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The thing that most surprised us about digital currency while doing this assignment was that it is not officially backed up by an actual bank or government of any type. The currency itself is protected all by online cryptography and sometimes random people can volunteer to watch over and fight off hackers if they come. We just found this very shocking as people do have to put a lot of trust into these currencies when investing in them. We ourselves don't actually have any experiences with digital currencies. However, we do think that it could be useful for online shopping in the future. We also found it to be an interesting topic because not a lot of people are fully aware of digital currencies. They may have heard of them before but they have not actually taken the time to sit down and educate themselves on the topic. We think if we were to pass on our knowledge to a family member or friend, we would definitely recommend doing you research. Really make sure you are using trustworthy resources and that you are one hundred percent sure this is what you want to get into.

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This video is explaining how bitcoin and other online currencies work. Bitcoin wouldn't exist without people or cryptography. It is said to possibly be one of the first digital currencies. The transaction block chain is decentralized, so anyone can volunteer to keep track of the transactions and other things like that. Bitcoin is definitely a risky investment, there is a lot of security problems because there is no regulatory rules. You also have no one exactly looking over your money, it is protected by cryptography which can normally be pretty secure as long as everything is used properly. You should definitely make sure you are educated in all these digital currencies before you consider purchasing them as they can be quite risky.

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0:00 / 9:25•Watch full video

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This video is explaining how bitcoin is actually worth something. It has a value because of its scarcity, there is a certain cap on how many bitcoins can exist at one given time. It is also considered a more efficient form of currency and easier to use as there is no banks controlling it. Bitcoin is very divisible meaning you can very easily buy stuff with it in the up and coming society we live in today. Everything is based on the trust you put on it, there is no intrinsic value. The value of one bitcoin however does fluctuate, no one is quite sure how much they are actually worth. This could affect us in my opinion because if you are purchasing bitcoin you do not know what you are getting yourself into. The value of it can go down at any time if people stop investing. We chose this video because we feel as though it does show the real reason as to why digital currency does have real value. It shows how the value works and how it can fluctuate.

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Digital Currency Has Real Value — Here’s Why | CNBC

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This video is a step by step video tutorial on how to buy bitcoin and other digital currencies. This is not a Canadian video however, the websites are all available in Canada and do follow the same procedures. This video is explaining how you can view the worth of the bitcoin and then showing you the proper and safe websites that you can use to make the investment if you are looking to do so. We chose this video because we believe it is very easy to follow and it is directed towards beginners so it can be good and useful for people who are looking to invest in bitcoin or any other form of digital currency that is on the market right now. We also believe it is very important for people to be aware of how to make this transaction safely and to make sure that they are not using scam websites. Everyone should be aware of how to safely purchase bitcoin.

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How To Buy Cryptocurrencies? (2018 Guide For Beginners)

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This video is of a man explaining all the ways you can use your bitcoin in Canada. There is apps and websites and even designated cards that you can use to spend your bitcoin in your everyday life. Bitcoin is up and coming, you can pay your bills through the app that he showed in the video called Bylls. He is showing people that they don't need to use banks in your everyday life, he is explaining how you can live strictly off bitcoin. We chose this video because we feel as though people are always confused on how you will be able to make everyday purchases through using digital currency. So this video here is very helpful and straight forward in explaining it and it might help a lot of people out who have invested and now are not sure what to do with it.

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How to Never use a Bank again! Live on Bitcoin in Canada 2019 - Here's how

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Digital currency is money that can only be used online and isn't able to transfer into physical money. The currency itself is created by computer algorithms. You can only use this currency on the internet where it is accepted. Not all websites will accept this currency as a form of payment. Even though digital currency is used in Canada it isn't actually considered an official currency in Canada. The only official currency here is our Canadian dollar. Some of the risks of using this currency include having fewer protections, not being insured, your investment could be high risk, exchanging digital currency can be difficult, transactions can't be reversed and you may become vulnerable to fraud. Tips to being safe while using this currency include protect your digital currency wallet, be aware of polices regarding digital currencies before making purchases, wait for your conformations before completing a purchase, know what the actual cost is after fees, and make sure you think about the future in case someone needs to access your funds.
We chose this website because it gives a good understanding of what digital currency is. This website also gives some risks and good tips when using this currency.

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This page is about cryptocurrencies, which are not issued or governed by a government or central bank.

Digital currency is electronic money. It's not available as bills or coins.

Cryptocurrencies are a type of digital currency created using computer algorithms. The most popular cryptocurrency is Bitcoin.

No single organization, such as a central bank, creates digital currencies. Digital currencies are based on a decentralized, peer-to-peer (P2P) network. The "peers" in this network are the people that take part in digital currency transactions, and their computers make up the network.

