Thread: Cryptocurrency / Bitcoin

Hey folks,
I thought I'd bring up the topic of cryptocurrency, as it's something that interests me, and I think could help both providers and clients. Especially now with all the online services, and the recent thread about why some clients don't want to use them, re payments.
Be warned this is a long post, a lot of stuff in it. If this is way more text than you expected, time to stop now. If not, allons y!
TL;DR
Why would I want to do this?
- it's a way to instantly transfer something of value to another person somewhat anonymously
- it can be easily converted into real money in a bank account
- there is also a risk involved due to the volatility. If you hold on to the crypto for too long before converting it to fiat, the price could go down and you could lose value. Conversely if the price goes up, you could gain value
The too long version:
I'm sure by now everyone has at least heard of bitcoin. It's the big dog of crypto, was the first real implementation of it, and definitely the most lucrative. A lot of people have also probably heard that it's only used for evil, that it's really shady, and very difficult to deal with. Hopefully I can help dispel some of those thoughts.
So what is it really? It's a currency that is not centrally controlled. And what does that mean? Well, unlike fiat currency, such as Canadian dollars, there is no central authority that governs the making, distribution, value Etc.
Essentially bitcoin is controlled by a network of computers that collectively keep track of all transactions. This network also issues new bitcoins for participating in the network. There is a hard limit of 21 million bitcoins that can ever exist. This is a control put in place by the mysterious person(s) who created it in the first place. Other cryptocurrencies are done in a similar manner, while some are less distributed.
So that's a rough non-techy overview of the technical side of it, now let's talk about what you can do with it.
When you get right down to it, it's money. It's something that you can trade for other things. Not quite as easily as you can with fiat money, but that's the long and short of it.
You can exchange it for fiat currency via a third party. As I write this, a single bitcoin is worth over $9400 USD (13000 CAD). You can buy/send/receive partial bitcoins.
It's value is very volatile, especially right now. So you could buy some bitcoin at 9400 USD and tomorrow it could be worth $8000 USD or $10000 USD. It's hard to predict. Right now there's a high probability the value will continue to increase over the short term because of an event coming up in the next few days that makes it about twice as hard to get as it is right now. More or less. But I won't really get into that.
So back to why I'm posting this and how it can help this industry.
Right now, exchanging fiat currency with a provider other than in person handing over of physical money is fraught with issues. Etransfers are easily traceable. Using a CC is the same. Ditto PayPal. Some providers will accept a gift card of some sort, which is somewhat less traceable, but means you are basically trading money for something else as payment.
So why not use crypto? I've mostly talked about bitcoin, but there are multiple other types of cryptocurrencies out there.
If providers were willing to accept a cryptocurrency as payment, the transaction can be completed online fairly anonymously. That's not to say it's not traceable, it completely is, but it leaves a different trail than most fiat based transfers. Plus there are ways to make them more anonymous, but that's a whole other story.
Now, down to the process. It takes a bit to get setup initially, but once setup, transactions are pretty easy. It's pretty similar to signing up with a bank to open an account.
Step 1 - you need to register with an exchange that conducts business with Canadians. I'd recommend Kraken. They've been around awhile and are serious about security. There are others as well. This involves creating an account on the exchange, using an email address (go protonmail!) And setting up your account with your real information and bank account info. This all gets verified and you need to provide copies of documents to do so. It's part of the anti money laundering rules that exchanges operate under.
Step 2 - once you are setup and have a bank account linked, you are pretty much ready to receive crypto. If you want to send crypto, the next step is to buy some. You need to send the exchange some fiat to do so. Depending on the exchange this could be an interac etransfer, a wire transfer, or with Kraken you can even walk into a post office and hand over cash (for a fee). Once the fiat arrives on the exchange (depending on the funding method it can be almost instant, or take a few days) you are ready to buy.
Step 3 - Time to buy some crypto! What you are doing is asking the other users of the exchange to take your money and send you crypto. The simplest method is to use the market price. This will get actioned pretty much immediately and now you will have crypto available in your exchange wallet.
Whoa now old nerdy guy, this is a lot of reading and sounds shady and complicated. And WTF is a wallet?
It sounds more complicated than it is. Conceptually it's like a regular wallet. I won't get into the technical aspect of it but it's a repository for crypto. Each type of crypto has a separate wallet.
Ok. So now you have a wallet with some crypto in it. Now what?
If you want to send it to someone else, you ask them for their wallet address, and then perform a transfer. For bitcoin it takes anywhere from 20 minutes to an hour on average for the transfer to complete. This is because of that network across the globe that I talked about earlier. Every transaction on the network is queued and processed and double triple etc checks are done to make sure it's valid. Once it is marked as valid on the network, it appears as sent and will be in the receivers wallet.
Once someone has crypto, it is very easy to send to someone else. There are apps that you can use to instantly send between two wallets, as much as you want, basically for free.
So if someone wanted to pay a provider for a service, they could instantly send them crypto. Once sent, it cannot be recovered unless the recipient agrees to send it back.
Great. So it's a harder to track way to send fake money then. Wonderous!
Well the great thing is you can easily trade it for fiat currency again. Go back to your exchange, sell your crypto for fiat, and have the exchange send it to your verified bank account - it takes up to 5 days to receive.
Ok weirdo, once again whyyyyy would I want to do this?
- it's a way to instantly transfer something of value to another person somewhat anonymously
- it can be easily converted into real money in a bank account
- there is also a risk involved due to the volatility. If you hold on to the crypto for too long before converting it to fiat, the price could go down and you could lose value. Conversely if the price goes up, you could gain value
Personally I've done very well over the short and long term by holding onto bitcoin for certain periods. With the volatility right now, buying at the right moment you could double your investment. Or you could just as easily lose it.
As with every type of currency transaction there is risk involved. With traditional fiat transfers, it's very traceable. With crypto, it's a bit harder to trace and there are ways to make it even harder, but for the most part it won't show up on a bank statement when you are sending it to someone which helps the clients. For the providers it can add a bit more of a process to cash out vs physical cash.
There's a lot more than can be covered here, especially around security, trading and wallets. I'm happy to answer questions to the best of my ability.

A very useful post, thank you.

Coming a bit late to this, but there's three major issues for me.
The first is the volatility of the currency. IMO it's still too high for BTC to be really useful. It's very hard to set meaningful rates in BTC right now. Using BTC to transfer a fixed amount of some other currency is... viable, provided you can agree the amount to transfer and then get it done quickly (before anything changes too much).
The second issue is wallets - AFAIK there's no recovery mechanisms, and you MUST remember your password. Lose that, and you've lost your wallet and everything in it.
The third is the fact that BTC exchanges get shut down sometimes. That may be because LE do it, or for other reasons (e.g. Mt Gox). If your exchange goes down then again, you've probably lost everything in it.

I only bet on sports when the value of the cryptocurrency is worth the maximum price. I have been interested in sports betting and casinos for a very long time, and most of all I don't like unpredictable outcomes. Such situations are not comforting, but I'm used to taking risks, I'm not afraid of that and I still don't give up on it. I've been betting since childhood (that's how I helped my mother with the money), and I know for sure that I'll be doing this all my entire life. Now there are more and more cryptocurrencies on the market that you don't even know which one is better to buy. But most likely I'll be devoted to http://lambo2btc.com/litecoincasino .