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Bitcoin and the Future of Cryptocurrency

Bitcoin has a mixed reputation. There are utopian idealists that imagine Bitcoin as a way to a future of no central governments and no banking cabals lording over the masses. And then there are the naysayers that claim that Bitcoin is a scam with nothing to back it. Before you go filling up your Bitcoin wallet, you will want to learn as much about Bitcoin as possible and decide where you think it will go in the future.

bitcoinImage Source: Pexels

What backs Bitcoin? That is an interesting questions that crypto naysayers bring up when they try to assert that there is no place for Bitcoin to go but the ash heap of history. Who actually guarantees the value of Bitcoin? There is nothing tangible behind it. But, the other side is this: There is nothing backing up the dollar, except the full faith and credit of the United States government. Which is not exactly a tangible entity.

What is Bitcoin? You could say that Bitcoin is a currency, but it is not backed by any country or government. It can act as untraceable money, which gives it an advantage on the black market, where drug users can utilize it to buy illicit material, or terrorists can use it to transfer value to various cells around the world. But that is true of any currency.

Bitcoin can also be looked at as a financial asset, like a stock or a bond. The crazy price volatility may scare away some people, but it attracts those looking for risk and reward. And because there is no company backing the price, like there is with a stock, there is no fundamental value to Bitcoin. So the naysayers have a case.

Buying Bitcoin can be a bit of an unfamiliar task for most people. Because the mechanisms behind the whole currency are not what you might be used to in normal financial transactions. Bitcoin has nothing physical backing it. They basically exist and reside at computer addresses. Which, if you buy Bitcoin, you need to remember or write down, or else you will have no way to prove that you own Bitcoin.

Once you buy Bitcoin, you will want to store it in a Bitcoin wallet. A Bitcoin wallet can be web-based, basically a website that will store your Bitcoin address and allow you to access if when you need to pay for something or trade your Bitcoin for cash or something else.

If you have concerns about web-based Bitcoin wallets, you can invest in a hardware wallet, which is essentially a USB drive where you can move your Bitcoin off the web storage onto the USB and take it out of your computer. That means it is offline and in cold storage, inaccessible by hackers.

The more paranoid of Bitcoin holders also have their Bitcoin address written down or printed on paper and kept in a household safe, which keeps them as safe as possible. There is no other, more secure, storage strategy.

All these potential issues with Bitcoin make for an uncertain future. There is no way to truly know where Bitcoin is going to go, so the best thing to do is just enjoy the ride.

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