Using digital currencies

You can use digital currencies to buy goods and services on the Internet and in stores that accept digital currencies. You may also buy and sell digital currency on open exchanges, called digital currency or cryptocurrency exchanges. An open exchange is similar to a stock market.

To use digital currencies, you need to create a digital currency wallet to store and transfer digital currencies. You can store your wallet yourself or have a wallet provider manage your digital currency for you.

You need a "public key" and a "private key" to use your wallet. Keys are made up of a random sequence of numbers and letters.

Public keys are used to identify your wallet.

Private keys are used to unlock your wallet and access your money. Private keys should be kept secret.

All transactions are recorded to a public ledger or "blockchain" that everyone can see.

Digital currencies are not a legal tender

Digital currencies, such as Bitcoin or other cryptocurrencies, are not legal tender in Canada. Only the Canadian dollar is considered official currency in Canada.

The Currency Act defines legal tender.

Legal tender is defined as:

bank notes issued by the Bank of Canada under the Bank of Canada Act

coins issued under the Royal Canadian Mint Act

Digital currencies are not supported by any government or central authority, such as the Bank of Canada.

Financial institutions, such as banks or credit unions, don't manage or oversee digital currency.

Automated exchangers (Bitcoin ATMs)

Automated exchangers are commonly referred to as Bitcoin ATM s. They are vending machines that allow you to insert cash in exchange for bitcoins, and in some cases bitcoins for cash.

Unlike traditional ATMs, they are not connected to your bank, credit union or the Interac network. You may be charged a transaction fee for using a Bitcoin ATM. Shop around as exchange fees vary and you may be able to get lower rates elsewhere.

Generally, when you use a Bitcoin ATM, the machine:

reads the bills you insert

converts the amount into an amount of bitcoins

sends the equivalent of bitcoins to the Bitcoin address you enter

How tax rules apply to digital currency

Tax rules apply to digital currency transactions, including those made with cryptocurrencies. Using digital currency does not exempt consumers from Canadian tax obligations.

This means digital currencies are subject to the Income Tax Act.

Buying goods or services using digital currency

Goods purchased using digital currency must be included in the seller's income for tax purposes. GST/ HST also applies on the fair market value of any goods or services you buy using digital currency.

Buying and selling digital currency like a commodity

When you file your taxes you must report any gains or losses from selling or buying digital currencies.

Digital currencies are considered a commodity and are subject to the barter rules of the Income Tax Act. Not reporting income from such transactions is illegal.
Learn more about the Canada Revenue Agency's reporting requirements for digital currencies.​

Risks of using digital currency

Using digital currency has certain risks.

You may have fewer protections

You may not have access to a complaint-handling procedure like you would with other payment methods, such as debit and credit cards.

Even if you use a wallet provider to help you manage your digital currency, the provider does not have to help you get your funds back if something goes wrong with your transaction.

Your deposit is not insured

It's your responsibility to protect your digital currency wallet.

Federal or provincial deposit insurance plans don't cover digital currency.

For example, the Canada Deposit Insurance Corporation only covers eligible deposits in Canadian dollars at member financial institutions if the institution fails.

If the currency exchange or wallet provider that has your digital currency fails or goes bankrupt, your funds won't be protected.

Your investment may be high risk

Digital currencies can be risky investments because their value can change quickly. The value of a digital currency can increase or decrease over a very short period of time. Such changes in value can be difficult to predict.

When you exchange your digital currency for traditional currency, such as the Canadian dollar, it may be worth less than when you bought it.

You may have a hard time exchanging your digital currency

Digital currencies can be difficult to buy and use. You may not be able to exchange them easily for cash or to purchase goods and services.

Merchants don't have to accept digital currencies as payment. They don't have to exchange digital currencies for traditional currencies, such as the Canadian dollar.

You may be exposed to fraud

Digital currencies may be vulnerable to fraud, theft and hackers.

All transactions are recorded to a public ledger or "blockchain". The blockchain may include information such as transaction amounts, wallet addresses and the public keys of the sender and recipient.

Digital currencies are also sometimes used to support illegal activities.

Transactions are not reversible

Purchases and transactions made with digital currencies are not reversible.

This means:

you can't reverse the charges if you didn't receive the product

you can't get your money back unless the seller agrees

you might not be able to stop a payment

Tips for using digital currency

Here are a few tips to help you protect yourself when using digital currency.

