Want to buy a house — or maybe just a drink or two? While the standard purchase price might be in dollars, a new currency is taking hold in today’s changing markets.
Bitcoin, a digital, unregulated currency, is growing in popularity. With enough bitcoin, you could purchase a little piece of paradise in Nicaragua or a million-dollar property, complete with private forest, in Canada — though those of us with lighter pockets might have to settle for a drink or two at a British pub.
Sound intriguing? Here’s a quick guide to the bitcoin phenomenon — and what it could buy you.
What Is Bitcoin?
Bitcoin is a decentralized currency, meaning no single bank or country regulates it.
The theory behind bitcoin is that no banking institution will ever control or devalue a cryptocurrency in the hands of the wider public. Investors make purchases and transactions electronically, and while no single unit of currency is ever physically printed, bitcoin carries the same sort of value as dollars, euro, sterling and gold. (Like this idea? Click to tweet it!)
When bitcoin first appeared on the scene in 2009, one unit was worth about $27. It’s come a long way since then: CoinDesk, a site dedicated to digital currency, lists its value as $500 at the time of writing.
How to Start Collecting Bitcoin
While computer-savvy folks with serious hardware might be keen to mine bitcoin, many people prefer to purchase it through an exchange or directly from an individual seller. You could also visit a bitcoin ATM. Once you buy your bitcoin, make sure to protect it with an unhackable digital or paper wallet, formulating a complex pass key that only you can decrypt.
Don’t get too excited about the possibility of unlimited money, though: the mathematical proof that governs bitcoin ensures that only 21 million bitcoins can exist.
What Can You Buy With Your Bitcoin?
If real estate is what you’re after, you’ve got a few options. With the steadily growing interest in the cryptocurrency, realtors are clamoring to list properties for bitcoin value. This sprawling, $7.85 million, 25,000-square-foot Las Vegas mansion is next to a golf course. If you’d like something a little smaller, consider this ranch-style house in the Hamptons for only $799,000.
But if property is too steep a buy, you could just grab a pint at The Pembury Tavern in East London — the world’s first bitcoin pub, along with its sister pubs in Cambridge, Norwich and Petersborough. Their owner, Stephen Early, is a former computer scientist who wasn’t sure what to do with his early investment. After the revelation that if he wanted to spend his bitcoin on a pint or two, others might as well, he custom-built his payment system. The bartender simply creates a QR code on the digital cash register, then the customer uses their digital wallet to take a screen capture of the code and confirm the transaction.
All That Glitters Isn’t Bitcoin
Before you go chasing the bitcoin gold rush, consider the risks involved. Like any hot property, there’s bound to be some volatility — especially after a recent IRS ruling that bitcoin must be treated as property. Couple that with high-profile shutdowns of the Bitcoin 24 exchange in Germany and the online marketplace Silk Road in the U.S., as well as Apple’s ban on bitcoin-related apps, and what’s to come is anyone’s guess. It certainly warrants some prudence.
For more on bitcoin, see CoinDesk’s detailed guide.
Your Turn: Have you bought or mined bitcoin?
Akil Wingate (@AkilWingate) is a writer and singer-songwriter, explorer, foodie and fitness enthusiast. He loves to see the world from the leather seat of a motorbike called adventure.