So many people are talking about Bitcoin! Here's a little primer so you understand the basics of this new type of currency.
Bitcoin. Crypto-currency. Blockchain. These buzzwords are being thrown around like everyone knows what they mean... but do they?
"Absolutely not, No," said Alon Goren, a financial technology entrepreneur based in Los Angeles. He also hosts Crypto Invest Summit, one of the largest cryptocurrency investment events each year.
"The average person definitely doesn’t understand and the average person who is a bitcoin millionaire probably doesn’t understand, for the most part," continued Goren.
He's so into this stuff, his wife even wrote a book on it: Bitcoin for Babies.
Let's start with the basics: cryptocurrency refers to new types of digital money that use complex math equations instead of bank records to verify transactions.
"There are over 1500+ cryptocurrencies... and they all do different things," said Goren.
Bitcoin the most widely known, so it’s super popular.
"Bitcoin is getting all the publicity because it’s the first major one. It got the most adoption and it really was revolutionary in what it did," explained Goren.
Like cash, cryptocurrency is anonymous. But unlike cash, it’s independent of banks or government - it carries its own record of everywhere it’s ever been exchanged.
"The reason why that’s special is that it’s trustless - Which means you don’t have to have a middleman."
The biggest thing holding bitcoin back? Slow transaction time, but startup companies are working to improve that. The issue - a worldwide network of computers must approve each exchange, which takes time. These computers are called miners - they do the work and their owners are rewarded with a little Bitcoin for themselves as sort of a prize.
"Just like somebody is mining gold in a mountain, they’re mining bitcoin by solving these transactions and verifying them," said Goren.
So why are investors going wild over these new currencies like Bitcoin and similar cryptocurrencies like Lightcoin and Ethereum?
"There are lots and lots of very valuable tools being built on it and that’s what’s building the value in it," concluded Goren.
Right now, just a handful of big businesses accept Bitcoin as a payment type - you won't find it as a checkout option on Amazon, but Overstock.com is one of the pioneers in accepting it. You can see a list of some other companies here.
You can also buy Bitcoin from several places - Coinbase is one of the most popular websites to do this, Square Cash also makes it really easy to purchase Bitcoin. Just keep in mind it's best to fully understand what you're getting into before you plunk down your cash.
Finally, here are some resources Goren recommended to learn more about Bitcoin: Cointelegraph, Crowdfund Insider and Coinlist. If you're interested in attending the Crypto Invest Summit you can use the code RICHONTECH to take 20% off your ticket.
Are you subscribed to the Rich on Tech podcast? Daily updates Monday through Friday, then a longer Q&A show on the weekends. Here's a listen!
[protected-iframe id="4ba6eef7fc24275a7e8be54ecc20203c-41641936-42315212" info="https://player.pippa.io/5a788c1e77abb830441900e8/episodes/whole-foods-perk-for-amazon-credit-cardholders?theme=default&cover=1&latest=1" width="100%" height="110px" frameborder="0"]