Bitcoin is a decentralized digital currency, and is the world’s largest cryptocurrency by market capitalization. Without any oversight from banks, governments or financial institutions, Bitcoin operates free from any centralized control. Bitcoin is considered a cryptocurrency because it uses cryptography, which is the practice that allows secure communication between the sender and the intended recipient.
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Unlike fiat, Bitcoin is created, distributed, and stored with the use of a decentralized ledger system known as the blockchain. The blockchain technology also regulates the release of new currency and verifies transactions. Every transaction is publicly broadcasted on the network and shared between servers, known as nodes. Anyone with internet access can setup a node. Determining who owns which coin is reached through a cryptographic consensus mechanism across these nodes, rather than relying on one single centralized authority of approval. The transactions are collected by miners into groups or “blocks”, hence the term blockchain. Therefore, the blockchain is considered the accounting bookkeeping of cryptocurrency.
The most reliable way to show proof of ownership of your crypto is through a private key. A private key is simply a form of cryptography that allows users to access their digital currencies. It is simply a set of numbers and letters that are encrypted through a mathematical algorithm. The private key serves as your public address where you can send and receive crypto to anyone in the world. The private key shields crypto-holders from potential theft or any unauthorized access to their funds. It is crucial to remember one’s private key and store it safely.
Bitcoin also uses Peer-To-Peer (P2P) technology to facilitate instant payments. P2P is a framework of computer-based systems that share and transmit information between one another via the internet. The term has its roots from locally-based hardware architecture, in which individuals (or peers) would share data of identical features and capabilities. Now, P2P encompasses Bitcoin miners who own the governing computing power to operate and participate in the Bitcoin network. Bitcoin miners are usually in charge of processing transactions on the blockchain, and are motivated by rewards.
One of the key characteristics of Bitcoin is its limited supply, when compared to fiat money than can be printed by central banks with unlimited supply. The creator of Bitcoin, Satoshi Nakamoto has capped the number of Bitcoin to 21 million. The supply of Bitcoin in existence is introduced at a fixed rate of one block, about every 10 minutes. Every four years, however, the number of Bitcoin released in each block is halved by 50%. The limited supply of Bitcoin keeps its scarce value, and prevents any potential inflation that might arise from unlimited supply. At the time of writing, there were 18,882,162.5 total Bitcoin in existence, but that number changes every time a block is mined. This leaves us, at the time of writing, with 2,117,837.5 Bitcoin left to be mined, which amounts to the total of 21 million Bitcoin. Out of all the total supply in existence, 89.9% of Bitcoin has already been issued. We cannot conclusively determine the amount of Bitcoin that has been lost in circulation as a lost Bitcoin looks the same on the blockchain as one that is not lost. We can only hypothesize the duration of Bitcoin that has sat in an unmoved address.
Like any other asset, Bitcoin can be converted into cash. There are numerous exchanges where you can carry out such transaction. Here is a step by step on how to sell Bitcoin and send money (CAD funds) to your bank account:
Step 1: Send your cryptocurrency from your private wallet, or from another exchange to your Bitbuy account or to the exchange of your choice.
You will want to do some research on what is required to trade on these platforms (example, KYC prerequisite). Remember that some exchanges will not be able to take Canadian dollars, so you will need to use a Canadian platform like Bitbuy.
Step 2: Locate the digital currency you want to send to your Bitbuy account, and click on the ‘Deposit’ button that is located directly across from it. Your Bitbuy wallet address for the cryptocurrency you selected will be displayed on the following screen.
Step 3: Send your cryptocurrency to the wallet address that is displayed on your account.
Step 4: Cryptocurrency deposits made to your wallet address will be automatically credited to your account after a certain number of confirmations on the blockchain. For more information on how long this may take, please click here.
Now that you have the cryptocurrency of your choice on your Bitbuy account, it’s time to sell it for Canadian dollars.
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Step 5: Start your sale by clicking ‘Express Trade’ at the top of the page, then locate the digital currency you wish to sell and click the ‘Sell’ button.
Step 6: Enter the amount of cryptocurrency you are looking to sell, and the amount of Canadian dollars you will receive will be displayed below under ‘Transaction summary’. When you are ready to continue, click the ‘Sell’ button to complete the process.
Now that your Canadian Dollar balance is updated, it is time to send your Canadian dollars to your bank account.
Step 7: Click on the ‘Wallets’ button, located at the top of the page. To the right of ‘Canadian Dollars’, click on the ‘Withdraw’ button. Please note that you must have a minimum Canadian dollar balance of $50 to do so.
Step 8: Select the amount you want to withdraw and the withdrawal method of your preference. You will be asked to enter your two-factor authentication code to confirm the transaction, and complete your request.
Step 9: Receive the CAD funds from Bitbuy through your email if you chose to do an interac e-transfer withdrawal, or through the bank provider if you decide to do a bank wire withdrawal.
The cryptography behind crypto is fool-proof, as it is based on the SHA-256 algorithm; the same algorithm designed by the US National Security Agency. It is impossible to crack this algorithm as there are as many private keys that would have to be tested as there are atoms in the entire universe. But because Bitcoin operates without a central authority, there is no recourse if one makes a transaction error on their wallets.
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If security concerns have kept you from buying or selling Bitcoin or other cryptocurrency, then Bitbuy could be a great fit for you. Take advantage of one of the best cryptocurrency exchanges in Canada when it comes to security. Every transaction you make on Bitbuy is encrypted using Secure Socket Layer technology, with two-factor authentication solutions implemented throughout. Users can choose between text 2FA, enhanced Google 2FA or Authy. Bitbuy is the only Canadian cryptocurrency exchange audited for proof of reserves, solvency, and security practices. Bitbuy also operates with a 95% cold storage reserve for all digital currencies in custody and executes daily encrypted and distributed backups for disaster recovery. Cold storage is a cryptocurrency best practice. Since Bitcoin can be withdrawn instantly, cold storage prevents intruders from taking advantage of a security breach to withdraw the entire reserve. 95% of Bitbuy’s cryptocurrency reserves are stored offline to mitigate any potential security breaches.