Bitcoin: What You Need to Know

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Just this week Tesla TSLA said it will soon accept bitcoin as payment for its vehicles, and announced that it had purchased $ 1.5 billion worth of cryptocurrency as part of its cash reserves. Meanwhile, Uber UBER and MasterCard MA also said they plan to accept bitcoin. And BNY Mellon – the oldest American bank, whose history dates back to Alexander Hamilton’s founding of Bank of New York in 1784 – announced that it has formed a “digital assets” unit.

So if you’re ignoring bitcoin thinking it might just be a financial whim, now’s the time to watch out. Here’s What You Should Know.

Bitcoin is a cryptocurrency created in 2009 by an unknown person with the alias Satoshi Nakamoto. Transactions are anonymous and are executed without brokers or intermediaries.

You cannot use bitcoin physically – it is a digital currency. And it is decentralized, which means it is not controlled by a bank or government.

Right now it could be used everywhere from Overstock.com to PayPal – and that list is rapidly expanding.
Many people also see bitcoin as a good investment. And it certainly has this week as bitcoin hit an all-time high of $ 49,000 this week.

Where can I buy bitcoin?

Bitcoin is 100% digital. Marketplaces called “bitcoin exchanges” allow people to buy or sell bitcoins with various traditional currencies. Coinbase is a leading exchange, along with Coinmama, CEX.IO and Gemini.

Where do I keep my bitcoin?

Bitcoin is stored in a digital wallet, which is located in the cloud or on your computer. It’s like having a virtual bank account. But unlike bank accounts, bitcoin stored is not insured by the FDIC.

Wait, what’s Elon Musk got to do with this?

Elon Musk, CEO of Tesla and SpaceX, has a history of tweeting support for assets and transmitting their value, and the world’s richest man is a very big bitcoin booster.

“I think [bitcoin] is on the verge of widespread adoption among conventional finance folks, ” Musk said in a recent interview on the audio-only social app Clubhouse.

Not long after, as he formalized Tesla’s relationship with the cryptocurrency, the company’s announcements began to flow.

Is Bitcoin Safe?

The cryptocurrency is highly volatile and therefore very risky. In January, for example, bitcoin’s value rose to $ 42,000, fell to $ 30,000, and then rose back to $ 40,000 – all over the course of a week.

And there are some inherent dangers to a digital currency: a hacked server, a deleted file, or a lost password can mean that the money is lost forever.

—— CNN’s Paul R. La Monica, Chris Isidore, Tal Yellin and Hanna Ziady contributed to this report.

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