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Friday, December 18, 2020

Cryptocurrency

The grand-daddy of crypto is, and always will be, bitcoin.  There's a lot of really interesting stuff you can learn about this topic, but we're going to focus on the financial aspects.  That means we won't be talking about things like the blockchain or the lightning network, as cool as they are.

Cryptocurrencies are digital, not physical.  The "private key" which gives access to a bitcoin account is just a very long sequence of characters, like a very long password.  If you know the private key, you have access to spend the bitcoins in that account (by transferring them to another bitcoin account owned by someone else, like a merchant).  You can also buy and sell cryptocurrencies on "exchanges" which are online marketplaces for crypto.

Important things to know about bitcoin (BTC), the original cryptocurrency:

  • Currently worth about $20,000 per whole bitcoin (year 2020)
  • Divisible to eight decimal places - you can possess as little as 0.00000001 BTC
  • "Mining" is no longer practical, so the only way to acquire bitcoin now is to buy it

Pseudo-anonymous

It's true that there is nothing on the bitcoin ledger (called the blockchain) which contains personal information that would identify who owns what accounts.  However, merchants and vendors may retain records on customers