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Bitcoin is a p2p digital asset, created in 2009 by a person or group of people under the pseudonym, Satoshi Nakamoto. Although there are numerous Digital Assets today, Bitcoin was released as open-source and is essentially the pioneer of this asset class. Due to the fact that it is a peer to peer network, there is no central authority. Instead, transactions are verified through network nodes and are recorded in a public ledger. This ledger is known as the blockchain.

While originally designed for being a ledger for bitcoin transactions, it has the potential for a multitude of uses. To put it simply, it is an ingenious invention, which records time-stamped data managed by several computers that are not owned by a single person or entity.

 

The blockchain network, unlike fiat currencies, lacks a central authority. Since there is no central authority to ‘hack’, the blockchain is immutable. Furthermore, since the ledger is public, the information in it is available for anyone to view and verify.

While originally designed for being a ledger for bitcoin transactions, it has the potential for a multitude of uses. To put it simply, it is an ingenious invention, which records time-stamped data managed by several computers that are not owned by a single person or entity.

 

The blockchain network, unlike fiat currencies, lacks a central authority. Since there is no central authority to ‘hack’, the blockchain is immutable. Furthermore, since the ledger is public, the information in it is available for anyone to view and verify.

Bitcoins are created by essentially having computers solve cryptographic problems to mimic the mining of a hard commodity like Gold. Gold miners use capital and labour and compete with other gold miners to extract a limited amount of gold from the Earth’s crust. Similarly, people or entities wanting to ‘mine’ Bitcoin purchase specialized hardware and incur labour costs to run their operations. They compete with other miners to solve an arbitrary yet complex math problem. The miner to solve this problem is rewarded the ‘block reward’. Currently, there are 12.5 Bitcoin mined approximately every 10 minutes

 

While fiat currencies have an unlimited supply, central banks can print as much as they want. Alternatively, Bitcoin has a supply that is tightly controlled by this underlying algorithm. A small number of new bitcoins are released to these and will continue to do so at a diminishing rate until a maximum of 21 million has been reached.

Due to the public nature of the blockchain, it allows transparency with a level of privacy. Using bitcoin as an example, a user’s identity is represented with a complex cryptographic public address. So while the public may view the transactions conducted by said address, no information on the blockchain would identify the owner of the address. However, if someone knows that an address belongs to you they would be able to see all transactions associated with that address.

 

One of the biggest advantages of blockchain is its immutability. Once a transaction has been entered and confirmed, it cannot be modified or tampered. Let’s use the bank example once more. Say you deposited $14,000 cash into your account, but someone at the bank deleted all records of this transaction and it did not appear on your account history. There would be no recourse to prove your deposit, since the bank is a central authority and they technically control your funds. Due to the decentralization and immutability of the blockchain, this problem does not occur as the deposit would be recorded on the public ledger.

A bitcoin wallet is a piece of software that stores your private keys. Your private keys are essentially the secret needed to prove you own your bitcoins. There are a few different types of wallets each with their own advantages and disadvantages. We are more than happy to help you get your wallet set-up and figure out which one is best for you.

Your Bitcoin wallet is what stores your Bitcoin and allows you to make transactions

A Bitcoin Wallet gives you ownership of a Bitcoin balance so that you can send and receive bitcoins. Although technically it is nothing more than a mobile app or computer program, it is essentially the personal bank account and ATM card of Bitcoin.

 

Similar to email, all Bitcoin wallets are compatible with each other. Therefore, users can send and receive bitcoins to each other without hindrance.

Are the bitcoins you bought burning a hole in your pocket? One of the questions we receive the most from people that are new to Bitcoin is ‘Where can I spend it?’ The places and ways to spend bitcoins is increasing steadily and rapidly. More and more major online retailers and local brick-and-mortar stores are starting to accept Bitcoin.

 

Below is a list of places to spend your bitcoins and services that help you use bitcoins to pay for things like bills and gift cards.

Altcoins are any digital cryptocurrency similar to, but not Bitcoin. Altcoins are created by diverging from Bitcoin consensus rules (the fundamental rules of the cryptocurrency’s network) or by developing a new cryptocurrency from scratch.

