Bitcoin: what you need to know

Bitcoin: what you need to know

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This week alone, Tesla (TSLA) said it would soon accept bitcoin as payment for its vehicles, and announced that it had bought $ 1.5 billion in cryptocurrency as part of its cash holdings. Meanwhile, it Uber (UBER) and Mastercard (MA) also said they plan to accept bitcoin. And BNY Mellon – the oldest American bank whose history dates back to Alexander Hamilton’s founding of the Bank of New York in 1784 – announced that it had formed a ‘digital assets’ unit.

So if you ignore bitcoin and think it might just be a financial fad, now is the time to pay attention. This is what you need to know.

Bitcoin is a cryptocurrency created in 2009 by an unknown person using the alias Satoshi Nakamoto. Transactions are anonymous and are done without brokers or intermediaries.

You can not physically use bitcoin – it is a digital currency. And it’s decentralized, which means it’s not controlled by a bank or government.

Right now it could be used everywhere from Overstock.com to PayPal – and the list expands rapidly.
Many people also consider bitcoin to be a good investment. And that was certainly true this week, as bitcoin peaked at $ 49,000 this week.

Where can I buy bitcoin?

Bitcoin is 100% digital. Markets called ‘bitcoin exchanges’ allow people to buy or sell bitcoins with different traditional currencies. Coinbase is a leading exchange, along with Coinmama, CEX.IO and Gemini.

Where do I keep my bitcoin?

Bitcoin is stored in a digital wallet that is on the cloud or on your computer. It’s like having a virtual bank account. But unlike bank accounts, stored bitcoin is not insured by the FDIC.

Wait, what has Elon Musk got to do with this?

Elon Musk, CEO of Tesla and SpaceX, has a history of supporting assets that raise their value, and the world’s richest man is a very big bitcoin booster.

“I think [bitcoin] is on the verge of gaining broad acceptance through conventional finance, ‘Musk said in a recent interview on the audio-only social app Clubhouse.

Not long after, after formalizing Tesla’s relationship with the crypto, the corporate announcements began to flow.

Is bitcoin safe?

The crypto-currency is very volatile and therefore very risky. In January, for example, bitcoin’s value rose to $ 42,000, dropped to $ 30,000 and then rose again to $ 40,000 – all in the course of one week.

And there are inherent dangers to a digital currency: a hacked server, a deleted file, or a lost password can mean that the funds are lost forever.

CNN’s Paul R. La Monica, Chris Isidore, Tal Yellin and Hanna Ziady contributed to this report.

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