many wealthy Chinese that look to diversify themselves and their families out of China, using mechanisms such as offshore companies and citizenship by investment. The result is that it is very likely that 2016 will see substantial Chinese wealth pour into BTC.

In fact, there is growing evidence to suggest that investment portfolios can be given additional diversification benefits by adding Bitcoin as a separate asset class. It is another reason to be a little bullish…

What I am sure of is that if the price starts to move up strongly, then money will flood in and the price will rise incredibly quickly. The real question then becomes when and how far will it fall back? It could very easily be the case that the price rises strongly, beyond $1000 but then falls back significantly, leaving us with a significantly higher price, but with another wild ride in between.

Therefore, my prediction is that there will be lots more price volatility and until we get to a stage where that comes under some control, it will be hard for businesses to really plan and build their companies around BTC.

Good luck to us all, and of course, to the moon!

Update – 20th January 2016

The events relating to Mike Hearn and Cryptsy in early January dealt a blow to lots of the more bullish forecasts. In just a matter of days the price dropped from over US$455 to around US$360. While the price is currently moving up again, such sudden volatility and downwards(!!) makes the above predictions look bad…

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A Beginners Guide To Bitcoin Mining

Before you read anything written here that may be a beginners guide to Bitcoin mining, please understand the following caveat… This has proved to be too intensive a topic for me to make it worth trying to mine Bitcoin myself. Therefore, I have read, researched and spoken to two people that do mine Bitcoins and alt coins, but I am not doing this myself.

The bottom line is that there are so many professional operations with very significant hardware in use that are already in play and the competition is so fierce, that you will probably decide not to start mining Bitcoin just as I did. Therefore, think of this as an information page to help you understand and not an instruction guide.

There really is a global technological arms race under way to use the best mining software and hardware to achieve the highest possible hash rate performance. Mining Bitcoins is no longer a place for amateurs. However, since there are more than 100 alt coins now available, there are opportunities to mine coins that are not BTC.

For example, in early 2015, Vice published this short film about an operation located in China. As you’ll see, the owners have six different operations! This is what it really takes to make it…

With all that said, how are alt coins mined?

What Is Bitcoin Mining And How Does It Work?

As has been discussed elsewhere on this site, crypto currencies are protected by strong cryptography to prevent fraud. This cryptography takes the form of a very strong mathematical calculation. To authenticate groups of transactions, mathematical puzzles need to be solved. Each time a puzzle is solved a block of transactions is authenticated. The record of these blocks is known as the blockchain1.

So far, so easy.

The blockchain is actually a public record. This means that unlike cash, it is possible for anyone to see a record of any transaction (if they know what they are doing). It isn’t possible to see the whole transaction, because there is no record of what was bought, sold or traded, and there is no name and address record of ownership. Transactions are therefore semi-anonymous.

Why semi-anonymous? There are some instances where very large wallets can be traced back to one or more people because of the transactions involved. This has been the case with the person(s) operating the TOR website called the Silk Road. While American law enforcement were able to arrest someone and confiscate the related Bitcoin wallet, it is going to be very hard for them to prove that two are actually connected. (This is being written in early 2014, before the trial).

Another example is the wallet believed to be owned by Satoshi Nakamoto. There are roughly 1 million BTC contained in the earliest wallets and while nobody knows for sure that they are his wallets, the alt community is quite convinced that they are. He was, of course, able to mine his coins right at the start when the calculations were easiest.

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When a miner solves a puzzle to authenticate a group of transactions they receive 25BTC. As the price per BTC has risen, this has created quite an incentive to solve the problems.

The math bit is known as a hash. This area becomes very complicated very quickly and a serious amount of implied mathematical knowledge is required.

The hardware needed to mine a Bitcoin started out as virtually any home pc or laptop. However, as the computing power required has increased, it has become less and less possible to use standard equipment. In fact, all coins that are SHA-256 (BTC and derivatives) are uneconomical to mine on home computers.

The set up typically used is known as a mining rig and is quite specialised. A mining rig revolved around the quality of it’s graphics card(s). The graphics card is where most of the computational effort goes on. The fastest graphics cards are also the most expensive.

