Ryan Burningham English 1010 Instructor Bryson Newhart 12/9/2013

Crypto Currency and You Crypto currencies like Bitcoin are becoming more popular among a wider audience. The possibility to earn money from this type of currency is perhaps dwindling. If you would have noticed this little giant a year ago you might be a millionaire. Just like anything else that is speculative you can earn or loose a fortune. During the time that I was putting this paper together the price started at $100 per Bitcoin and shot up to $1300. The volatility of this currency has been one of its long feared draw back. Another drawback is the complexity of actually what it is. The idea of this currency is a trip down geek lane, but well worth the adventure. I will go in to detail about some ways you can take part in this volatile and profitable currency. Together we can decide if this is a good thing to invest in or just to watch from the sideline.

Janssen, Cory. "Crypto currency." Techopedias. N.p., n.d. Web. 12 Nov. 2013. <http://www.techopedia.com/definition/27531/cryptocurrency>. Crypto currency is a type of digital currency that is based on cryptography. Janssen in his article Techopedias explains in great detail how this type of currency is generated and how you might make a little money at it. I am going to give a quick crash course on Crypto Currency. Crypto currency uses cryptography for security, making it difficult to counterfeit. Public and private keys are often used to transfer the currency from one person to another. With traditional currency it is not too hard to understand how you use it. If you have $20 in cash then you take it to someone else and exchange that note for goods or services. If you dive a little deeper in to US Cash the government backs this money.

They guaranteed it has value and allows everyone in the world to use it for making exchanges for services. A crypto currency only has enough value as the know network puts value on it. We will get in to a little later about who actually sets the price. Moving along down the trail of knowledge another key attribute with crypto currency is every transaction is known throughout the whole network. Every person that is participating in the network knows what everyone else has done. Kind of like you have a notebook with every transaction that has ever occurred for every coin or crypto currency exchange. If you possess a coin then everyone in the network knows you own it. You can then exchange this coin for services or goods by transferring ownership to another person on the network. In my opinion if you give the article some time you can learn a lot about how a very different way of creating currency is done. I find it fascinating but I enjoy technical documents. Knowing more about how Bitcoins are created adds a little credibility to it because you are not just investing in thin air.

Graham-Smith, Darien. "How to: Earn, spend and mine bitcoins." PC & Tech Authority. N.p., n.d. Web. 19 Nov. 2013. <http://www.pcauthority.com.au/Feature/360866,how-to-earn-spend-and-minebitcoins.aspx>. Building up on the idea that Bitcoins can one day be a main stream currency you need to know it is safe. Grahm-Smith in his article How to: Earn, Spend and mine Bitcoins goes in to brief detail on how Bitcoins are produced. Bitcoins are generated through complex algorithms and mathematical processes done by miners. These miners computers solve mathematical problems and if they find the correct answer to the block they get the reward of 25 bitcoins for compensation. With the drastic change in currency prices it is hard to say how much 25 Bitcoins would be. But imagine with me if you could sell one Bitcoin for $1300 that would be a healthy amount of money for a little computer work. The amount of power required to mine these 25 coins alone is very very large. Currently the entire Bitcoin

processing power is 4.6 Peta Hashes / Sec. So a peta hash /sec is 1,000,000,000,000,000 hashes or calculations every second. So you have all these machines in the world that are crunching all this data just the chase 25 Bitcoins. The neat thing is the network usually gives out 25 coins every 10 minutes. The computing power that is required to mine these coins is far more than any one person can do. In the article by Graham-Smith they mention how you can pool your resources together with other miners that want to strike it rich. I do not go in to much detail about how to do this in this paper however it is worth researching out to get in on mining some digital currency. Looking how the Bitcoin world gives out coins it makes me want to become a miner so I can get a little bit out of the whole network. I agree with Graham-Smith that Bitcoins can be away to earn extra money with your computer just running a piece of software all night. Now lets talk about some of the lucky people in the Bitcoin world. The following article talks about a few that invested early and are millionaires today.

