As Bitcoin soars past $14,000, mainstream media and news outlets have started to notice. After a serious security debacle with a single exchange back in 2014, Bitcoin has rebounded from a price of under $200 to $14,807.99 as of this posting. And now this humble blog is starting to get cryptocurrency pitches. Bloggers, are you ready for Bitcoin and cryptocurrency? Bitcoin, Ethereum, and other cryptocurrencies are becoming more and more popular, and with it comes a lot of opportunities – whether you’re a lifestyle blogger, fashion blogger, casual blogger or anyone really. I’ve put together this list of useful things bloggers should know about Bitcoin and other cryptocurrencies. In this article we’ll cover:
- Bitcoin Basics – What is Bitcoin and Why Do I Care?
- Getting Started With Bitcoin – Get an Address, Buy Bitcoin, Start Shopping
- Cryptocurrency Tips – Security and Other Crypto Tips
Before getting started, let me preface everything by saying, that everything here is opinion only and should not be considered professional advice. Seek professional financial advice when making investment decisions.
Bitcoin Basics
While cryptocurrency and “FinTech” might seem super technical, Bitcoin is actually fairly user-friendly and easy to use. Here is some basic information on Bitcoin.
What is Bitcoin?
First up, let’s talk about what Bitcoin is. Bitcoin is a digital currency, also known as a cryptocurrency, that creates a decentralized peer-to-peer payment network. Decentralized cryptocurrency means there isn’t one single entity controlling Bitcoin – no one owns or controls the network or the coin. Unlike fiat money which has values that can be affected by inflation or can be printed when needed (which can lead to serious financial issues like those that led to a ZWD100 trillion bill – that’s 100,000,000,000,000 – in Zimbambe,) Bitcoin value is based on actual consumer usage and limited supply and demand. There’s a fixed amount of Bitcoin available by design. Similar to the price of gold, the value of Bitcoin is driven by the real market value of people who are using and/or investing in Bitcoin – not by a government, CEO, or Treasury Department.
This is worth less than a Bitcoin…
Bitcoin transactions are processed and verified by thousands of independently owned Bitcoin mining machines around the world. Hundreds of thousands of Bitcoin transactions occur each day. (You can actually become a Bitcoin miner fairly easily, but that’s a whole other post.) Each Bitcoin transaction is stored on a public ledger, or blockchain, that anyone can access however no personal information is ever tied to that transaction or Bitcoin address. While some claim that Bitcoin transactions are anonymous, there are services that can trace transactions to an individual and recently, the IRS won a case against Coinbase regarding the release of account information for certain accounts.
What’s The Benefit of Bitcoin?
The advantage of Bitcoin and most other cryptocurrencies is that it allows individuals and businesses to safely and securely exchange money without a middleman or third-party bank or service. For example, if I wanted to send you $100 right now, I’d have to write a check, send a wire transfer or Paypal it. When I do any of those, a transaction is processed through my bank to your bank before the funds are available to you. (Add a few extra steps and days to exchange currencies if sending money internationally.) If I wanted to send you $100 in Bitcoin, I can send it to your Bitcoin address, you can track the transaction on the public ledger, and receive it in a matter of minutes (or hours – depending on how many transactions are being processed.) When you consider bank fees, transfer fees, processing fees, etc, the ability to directly send someone money can be a real cost and time-saver.
(Note, there are many cryptocurrencies out there that offer faster transaction times or reduced fees compared to Bitcoin. We’re not saying that Bitcoin is the best at either of these, but as the ground-breaker crypto, it has found its place as a store of value for those who hold it. Many consider Bitcoin to be the “first-generation” of cryptocurrency while coins like Ripple, Monero, and Ethereum are 2nd generation.)
Why is the Price of Bitcoin Going Up All of a Sudden?
While Bitcoin has been popping up in the news a lot recently, Bitcoin has actually been on a consistent upward trend for over a year. There have been a few weeks where the price has dropped “dramatically” only for the price to rebound to higher prices later. In case you didn’t do the math, $200 to $14,000 is already a 6900% growth. To give perspective, Apple would currently be at $7700 if it matched the growth rate of Bitcoin. Since there is a limited supply of Bitcoin available, the price of Bitcoin will likely continue to climb as the demand increases.
But Why Do I Care About Bitcoin?