This is a problem since a good graphics card is expensive and if you run one permanently it will burn out at some point. This means that for most alt coin miners, cooling is a very big issue. Somehow, the rig needs to run 24 hours per day and so do the fans that keep the room cool. The power required starts to get serious when you are running so much hardware constantly.

Since there has been an arms race in the technology of mining Bitcoins, there have been a few firms that have launched to sell rigs into this growing market. Unfortunately, there are many horror stories of dealing with these firms. Stories of companies charging upfront (because of a limited supply) and then not delivering upon their orders for more than one year. In the world of BTC, one year is forever… Other firms have charged upfront and then gone out of business, delivering nothing. The cost for a good mining rig can start at perhaps US$5,000 but can be much more expensive as the tech improves. In other words, you are better off buying the parts individually and building your own rig if you can.

For a beginner, this is about as far as it gets though. For example, I recently found this in a forum about mining:

Once you sort out which card(s) to use, the next challenge is power supply. Figure around 250-300w per card plus say 100 for overhead. I generally use 300 for the 290x and 250 for the 280x/7970. I’m running one of each off of a 750w PSU right now. My Kill-A-Watt shows that it’s actually drawing around 570 from the wall, but I’m expecting that to go up a bit after I sort my driver problems and get overclocking going.”

Or try this:

The inner loop of the mining process is a double SHA-256 hash of data where only one 32-bit word, essentially a counter or “nonce”, changes. It looks for a specific result where there are enough zeros in the right place after the second SHA-256 and only needs to output that counter value for which this is the case (if it is for any).”2

Essentially, either you understood that or you didn’t. Now you know why I am not doing this myself…

For the more sophisticated miner, an ASIC rig is the next step. ASIC means Application Specific Integrated Circuit and relates to the processor hardware in use. ASIC processors were designed specifically for Bitcoin mining and run faster than other chips. Their goal is to work through the hashes faster than other processors can.

If you are still interested, or want to see what this really entails, this entertaining video explains everything in hard to understand phrases:

After all of that monkeying around, the ultimate goal is to mine coins profitably at their current price. To do this, a miner needs to be able to compare the rate at which his or her equipment can solve problems and create new coins (known as the hash rate) with the cost of equipment and electricity to do so. Therefore, how many coins and at what price in a specific time period compared to the cost to operate in that time period plus some amortizing of the cost of equipment. Got it…?

Can Bitcoin Mining Be Profitable?

It is possible to make money doing this, but you need to be quite careful and the easy days where people became really wealthy are long gone.

BTC mining is now so difficult3 that most people join a group to do it.

What Is A Bitcoin Mining Pool?

These are known as Bitcoin mining pools and there is some competition to join the best mining pools. A pool combines the computing power of multiple people to solve problems High Q faster. The group joins by using the same software (known as GUI) to help them combine their efforts.

If you imagine that there are 100 miners in a pool and that your machine does 1% of the work, then when coins are distributed, you receive 1% of the value of the coins. Most pools are much larger than 100 users, but you get the idea.

What Is A Bitcoin Cloud Mining Pool?

There are also cloud hashing services4 where spare capacity in the cloud is used to solve problems. These are known as Bitcoin Mining Contracts and there are already specialist firms offering these services5.

It is worth remembering that this is a space where development is coming very quickly. It is evolving in front of our eyes. Therefore, if you want to be involved you really need to do some more research of your own.

If after all that you are keen, perhaps you should create your own alt coins!5

Hopefully, that beginners guide to Bitcoin mining was helpful, if only in making you not want to try it yourself…

Book Review: CryptoCurrency by Vigna and Casey

During the past week I have read CryptoCurrency by Paul Vigna and Michael J. Casey. I loved it!

Firstly, the aim of the book is similar to the aim of this website. Neither author is a developer, they are both journalists, which means that the content is very accessible to us normal (not a cryptographer) humans. Their goal was simply to understand and explain what they found as best they could. I think that they did a great job.

Since they were making the very substantial effort to write a book and not an article or a blog post, they interviewed many of the leading people in the development of Bitcoin which has enabled them to piece together a very readable history of this new technology.

