HomeMy WebLinkAboutThe Citizen, 2018-02-01, Page 11THE CITIZEN, THURSDAY, FEBRUARY 1, 2018. PAGE 11.
Bitcoins: What they are and how they came to be
Cryptocurrency
Cryptocurrency is a new hot word in the financial industry, refering to digital currencies that are
regulated through encryption and "mined" by computers. While bitcoins have been around for
nearly a decade, they didn't make front page news until recently when the price of the currency
soared to thousands of dollars per unit. (Ms photo)
MS — As of September, 2017, one
bitcoin was equal to nearly $4,900
Canadian ($4,000 U.S.) according to
the CoinDesk calculator.
Considering bitcoin is such a highly
valued yet volatile form of currency,
many people have questions as to
how bitcoins were created and how
they are used.
Bitcoin is a relatively new
currency that was created in 2009 by
an anonymous person (or group)
using the alias Satoshi Nakamoto.
Bitcoins are produced and traded in
the virtual world. In a relatively
short period of time, bitcoins went
from being worth pennies to
thousands of dollars. Unlike other
forms of currency, which are
controlled by a central authority of a
particular country, bitcoins are
completely virtual.
• How to get bitcoins: Bitcoins
are not acquired in the same way as
other currencies. Bitcoins can be
bought and sold in marketplaces
called "bitcoin exchanges". These
online trading areas enable people to
buy and sell bitcoins using various
currencies, says CNN Money.
Similarly, people can send bitcoins
to one another using mobile apps or
a computer, much like one would
make digital transfers at a bank.
Bitcoins are not based on gold or
another backing currency, but rather
on mathematics. Instead of a federal
reserve deciding on when to print
and distribute money, bitcoins are
created as a reward for mining.
"Mining" involves a special open
source software that is designed to
solve math problems. As a reward
for solving these problems, people
are rewarded with bitcoins. This
Real estate can require reserves
Continued from page 10
debt or existing mortgage payments,
may want to pay down those debts
before investing in real estate.
• Down payments: According to
Wells Fargo, mortgage insurance
does not cover investment property,
and loans typically require a
minimum down payment of 20 per
cent of the value of the property. So
prospective investors cannot count
on mortgage insurance to finance
their investments in real estate.
Investors should not just make sure
they can meet that 20 per cent
requirement, but also ensure they
have enough capital left after
making their down payments to
address any repairs that need to be
made. If not, they might have trouble
attracting renters willing to pay
enough in rent.
• Interest rates: Prospective real
estate investors may be surprised to
learn that investment property loans
are often subject to higher interest
rates than those for home buyers
borrowing to purchase a primary
residence, says Quicken Loans.
Investors should not count on getting
the same or better interest rates for
their investment properties that they
did when buying the homes they
currently live in.
• Financial reserves: Some
lenders may require that prospective
investors have sizable financial
reserves before they will lend them
money to invest in real estate. Some
may require that borrowers have
several months' worth of reserves to
finance both their personal lives and
their investments. If a 20 per cent
down payment would make that
impossible, then prospective
investors may want to wait a little
longer to invest and save more
money until their financial reserves
would prove more acceptable to
lenders.
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and other deals in our
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Investing in real estate can yield
big returns. But first-time investors
should know that such investments
are vastly different than investing in
a home for oneself
holdice
FINANCIAL
SERVICES
PEAK Investment Services Inc.
Susan Alexander, CFP CLU CHS EPC
Doug Sholdice
472 Turnberry St.
PO Box 69 Brussels,
Ontario NOG 1H0
www.sholdicefinancial.com
Phone:
519.887.2662
creates an incentive for people to
mine.
Bitcoin mining is designed to
require exertion and take time so that
the rate resembles the rate at which
commodities like gold would be
mined from the ground, offers
Bitcoinmining.com. According to
ABC News, available bitcoins are
hidden amid a complex encrypted
computer program. Users'
computers work around the clock to
solve a complicated mathematical
problem in order to release new
coins. The system requires
more work to get coins as time goes
by.
• How are bitcoins stored:
Bitcoins are stored in a digital
bitcoin wallet. Only 21 million
bitcoins can be found by miners so
the value of the system is preserved.
To date, not all bitcoins have been
mined. Every bitcoin transaction is
completely transparent, which
means they can be traced back to
creation. The "block chain" is a
public ledger where every bitcoin
transaction that has ever taken place
is registered.
• Anonymity: Even though
bitcoin transactions are recorded
publicly, the names of buyers and
sellers are never revealed. Only a
wallet ID is recorded. This enables
bitcoin users to buy or sell anything
without it being traced back to them.
While many legitimate businesses
now accept bitcoins, bitcoins also
are highly valued for black market
ventures like purchasing drugs and
illegal weapons.
Bitcoins are changing the way
people see money and store their
private wealth. The concept
decentralizes money and makes the
bitcoin exchange a relatively
transparent process.
DONALD A ANDREW
ACCOUNTING
Accounting & Income Tax Services for
FARMS, BUSINESSES & INDIVIDUALS
296 Ross St., Lucknow
Ph. 519-528-3019
dandrew@ hurontel.on.ca
INCOME TAX SERVICE
Farm, Business, Personal
• complete year-round service including tax audit representation
• E -file available
Stephen Thompson
R.R. #2, Clinton 519-482-3244
stevethompson @tcc.on.ca
Pe -P
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iverside
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401 Albert Street, Box 340 , Brussels, ON NOG 1H0
Phone: 519-887-6336
Fax: 519-887-6438
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