If the cost-saving benefits aren’t enough, here’s another reason you should care about Bitcoin. Unlike stock, when you own a Bitcoin, you have something that you can actually use. The Bitcoin itself has value. You can buy things with Bitcoin. And I’m not just talking random techie items from China. With Bitcoin-based debit cards like Shift card, I’m talking fast food, Amazon, Walmart, or any other place that accepts a VISA debit card. There are also plenty of retailers, like Dell, Newegg, Overstock and more businesses that accept direct Bitcoin payments.
On the flip-side, if you’re a blogger or small business owner, you can get paid in Bitcoin, Ethereum, or other cryptocurrencies. One advantage? No Paypal/VISA processing fees. Another advantage? Immediate access to your funds. When you receive Bitcoin, it’s yours and available for you to spend immediately – no waiting days for bank transfers or pending deposits. Bitcoin can also be particularly useful when working with someone based in another country. If payments are made with Bitcoin or “crypto”, there are no exchange rates. 1 BTC in America = 1 BTC in Great Britain = 1 BTC in Japan. (Compared to 1 USD = 0.747 GBP = 112.420 JPY….)
Note: Different cryptocurrency exchanges will show slightly different prices at times depending on supply and demand in that country.
I also want to point out that if Bitcoin continues its upward trend, then holding Bitcoin is like having a savings account that pays you interest. (Anyone else remember when banks actually offered those?) The value of your Bitcoin grows as the value of Bitcoin grows.
The Price of Bitcoin is Ridonculous. Isn’t it Too Late to Get Involved with Bitcoin?
No. It’s not too late. Less than two years ago the price of Bitcoin was $200. There were people wondering if the “Bitcoin wave” was over then…. they didn’t invest because thought they were too late. Less than 3 months ago, the price of Bitcoin was $5500; the price had skyrocketed. Again, people were wondering if “That’s it, is the bubble going to burst? It’s too late for me.” Now, Bitcoin has smashed through the $10,000 barrier and is breaking new records. While I would never presume to tell you what to do with your money, I will say I REALLY wish I’d invested more earlier on. There are Bitcoin billionaires now.
Yes, the price of Bitcoin is high. It’s cheaper to buy some cars than it is to buy a single Bitcoin. But, unlike a car, you don’t have to buy a whole Bitcoin. And also unlike a car, a part of a Bitcoin can still grow in value. (Imagine buying a steering wheel and having it grow into a Porshe in 3 years.) You can buy a little bit of Bitcoin (Coinbase even allows you to set-up recurring Bitcoin purchases) gradually to fit your budget and let the Bitcoin grow. It’s a great way to diversify your savings or even to start saving for your kids.
I’ve heard JPMorgan, Mark Cuban, and/or ______ have said Bitcoin is bad/a fraud/high risk. Are they right?
No…. and yes.
Yes, Bitcoin is bad for banks simply for the reason that some people might prefer to be their own banks, keeping their own money safe and away from monthly banking fees or online security breaches. (Realistically, I wouldn’t expect the CEO of a leading brokerage firm to be thrilled about an alternative investment option that outperforms their stock returns by 1,000s of %.)
Yes, Bitcoin is bad for companies like SWIFT and Paypal that make money off of processing fees. If people/businesses are able to send money directly to each other, well, what do they need payment processors for? The middlemen companies that make money when you send money definitely will think Bitcoin is bad.
Yes, Bitcoin can be considered high risk in the same way investing in Google was high risk when it IPO’d in 2004. BTC is first to market, breaking molds, doing things differently, and challenging the status quo. Consider this – Bitcoin currently has a market cap value of over $245 billion, almost 3 times higher than PayPal’s market cap of $87.5 billion. (Google’s current market cap is $712 billion.) That being said, the common adage to never invest more money than you’re willing to lose is always something to keep in mind.
No, Bitcoin is not a fraud. Bitcoin isn’t some cockamamie idea or get rich quick scheme that someone threw together. Real people (like me), real businesses (like IBM, Sony, and Microsoft) and real COUNTRIES (like China and India) are embracing and using Bitcoin, other cryptocurrencies and the blockchain technology Bitcoin created. Bills and groceries are being paid and gifts are being bought with REAL, non-fraudulent Bitcoin.
Getting Started With Bitcoin
Now you know the basics about Bitcoin, it’s time to share how easy it is to start buying, selling, and shopping with Bitcoin.