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This readability is key if Bitcoin is going to be able to breakthrough into the mainstream of society – a point that they frequently make. It is also important because, although it takes them many pages, their description of the blockchain is the best that I have read so far. Given the desire to make it through those six or so pages, most people would be able to understand the basics. Let’s be honest, the blockchain is not the most easy to grasp concept in history…

The authors clearly believe that the future of finance will be shaken up by cryptocurrencies, the only questions are to what degree that happens and how soon. They make a good case and it is not easy to disagree with them.

They also take a thoughtful look at a number of the other alt coins that have been developed in the wake of Bitcoin and the technical nuances and breakthroughs that underpin their concepts. This makes the book a good way to begin to learn about the ecosystem and be able to distinguish Ethereum from Dash and Ripple from WeChat.

Interestingly, when I first learned of bitcoin et al I was struck by how difficult it might become in the future for governments to collect taxes and VAT on transactions and the potential impacts this might have to a functioning society. The authors looked at many of the potential big picture developments that might unfold, but left this topic alone. That is probably a good thing, because in doing so they investigated ideas that my friends and I had not thought of, ideas that are revolutionary for society as we know it. I’m glad they did.

This scope means it is almost impossible for even the most seasoned and knowledgeable bitcoin enthusiast to not learn something

Therefore, no matter what level you may be at, if you are interested in bitcoin, this book is highly recommended.

Bitcoin And Libertarianism

Once you have seen and read for a while about Bitcoin, the link between itself and libertarianism is impossible to deny. For reasons that I only partly understand, bitcoins seem to have built an early fan base with people that are very committed to freedom.

As best I can tell, this is because of a conspiracy theory about the way the Federal Reserve works in the United States. I’m sure like many people, I have watched a couple of videos online that explain just how terrible and evil the Fed really is and how it’s founding and structure was designed to build debt into the American way of life. I am not sure I believe them. In reality, the truth is normally somewhere in between the two extremes, so my presumption is that there are parts of their theory that are correct and that makes it possible to highlight other parts as being dastardly Machiavellian.

Bitcoin, Fiat Currency And Conspiracy Theories

The link between these conspiracy theories and Bitcoin is debt. The conspiracy theorists believe (possibly correctly) that the entire economic system is created to enslave us all in debt forcing us to work hard throughout our lives. On the other hand, Bitcoin has virtually zero debt in the system. For a long time it was not even possible to buy using a credit card, so there was literally no debt in BTC. If you believe that the role of the Federal Reserve is to enslave us all, then a currency that is debt free has lots of appeal.

A different but related strand worries about the way that government’s borrow money in the modern world to pay for, well, everything really… Once again, with no debt in the system, bitcoins resemble gold more than they resemble the US dollar. This means that anyone that philosophically dislikes fiat currency can find a home in Bitcoin or any of the other crypto currency communities.

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Bitcoin Is Distributed

The design of the entire system means that anyone, anywhere in the world, can potentially be involved. They need to have the right knowledge and hardware, but geography is only a constraint if you cannot access the web. The result has been that there have been developments around the world and the speed of adoption is different everywhere. For example, in 2016 as I write this, there are believed to be 10 main mining operations, that account for 80% or more of the total capacity. I have read that eight of those are independent operations in China. A few years ago you probably would not have predicted that, but that is what has happened.

This distribution means that no government can control it. For example, if the Chinese government stepped in to shut down those miners, you can bet that new locations will launch in other countries quite quickly. There are full nodes in operation in many cities and countries. There are major owners of coins in many different countries. And importantly, the (lack of) speed and flexibility of most governments has prevented them from getting in early, so almost everything is in private hands in one way or another.

Bitcoin And Information Freedom

If you have read anything about the early days of the web, then it becomes clear that many internet pioneers had a deep desire to make information available and organised. All of it. All information, with few or no secrets. This is a noble, but partly unrealistic goal.

Needless to say, if you have dreams and goals like this, then subjects like fiat currency are likely to be quite annoying to you. This is likely to be one of the reasons why crypto currencies were able to get early support in the tech and developer communities.

