Striplv Magazine - The Sexiest Magazine on the Planet, Issue 0318

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Page 37 of 79

One of the advantages of Bitcoin and other Cryptocurrencies is that they can be stored offline on a person’s local hardware that is often referred to as “cold storage.” Unlike “hot storage,” when the currency is stored somewhere online like a cloud server, cold storage adds a layer of protection and prevents the currency from being stolen. On the flip side, if a person loses access to the hardware that contains the Bitcoins or Altcoins, the Cryptocurrency is gone forever. There is simply no way to recover it. It has been estimated that as much as $30 billion in Bitcoins alone have been lost or misplaced by investors and miners. Nonetheless, Bitcoins remain incredibly popular as they are the most recognizable Cryptocurrency by name. Why Are Cryptocurrencies So Controversial? Aside from the fact that Bitcoin became the center of the media frenzy when it experienced a meteoric rise over the past year – going from $1,020.83 on January 1, 2017, to $14,773.85 on January 2, 2018 with it reaching an all-time high on December 16 at $19,187.32 – there are many reasons why Cryptocurrencies and Bitcoin, in particular, have become so controversial. Between 2011 and 2013 when Bitcoin was trading at $10.35, it found itself in the news when criminals bought millions of dollars of Bitcoins so they could move money outside of the eyes of law enforcement. Since then, scams have become very real in the Cryptocurrency world as inexperienced and veteran investors alike have been duped out of thousands of dollars to unsavory schemes. But at the end of the day what makes Bitcoins and Altcoins highly controversial is the fact that they take the power of making money out of the hands of central federal banks and place them in the hands of the general public. Cryptocurrency accounts cannot be frozen or examined by government tax agencies like the Internal Revenue Service, and go-between banks are entirely unnecessary for the digital currencies to move. Police departments and banking institutions often see Bitcoins as “gold nuggets in the wild, wild west,” beyond the control of traditional law enforcement and financial institutions. How Cryptocurrencies Work Bitcoins and other Cryptocurrencies are designed to be “self-contained” for their value and are completely virtual. Because there is no need for banks to store and move the money, once you own the Cryptocurrency, they almost behave like pieces of gold: they hold value and trade just like if they were gold nuggets. You can use Bitcoins and Altcoins to purchase goods and services online – although most places do not yet accept them – or you can hold on to them and hope that they will increase in value over time. o use Bitcoins, they are traded from one personal “wallet” to another. Wallets are small personal databases that are stored on one’s computer drive (cold storage), on smartphones, tablets, or somewhere in the cloud (hot storage). It should be noted that Bitcoins are forgery-resistant as it is so computationally-intensive to create a Bitcoin, the time and effort it isn’t financially worth it for counterfeiters to attempt to manipulate the system. Cryptocurrency Values and Regulations It is estimated that there are more than $2 billion worth of Bitcoins in circulation and they vary in value on a day-to-day basis. A simple Google search will produce the current daily market value. Bitcoins will continue to be made until 21 billion coins are produced, which is estimated to be sometime around the year 2040. As of January 2018, more than half of those had already been created. As previously explained, Cryptocurrency is both unregulated and decentralized. Since there is no national bank or mint, there is no depositor insurance coverage. Because the currency is self-contained and absent of collateral, meaning that there are no precious metals behind them, the value of each Cryptocurrency resides within itself. How Are Cryptocurrencies Tracked? Cryptocurrencies hold a very simple data ledger file called a Blockchain which is unique to each individual user and his or her personal wallet. All transactions are logged and made available in a public ledger, which helps ensure their authenticity and prevents fraud. This process helps to prevent transactions from being duplicated and people from copying the Cryptocurrencies. It should be noted that while every Bitcoin records the digital address of every wallet it touches, the Bitcoin system does NOT record the names of the individuals who own those wallets. In practical terms, this means that every Bitcoin transaction is digitally confirmed while being completely anonymous at the same time. So, although miners cannot easily see your personal identity, they can see the history of your Bitcoin wallet. This is a good thing, as a public history adds transparency and security, and helps discourage people from using Bitcoins for illegal purposes. What are the Fees to Use Cryptocurrencies? There are very small fees to use Cryptocurrencies. While there are no ongoing banking fees with Cryptocurrencies because there are no banks involved, you will pay small fees to three groups of Cryptocurrency services: the servers (nodes) that support the network of miners, the online exchanges that convert the Cryptocurrencies into dollars, and the mining pools you may join. Some server nodes owners will charge one-time transaction fees of a few cents every time you send money across their nodes, while online exchanges will also

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