Get a Bitcoin Address
The first thing you’ll need is a Bitcoin wallet aka Bitcoin address. The Bitcoin address is a unique payment address that only you have control of via a private key phrase. The address is a random string of numbers and letters that do not contain any identifiable information about you.
Getting a Bitcoin address to receive or send Bitcoin is free. I recommend setting up an account on Coinbase. They’re a reputable exchange that allows you to buy, sell, receive and send Bitcoin, Ethereum, and Litecoin. It’s free to create a Coinbase account and you’ll get a bonus $10 with your first $100 purchase if you sign-up to Coinbase using this link.
Once you’ve verified your Coinbase account, log-in and click on the Tools menu to access the Addresses section and generate a unique Bitcoin address. This address is just for you and can be used once or multiple times. You give this address to people who want to send you Bitcoin. Other people give you their Bitcoin address for you to send them Bitcoin. It’s very important you double check your Bitcoin address when sending or receiving Bitcoin. There are no “takebacks” here. Once you send the Bitcoin to an address, the transfer process happens immediately and cannot be undone, even if you make a typing mistake.
How to Buy Bitcoin
After setting up your Coinbase account, you’ll need to set-up a Payment Method to purchase Bitcoin. You can purchase Bitcoin using your bank account, credit or debit card, or PayPal. Once a Payment Method is set-up and verified, just click the Buy/Sell menu option, then Buy BTC to buy your Bitcoin.
Reminder: You’ll get a bonus $10 after your first $100 Coinbase order if you sign-up with this link.
Shop with Bitcoin
While you can find retail stores and online business that accept Bitcoin payments, the easiest way to start shopping with Bitcoin is with a Bitcoin-based VISA card like Shift Card (which conveniently links to your Coinbase account.) Once you have Bitcoin in your Coinbase account, click here to request your Shift Card. You can use your Shift card just like any VISA debit card. Buy groceries, watch movies, pay for dinner, and even withdraw cash from the ATM. The card will pull the appropriate amount of Bitcoin from your Coinbase account to pay the bill.
User-tip: Make sure you make at least one purchase – even a tiny purchase – within the first few weeks of receiving your card. Shift has canceled new cards that were not used within a certain timeframe for security purposes.
Cryptocurrency Tips
Secure Your Money
One aspect of Bitcoin and cryptocurrency that appeals to many individuals is the level of control and security you have over your Bitcoin. You are able to create Bitcoin wallets that can only be accessed via a private key – a private key that only you have. The Bitcoin is tied to your unique wallet, not to a specific bank, so you can access your Bitcoin from any computer, anywhere in the world using your private key.
We recommend taking your security to the next level by protecting your currencies “off-line” using a hardware wallet like the Ledger Nano S or Trezor or by printing it out on paper. Make sure you put the offline wallet and private keys into a secure (and fireproof) safe so you don’t lose them. Being your own bank means if you lose your private keys, you lose your money.
Do Your Research
Before investing, working with or promoting Bitcoin or any other cryptocurrency out there, do your research. Just like in the stock market, there can be unscrupulous individuals who might want to take advantage of the Bitcoin hype and people not educating themselves properly beforehand. Here are a few great resources to help get you started:
Businesses, Bitcoin, and Taxes
Just like dollars, the profit you make in Bitcoin and cryptocurrency is considered property for tax purposes. Get a jump on the game by making yourself familiar with the IRS Virtual Currency guidelines here. If you have any questions, call the IRS and/or ask a tax professional for additional assistance.
Get Crypto to Blog or Vlog
With recent changes to YouTube’s advertising policy and new tweaks to the Facebook algorithm, traditional social media channels aren’t as profitable for bloggers as they once were. The emergence of blockchain technology has driven new content platforms that cut-out the middlemen, directly rewarding bloggers and video creators with cryptocurrency. One such platform is steemit.com. Steemit is a social media platform that rewards content creators with STEEM tokens based on how well their content performs on the site. The tokens can then be cashed out for Bitcoin, dollars or other coins. Have an article that goes viral? You actually get paid for that.
There are a lot of exciting things developing with Bitcoin, Ethereum and other new and emerging cryptocurrencies. We hope this post shared some useful and helpful information for your blog as the rise of Bitcoin and cryptocurrency continues.
This post is opinion only and should not be considered professional advice. Seek professional financial advice when making investment decisions.
that’s the best explanation of Bitcoin I’ve ever heard.
Thanks! Gil has done a good job of educating me. 🙂