Bitcoin, Liberty And Crime

From there, of course, the quasi anonymity of Bitcoin attracted criminals and the Silk Road and all that came from and around it (described here). That helped to bring a bad reputation, which has mostly been shaken off now as more and more legitimate institutions look for ways to work with and use the blockchain and Bitcoin. The future for smart contracts looks very bright.

Needless to say, you cannot hold a currency accountable for the actions of bad people when they use it. If that were the case, then the US dollar would be the “responsible” for all manner of awful crimes around the world. Whilst it might be possible to hold bankers accountable for helping to launder and move money, you can’t blame the money itself.

Bitcoin And Financial Freedom

Lastly, the advance of the price of Bitcoin has provided the very early adopters with substantial wealth. This provides it’s own level of very real freedom that can be used to enforce and enhance the rest of the system. Some of the earliest miners now (only a few years later) have fortunes in the tens of millions of dollars. If that doesn’t enhance your feeling of independence, nothing will!

Your author knows two people like this. Both found the idea of BTC interesting and worked hard to get involved in the early days. It really was hard to get involved then – you had to have some technical skills. Both bought some coins to learn more and mined coins for some months (when an ordinary computer could solve the problems). Both accumulated several thousand coins – now worth multiple millions of pounds, euros or dollars. It happened largely by accident for them both.

Whether people that joined the revolution later, like me, or you (?) will also become rich, who knows? There is still the chance, but the biggest price gains are probably now in the past.

The World’s First Bitcoin Regulations – The Isle Of Man

One of the real downfalls of cryptocurrencies has been the lack of Bitcoin regulations. While the new currencies are attractive to many users because of the lack of regulations and oversight, the fact that the main exchanges are unregulated is a real problem the hinders the growth, development and uptake of all alt coins.

For example, the collapse of Mt Gox, showed just how precarious the early infrastructure really is and just how much money is at stake.

Step forwards the Isle of Man!

In March 2015 the Isle of Man – a small island that has a very strong financial services sector and sits between the UK and Ireland – announced the world’s first Bitcoin regulatory framework.

The aim is not, of course, to regulate the currency, but instead to provide regulation for the companies that exist in the crypto currency ecosystem. If these infrastructure companies can become much more solid, safer and trusted, then the continued development of BTC and other alt coins can hopefully proceed quickly.

The Isle of Man is also interesting for tech startups because it has existing low tax or no tax rules in place for companies and individuals.

The Isle of Man already has a growing reputation for e-commerce and gaming and a workforce that has lots of international and tech skills. In fact, it is one of the leading rivals in the gaming space to Malta and Gibraltar. Many people will be hoping that this reputation combined with real rules will help to shed some of the reputation for crime that the currency has attracted.

The local government is hoping that these new rules will help to attract more startups and that the Isle of Man can be at the centre of the worldwide development of these currencies. It does seem to be very good news for everyone in BTC!

In early September 2015 a story emerged on Business Insider about Barclays Bank in the UK and their development and research efforts into the blockchain. More interestingly, while the interview was underway, staff from Her Majesty’s Treasury were in the building as well. It seems that the UK government is also taking a keen eye in the developments and how they can be used at a national and international level. The future is bright!

Update: May 2016

In early May 2016, the Isle of Man had another BTC coup when they announced the world’s first set of rules for Bitcoin gambling websites. This is really interesting because there are existing low tax jurisdictions that focus on gaming companies and their fees – such as Costa Rica, Malta and Gibraltar – but despite the headstart they have by already having the gaming firms present, IoM has jumped the queue and got in first! Only one country can be first at something.

The History Of Money

Way Before the Benjamins…

Money is a fact of life, it always has been. So as long as there has been an America, there have been many different kinds of currency.

So you think carrying change in your pocket could be a pain? How about lugging around strings of beads made from the clam shells?

That is precisely what Native American tribes had to do. These beaded shells, called wampum, were the most common form of money in North America. By 1637, the Massachusetts Bay Colony declared wampum legal tender (ok to use as money).