Protect your wallet

Take steps to protect your wallet:

keep your wallet, and any backups, in a safe place

encrypt your wallet using encryption software

encrypt any copies you make or online backups

set a password to help prevent thieves from withdrawing your funds

use a strong password that contains letters, numbers and symbols

Know the merchant's refund, return and dispute policies

Before you make a purchase, find out:

what the exchange rate will be

if refunds are available

if refunds will be processed in digital currency, Canadian dollars or store credit

how to contact someone if there's a problem

Wait for multiple confirmations before completing a transaction

It can take 10 minutes or more for a digital currency transaction to be confirmed. Confirmation happens when users on the network verify the transaction. During that time, a transaction could be reversed and you could lose your funds to a dishonest user.

Understand what the actual costs will be

Find out if there are any mark-ups or other fees. Find out what will happen if the rate changes before the exchange is completed.

Think about the future

Consider what will happen if you fall ill or die and can no longer access your wallet.

If no one knows the locations and passwords of your wallets when you are gone, the funds can't be recovered.

Consider having a backup plan for your peers and family.

Related links

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personal finance; consumer protection; currency; banking; income tax; taxes

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This page is about cryptocurrencies, which are not issued or governed by a government or central bank. Digital currency is electronic money. It's not available as bills or coins. Cryptocurrencies are a type of digital currency created using computer algorithms. The most popular cryptocurrency is Bitcoin.

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Hi everyone, My name is Carly Matieuski & my partner is Kylie Gosse. On this wall we will be teaching you about digital currency (also known as bitcoins) Digital currency can be used to purchase items and services online.

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Website #2 How Bitcoins Might Impact Your Income Taxes

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Website #2 How Bitcoins Might Impact Your Income Taxes

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Even though digital currency isn't considered an official currency in Canada you still have to declare any income used on purchases or received from selling anything using this currency. Since digital currency isn't considered an official currency you must claim what it would've been considered as a Canadian dollar. This also applies if you use digital currency for a business. When you are claiming your income tax you must convert the money used or received into Canadian dollars for an accurate tax return. If you purchase any digital currency and sell it for profit then you have to declare a capital gain of whatever profit you received from this.
We chose this website because it explains how digital currency might impact your taxes and how you still need to declare it even though it isn't considered an official currency in Canada.

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CRA & Revenu Québec

Bitcoin is a relatively new e-currency payment system that is not operated by a centralized government authority like most other currencies. Popular for online payments and transfers due to its built-in encryption and security methods, Bitcoin has captured the attention of many non-traditionalists and tech-minded people. It has also captured the attention of the Canada Revenue Agency, who has altered existing tax codes to help address profits and transactions associated with virtual currencies.

Trade and Barter Transactions With Virtual Currencies

Transactions made with bitcoins or other virtual currency are covered by the section of the tax code that governs barter and trade transactions. Under this portion of the tax code, you must declare any income received or expenses made, regardless of whether any actual cash was tied to the transaction.

For example, if you run a daycare and you accept eggs, bitcoins or any other type of trade in exchange for child care, you still are required to report these transactions on your income taxes. Since you can't declare bitcoins, eggs or other material items on your tax form, you must declare the typical dollar amount that you would have otherwise claimed for those services.

If you usually charge $200 per week for daycare services, you must declare $200 as income on your return - even if you accepted different types of payment. Similarly, the person who provided you with the trade may declare the $200 as an expense on their income tax return.

Using Virtual Currency for Your Business

In some cases, regular trade and barter rules do not apply. However, if you use Bitcoin or other virtual currency systems in the operation of your business or self-employment activities, you are still responsible for claiming these purchases and payments as usual on your tax return.

To assign dollar amounts for these transactions, you must use the exchange rate between the virtual currency and the Canadian dollar on the day of the transaction.

For example, if you purchased inventory for your shop with Bitcoin and the cost was three bitcoins, you need to find the exchange rate for the day the purchase was made. If the exchange rate was $316 for one Bitcoin, your deduction for that inventory purchase would be $948.

Similarly, if you paid an employee using Bitcoin, you would have to convert the payment to Canadian dollars using the exchange rate from the day the payment was made. Your employee would have to use the exchange rate to determine how much income to declare.

Determining Capital Gains From Virtual Currencies

If you buy, hold and sell virtual currency, and make a profit in the process, you must claim that profit as a capital gains. The portion of the Canada Revenue Agency's tax code regarding securities exchanges applies to these transactions.

For example, if you purchased 200 bitcoins for $50,000, but sold them six months later for $62,400, you would have to declare a capital gain of $12,400.

With more than 20 years' experience helping Canadians file their taxes confidently and get all the money they deserve, TurboTax products, including TurboTax Free, are available at www.turbotax.ca.