Simonite, Tom. "Rise Of The Bitcoin Millionaires." Technology Review 116.5 (2013): 20. Academic Search Premier. Web. 12 Nov. 2013. This subject is not complete with out a story about people that struck it rich from Bitcoins and crypto currency. Charlie Shrem and Roger Ver are now millionaires. You may think well where was I when this happened and why did I not invest? Well in 2009 when this system started people like Mr. Shrem, and Mr. Ver invested in Bitcoins. They saw this little currency starting out and decided to put time and effort, and more importantly money in to it. This has paid off for them in spades. Bitcoins have a relative max amount of total coins which is 21 million coins. This article talked about how great it is when Bitcoins are at $338 per. During the writing of this paper I have seen it swing in to the $1300 mark and back down to $800. Looks like a good investment if you could get your hands on a few of them. When the system was conceived they wanted to have an end in sight. After they hit

the 21 million mark of Bitcoins produced they stop. No more coins. This date should not occur for another 100 years from some analyses. You never know what could happen with new technologies being introduced to the system. What ways can you use Bitcoins? Bitcoins were used in early times for illegal business like drug trafficking and gambling sites. But you are seeing more and more companies like coffee shops or computer hardware shops accepting Bitcoins. The idea of sending the coins completely anonymous, which would be great for drug dealing,

"Bitcoin Exchange Scam Bitcoins Are Now Worthless." NERDrcom. N.p., n.d. Web. 19 Nov. 2013. <http://nerdr.com/bitcoin-exchange-scam-bitcoins-are-worthless/>. Nerdr.com did a very interesting article on how you get money in and out of Bitcoins. Now when I say money I mean USD or US dollars. Because lets face it to me and the US that is money. Nerdr supposedly has a source that was an operator of a Bitcoin exchange site. We have talked about many ways to earn bitcoins or speculate and buy low and sell high. But we have not talked about how to get money in and out of them. Well to do that you need a currency exchanger. Some of the most popular Bitcoin exchangers are Mt. Gox, and Bitstamp. They do more than 50% of the total transactions involving currency exchange. If you have a Bitcoin you can exchange the Bitcoin for US currency through one of these exchangers. They will then wire the money to your bank account. Or in the opposite you wire US currency to them and then you can buy bitcoins. In this article the writer talks about a anonymous person owned a exchanger and would change the price of the bitcoins arbitrarily at will. If you think about it currency does not have anything backing it. It is only worth what someone else will pay for it. So if the exchanger says they are worth $1.05 one day and $1.55 the next who is to say that is wrong. Besides you are getting a better rate for the coins you currently have. This will attract early investors to dump money in to the exchanger so they can get in on the bitcoins when they are low.

These investors expect a return later on down the road. The author of this article clearly points out there are 3 kinds of people that use bitcoins. One Money cleaners/ Tax evaders. Two those involved in non-legal activates. Lastly three the greedy. You can see how someone that has 1 million dollars would love to turn that in to 2 million. Or perhaps really go for it and turn it in to 100 million. That is entirely possible if you were in on it early. My opinion of this piece is that is sets you back on your heels and makes you think about what you are getting in to. Do you really want to be associated with people that are doing this type of transactions? I can see there are weak links in the system like currency exchanges. However in reality are people not free to make money on the stupidity or greed of others? They are not selling a fake product or tricking them. They are raising prices per demand warrants, and they determine how much demand that is. My opinion has changed back and forth from when I first started this paper. I used to be very skeptical of this entire system. I invested a small amount of money in to it and thought I was going to lose everything. Here at the end of the paper and looking back I have earned money from my small investment and wished I would have thrown more at it. I think perhaps it is good I was very skeptical because I did not go in to the whole process with no information.

