The opening of new Bitcoin ATMs in Toronto may have some people looking for more information on the digital currency that’s earned controversy even as it gains in popularity. Here’s all you need to know about Bitcoin:
What is it?
Bitcoin is a type of virtual currency that was created in 2009 and has been growing more prevalent ever since. The currency, which is not regulated by any bank or third-party financial overseer, allows people to make one-to-one transactions across borders. In the United States, Bitcoins are officially viewed as pieces of property rather than legal tender, according to a recent ruling by the Internal Revenue Service.
How does it work?
Users can install a Bitcoin wallet on their computer or mobile phone, which will generate a special address to which others can send payments. Transactions can take place between individuals, although a growing number of high-profile businesses have started accepting Bitcoin payments. These include computer retailers Dell and Tiger Direct and discount clothing store Overstock.com.
How much is it worth?
The value of Bitcoins has fluctuated wildly over the past year, trading as low as $100 and as high as $1,100. Currently, 1 bitcoin converts to about C$600.
Are there risks?
Financial authorities around the world have spoken out about perceived risks with the virtual currency. While the Canadian government has not issued any formal statement on Bitcoin, internal memos acquired under the Access to Information Act suggest Ottawa has been briefed on the risks. These include pseudo-anonymity, the ability to purchase the currencies with cash, the ease of moving digital funds across borders and the lack of restrictions on deposits and withdrawals. Financial authorities in the U.S., such as the Securities and Exchange Commission and the Consumer Financial Protection Bureau, have both warned the public that Bitcoins are not backed by the government and are therefore popular tools among hackers and scammers.
How can I get some?
North American users wanting to acquire Bitcoins will most commonly have to start by visiting a Bitcoin Exchange, which will allow them to purchase the virtual currency with traditional money. There are a variety of Bitcoin exchanges online, some of which have had to shut down due to instability and security concerns. Bitcoin ATMs are also beginning to crop up, including existing machines in Toronto and Vancouver.