 

Whether an altcoin is using the same fundamentals as Bitcoin or is built from scratch, the coin will have an entirely different distributed ledger (blockchain).

 

Some popular altcoins include Litecoin, Bitcoin Cash, Dash and Ethereum.

Stablecoins are a class of digital cryptocurrency that are designed to offer price stability and are backed by a reserve asset.

 

Stablecoins attempt to peg their market value to some external reference such as a currency like the U.S. dollar or to a commodity’s price such as gold. Their price stability is achieved via collateralization (backing) or through algorithmic mechanisms of buying and selling the reference asset or its derivatives.

 

Advantages of asset backed Stablecoins are that coins are stabilized by assets that fluctuate outside of the cryptocurrency space, that is, the underlying asset is not correlated, reducing financial risk. Also, assuming they are managed in good faith, and have a mechanism for redeeming the asset/s backing them, Stablecoins are unlikely to drop below the value of the underlying physical asset, due to arbitrage.

Fiat-backed Stablecoins

Fiat-collateralized Stablecoins maintain a fiat currency reserve, like the U.S. dollar, as collateral to issue a suitable number of coins. These reserves are maintained by third-party regulated financial entities and are regularly audited for adherence to the necessary compliance. Stablecoins backed by fiat money are the most common.

 

Example: USD Coin (USDC)

Cryptocurrency-backed Stablecoins

Crypto-collateralized Stablecoins are backed by other cryptocurrencies and are conceptually similar to fiat-backed Stablecoins. The significant difference between the two is that while fiat collateralization typically happens off the blockchain, the cryptocurrency asset used to back this type of Stablecoins is done on the blockchain, using smart contracts in a more decentralized fashion. Since the reserve cryptocurrency may also be prone to high volatility, for such Stablecoins a larger number of cryptocurrency tokens is maintained as reserve for issuing a lower number of Stablecoins.

 

Example: DAI

Commodity-backed Stablecoins

Stablecoins backed by commodities such as precious metals (gold, silver etc.) have their value fixed to one or more of these commodities and are redeemable for such (more or less) on demand. The amount of commodity used to back the Stablecoin has to reflect the circulating supply of the Stablecoin. Therefore, holders of commodity-backed Stablecoins can redeem their Stablecoins at the conversion rate to take possession of real assets.

 

Example: Tether Gold (XAU₮)

Coin Nerds advises the public of a notable increase in fraudulent emails, letters and phone calls directed to Canadian citizens by scammers posing as the Canada Revenue Agency (CRA) in an attempt to extract payment. Do not send Bitcoin in response to such requests. We encourage you to contact the CRA to be familiar with their rules and procedures.

 

Coin Nerds operates a bitcoin payment service. Like other network providers, Coin Nerds is not responsible for your actions on the network.

 

Coin Nerds cannot help you if you deal with someone or for a purpose that you haven’t taken the steps to verify.

 

Remember: bitcoin transactions are irreversible

How can you tell if you are the target of this type of scam?

The caller claims that they are from the CRA, attempts to gain your trust and asks you to provide personal information.

The caller states that you owe a large sum of money in taxes to the CRA.

The caller claims that if you fail to pay your taxes owed at a Bitcoin ATM immediately, you will be sent to jail.

The caller will do anything to keep you on the phone and pressure you to make the transaction.

Coin Nerds advises the public of a notable increase in fraudulent emails, letters and phone calls directed to Canadian citizens by scammers posing as the Royal Canadian Mounted Police (RCMP) or other police agencies in an attempt to extract payment. Do not send Bitcoin in response to such requests. We encourage you to contact the police if you receive such a call.

 

Coin Nerds operates a bitcoin payment service. Like other network providers, Coin Nerds is not responsible for your actions on the network.

 

Coin Nerds cannot help you if you deal with someone or for a purpose that you haven’t taken the steps to verify.

 

Remember: bitcoin transactions are irreversible.

How can you tell if you are the target of this type of scam?

 

The caller will try to convince you that they are an officer from the RCMP.

The caller will try to convince you that they have one of your loved ones in custody.

The caller will explain that the only way for your family member or friend to be released is if you transfer an amount of coins to the QR Bitcoin address provided.

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