Answer:
Bitcoin is the most well know of the cyber currencies. There are a number of others, and they all work in a similar fashion is how they are created (thru datamining) and their storage. They are traded in ways similar to securities .
Bitcoin itself seems to be a safe item. Whether it is a good investment is beyond my expertise. The SEC is looking at ways to manage the investment methods of the cybercurrencies and is proposing some controls. Again, talk to an investment professional on these matters.
There are two areas that can be a way to totally lose what you have put in bitcoin and cybercurrencies. That is the concern of this article.
Bitcoin and cybercurrencies are kept in digital wallets and the transactions are maintained thru block chains. The wallets require when you create them to set up a password and/or other secure ways to access them. Nobody else knows what these secure methods you have used to secure them. Nobody else has nay access to your bitcoin or cyber currencies without these codes. To make them more secure so they cannot just be guessed, most wallets limit you on attempts.
Now for the dangers.
First danger is if someone else gets of guesses your password/secure control, then at that point they have full access to your money. The problem is if they steal it then, or take unauthorized, there is no way to recover the money, unless you know who and can get court to agree and then that they have any left to get back. So, theft of your secure login information mans that most likely you are losing all you have in it. It is not like a bank with insurance etc. to reimburse you, you lost it.
The second danger is if you forget or lose your secure access codes, likewise the money is gone. There I no backdoor an organization can go in and access it and then give back, it is gone. No one can then access it. Two horror stories I have heard on this is first a person who bought bit coin a number of years ago and lost or forgot his code. It has grown in value a ton and as they have tried combinations, they think is it, they are down to one last attempt and that bitcoin/money is gone if not remembered now. The second is a person who bought some bitcoin a number of years ago and now as some type of dementia and does not remember and no one in his family or friends has any idea and that investment is totally gone unless his mind clears on that one day and he tells someone the code.
So be cautious in investing in bitcoin, I am neither suggesting or saying do or not do, but critically write down and record several places the codes if you do (bank safety deposit box may be good idea) or give to a trusted individual (remember danger one. Bitcoin does have lots of interesting possibilities and has a lot of public interest so we will see what happens. Remember bitcoin only started in 2007 so it is very recent, the USA dollar started about 1792 so been around longer. Remember with the dollar tit was a way to stabilize currency in the USA as each state had done their own money prior and much of it was worthless.
Thanks to several people at the Walker Chamber for questions on this.
Send me your questions about computers to my e-mail dwight@dwightwatt.com and tell me you read this in this paper. I will pick a question to answer each week.
Dwight Watt does computer work for businesses, individuals and organizations and teaches about computers at a technical college in northwest Georgia. His webpage is www.dwightwatt.com.