"'Legitimate' Bitcoin's value soars after Senate hearing." BBC News. BBC, 19 Nov. 2013. Web. 19 Nov. 2013. <http://www.bbc.co.uk/news/technology-24986264>. The BBC did a quick article on a US senate hearing on the legality of Bitcoins. This article seems to lean to saying yes. After a senate hearing that ended November 19th 2013 the senate committee commended on virtual currencies were a legitimate financial services with the same benefits and risks as other online payment systems. (BBC) The confusion that started the senate hearings started after a website called the Silk Road was shut down. This website would trade drugs and illegal items for Bitcoins only. This facilitated to give the currency real world value and helped drug traffickers move

money semi anonymously. After hearing the details from leading experts they agreed to keep an eye on it but not go after it like an inherently illegal operation. It adds value to bitcoins with this hearing and did affect the price, which soared to $900 and then crashed to $727. US currency in my opinion can be used for good and bad. But is valuable and worth keeping around. Pagliery, Jose. "Ron Paul: Bitcoin could 'destroy the dollar'." CNNMoney. Cable News Network, 4 Dec. 2013. Web. 9 Dec. 2013. <http://money.cnn.com/2013/12/04/technology/bitcoinlibertarian/index.html>.

Jose Pagliery quoted Ron Paul There will be alternatives to the dollar, and this might be one of them," said former U.S. congressman Ron Paul. If people start using Bitcoins en masse, "it'll go down in history as the destroyer of the dollar," Paul added. This article came after the senate hearings and more information started to get out to more political public figures. Ron Paul later went on to talk about how the US government should not stamp out Bitcoins but should create an alternative. Ron Paul warned Governments absolutely demand a monopoly on money and credit. They're not going to give it up easily, The US government uses the Federal Reserve to create interest rates for borrowing and prints money when it needs it for projects. If you had a system of currency that is easily transported from one person to another with no fees? That would be completely outside of the current US money system. I believe you will see some major changes in currency in the upcoming months to 6 months. You will see the US economy embrace these types of currencies or the government will outlaw them completely.

In my opinion Bitcoins are a very interesting technology. You can earn a ton of money if you want to risk it all. If you threw $10,000 at it today you might double your money in a week. Or you could loose the whole $10,000. That is the risk when you invest in something with no intrinsic value. Some would argue that the stock market is much of the same thing. I would agree with most about this, however regulations and rules that are enforced on the stock market help prevent investors from being

taken advantage of. I would suggest that anyone interested in this investment to read all you can and decide for your self if it is worth investing in. You could win big or loose big. I would expect anyone that made it big to throw a few coins my way for helping you along your path of greatness. In true Bitcoin fashion of all the other articles I reviewed here is my Bitcoin address if you want to send a few my way. Bitcoin Address: 18zqfuQDZMU2Xioy45zLYYaTZnicZeaGZE

Works Cited Simonite, Tom. "Rise Of The Bitcoin Millionaires." Technology Review 116.5 (2013): 20. Academic Search Premier. Web. 12 Nov. 2013. Janssen, Cory. "Crypto currency." Techopedias. N.p., n.d. Web. 12 Nov. 2013. <http://www.techopedia.com/definition/27531/cryptocurrency>. Grahm-Smith, Darien. "How to: Earn, spend and mine bitcoins." PC & Tech Authority. N.p., n.d. Web. 19 Nov. 2013. <http://www.pcauthority.com.au/Feature/360866,how-to-earn-spend-and-minebitcoins.aspx>. "Bitcoin Exchange Scam Bitcoins Are Now Worthless." NERDrcom. N.p., n.d. Web. 19 Nov. 2013. <http://nerdr.com/bitcoin-exchange-scam-bitcoins-are-worthless/>. "'Legitimate' Bitcoin's value soars after Senate hearing." BBC News. BBC, 19 Nov. 2013. Web. 19 Nov. 2013. <http://www.bbc.co.uk/news/technology-24986264>. Pagliery, Jose. "Ron Paul: Bitcoin could 'destroy the dollar'." CNNMoney. Cable News Network, 4 Dec. 2013. Web. 9 Dec. 2013. <http://money.cnn.com/2013/12/04/technology/bitcoinlibertarian/index.html>.