Down the Bitcoin Rabbit Hole...
Updated: Jan 9
It just seemed too intimidating to figure out what cryptocurrency is, let alone how I could intelligently add it to my investment portfolio. So I have been avoiding it......until yesterday.
In full disclosure I am just scratching the surface on understanding cryptocurrency, blockchain, mining etc.... But when something is down 18% I figured it may be a buying opportunity. And it would motivate me to study the technology. And so into the rabbit hole I go......
What is cryptocurrency?
It is a form of money or a way of paying someone without the need for a centralized banking system. It can be used like money or can be used as a form of investment. The two most popular cryptocurrencies are Bitcoin and Ethereum but there are A LOT of others..
What is bitcoin mining?
Bitcoin mining is essentially running high powered servers to solve complex computational math problems. The first to solve the problem is awarded the next block of bitcoins and the transational fees for updating the ledger. Bitcoin mining accomplishes two major purposes. First, its the way new cryptocurrency is brought into circulation. Second, it is the activity in which new transactions are confirmed by the network and a critical component of the maintenance and development of the blockchain ledger. Since cryptocurrency is tied to a decentralized financial system the ledger is essentially in the public domain. Here is a short tutorial which explains it well:
How do you buy bitcoin or other cryptocurrency?
If you are just getting started or just want to play around to learn, I suggest you just use Coinbase. Its as easy as downloading to your phone and hooking up to your financial institution. Its as easy as using apps like Etrade, etc..
If you would like to read the original 9 page white paper explaining the fundamentals you can find it here.