We’re not talking about your grandparents car, here. What we are talking are America’s original ‘bucks’. To finance the American Revolutionary, Congress authorized the first printing of currency by the new republic. But without the strong financial backing of gold or silver, the Continentals quickly devalued and were soon worthless – thus the expression, “not worth a continental.”

Although these notes were actually issued by banks, they were as worthless as Monopoly money – maybe even less than that. With Monopoly money, you could at least put up a hotel on Park Place.

But back in the day when individual banks were allowed to print their own money, the so-called Free Banking Era, America was flooded with various currency notes – many of which were redeemable in gold or silver, but some were worthless. Some banks would set up shop in remote mountainous regions, prompting people to comment that it was easier for a wildcat to redeem these notes than people – thus the name.

As for “broken” notes, the name refers to the frequency in which the banks that issued them went bust. Without the confidence that these notes could be redeemed, they were virtually worthless. By 1860, an estimated 8,000 different state banks were issuing “wildcat” or “broken” bank notes.

Pressed to finance the Civil War, the U.S. government resumed printing paper currency for the first time since it issued Continentals. The name itself, a reference to its color, has become as much a part of Americana as apple pie In addition to its new color, “greenbacks” incorporated a more complex design, including a Treasury Seal, fine-line engraving and various security measures.

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BitcoinFastStart Homepage

Open up your wallet – if you’re carrying some cash on you, chances are its a Federal Reserve Note. Following the Federal Reserve Act of 1913, these notes became the dominant form of paper currency in America. Over the years, these notes have changed very little – they have been reduced in size in 1929 and the words “In God We Trust” were added in 1955.

Currently, the $100 bill is the largest currency note in circulation. The largest bill ever circulated in the United States is the $10,000 bill, which features the face of Salmon P. Chase, who was Abe Lincoln’s Secretary of the Treasury. If you have one, you can spend it, but most of them are in museums these days.

Once you take modern day currency into account, there are many other assets that have value and can be traded. At one end of the scale, the global rich, the one percent, use things like central London and Manhattan real estate as a quasi reserve currency and insurance. Other products such as bonds and CDs have a mainstream role. Other assets that can be sold for cash are vital.

Having begun with names like Egold and limited amounts of security, the first digital currencies were plagued with frauds and crime. However, once genuine cryptography was added into the mix, the new concept of Bitcoin was able to gain credibility – which is vital for any currency – and a wider user base.

As the crypto space moved on, into 2016 and beyond, tokens became a tradeable commodity, used to fund start-up launches and help small projects get traction. They are classed as assets in the crypto environment, rather than a currency, but they have a very similar role.

How To Stay Informed About Bitcoin Latest News

The world of Bitcoin and the other alt coins and digital money is evolving – FAST! It is like dog years, only quicker. Much quicker.

In such an environment, how does anyone hope to stay updated with current events? It isn’t easy to keep up with the Bitcoin latest news, that’s for sure.

I have found that there are a few locations where much of the news and views can be found in one way or another. Here are some of the best:

Bitcoin sub-reddit is the home of all things Bitcoin. There are many sub reddits for related topics, such as mining and individual alt coins, plus, of course, reddit is the birthplace of Dogecoin. reports on most BTC issues. As one of the largest tech sites on the internet, it is very involved in reporting the latest news. is another tech / financial news site that has enjoyed reporting on the latest BTC developments. The reporting is typically quite hype-y but the general thrust of the articles are correct. is an aggregator of blog posts and updates from a range of authors. Much of the content is personal opinion, but the posts often relate to a wide range of alt coins. is an interesting idea. The site tracks the legal status and progress of alt coins legality around the world. It has a helpful colour coded map to get to the point quickly and a feed that provides the latest updates.

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Bitcoin Price Prediction 2016 is another aggregator site. This one tracks latest tweets, news stories and forum posts related to all things alt coin. It is an easy place to get started actually. is another aggregator, but this tends to follow news about prices and trading. is a cool idea. The site monitors the largest wallets and shows lists of which ones hold the most coins. When you read elsewhere on this site that Bitcoin is quasi anonymous, you now know why! You would never see a list like this related to bank accounts or cash holdings.

Two mainstream news outlets that have started to report on the latest BTC news issues (providing much more credibility and outreach) are and