Bitcoin is a relatively new e-currency payment system that is not operated by a centralized government authority like most other currencies. Popular for online payments and transfers due to its built-in encryption and security methods, Bitcoin has captured the attention of many non-traditionalists and tech-minded people. It has also captured the attention of the Canada Revenue Agency, who has altered existing tax codes to help address profits and transactions associated with virtual currencies.

Trade and Barter Transactions With Virtual Currencies

Transactions made with bitcoins or other virtual currency are covered by the section of the tax code that governs barter and trade transactions. Under this portion of the tax code, you must declare any income received or expenses made, regardless of whether any actual cash was tied to the transaction.

For example, if you run a daycare and you accept eggs, bitcoins or any other type of trade in exchange for child care, you still are required to report these transactions on your income taxes. Since you can't declare bitcoins, eggs or other material items on your tax form, you must declare the typical dollar amount that you would have otherwise claimed for those services.

If you usually charge $200 per week for daycare services, you must declare $200 as income on your return - even if you accepted different types of payment. Similarly, the person who provided you with the trade may declare the $200 as an expense on their income tax return.

Using Virtual Currency for Your Business

In some cases, regular trade and barter rules do not apply. However, if you use Bitcoin or other virtual currency systems in the operation of your business or self-employment activities, you are still responsible for claiming these purchases and payments as usual on your tax return.

To assign dollar amounts for these transactions, you must use the exchange rate between the virtual currency and the Canadian dollar on the day of the transaction.

For example, if you purchased inventory for your shop with Bitcoin and the cost was three bitcoins, you need to find the exchange rate for the day the purchase was made. If the exchange rate was $316 for one Bitcoin, your deduction for that inventory purchase would be $948.

Similarly, if you paid an employee using Bitcoin, you would have to convert the payment to Canadian dollars using the exchange rate from the day the payment was made. Your employee would have to use the exchange rate to determine how much income to declare.

Determining Capital Gains From Virtual Currencies

If you buy, hold and sell virtual currency, and make a profit in the process, you must claim that profit as a capital gains. The portion of the Canada Revenue Agency's tax code regarding securities exchanges applies to these transactions.

For example, if you purchased 200 bitcoins for $50,000, but sold them six months later for $62,400, you would have to declare a capital gain of $12,400.

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How Bitcoins Might Impact Your Income Taxes | 2019 TurboTax® Canada Tips

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Bitcoin is a relatively new e-currency payment system that is not operated by a centralized government authority like most other currencies. Popular for online payments and transfers due to its built-in encryption and security methods, Bitcoin has captured the attention of many non-traditionalists and tech-minded people.

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Website #3 Bitcoin for Canadians: Where to buy it – and the taxes you’ll pay

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Website #3 Bitcoin for Canadians: Where to buy it – and the taxes you’ll pay

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The site QuadrigaCX.com is known as the largest place to exchange bitcoins in Canada. Another site you can purchase and exchange digital currency is Coinsquare.io. In order to use these sites you must have a valid email address and I.D. Neither of these sites accept credit cards though, so in order to purchase digital currency from these sites you will need to use an email transfer or a bank wire. Since these sites don't accept credit cards some Canadians started using Coinbase. Coinbase has recently decided to stop converting bitcoins into Canadian dollars. Another way to buy and sell digital currency is through trading with other bitcoin users.
Blockchain is a public ledger used to track bitcoin transactions. Every time a transaction is made it must be registered on this ledger.
We chose this website because it give information on where to exchange bitcoins in case anyone is interested in using digital currency.

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Bitcoin continued its gravity-defying trajectory on Wednesday, breaking through the C$16,000 mark.

The skyrocketing rise of the cryptocurrency this year, and particularly over the past few weeks, has prompted comparisons to the dot-com bubble of the late 1990s and the tulip bulb craze of the early 17th century, both textbook cases of booms that went bust, leaving many in financial ruin.

Indeed, "Bitcoin should not be seen an investment, it's speculation," Andreas Park, professor of finance at the University of Toronto, told Global News.
READ MORE: Tempted to invest in Bitcoin? Here are a few things to consider
Still, if you have a few extra dollars to spare - money you can lose with no consequence - where do you go to buy Bitcoin and other digital currencies?

The web is full of Bitcoin spams, and there's precious little out there about where Canadians, specifically, can find and trade digital tokens. Global News spoke to cryptocurrency experts to prepare a brief primer for Canucks.

Where to buy it

"Vancouver's QuadrigaCX.com is likely the country's largest exchange for Bitcoin," said James Kupka, communications director at Decentral, a Toronto-based cryptocurrency company founded by Anthony Diiorio, who used to be chief digital officer at the TMX Group and the Toronto Stock Exchange.

There's also Toronto's Coinsquare.io. Both require users to set up an account, with an on-boarding process similar to that required by traditional online investing platforms. At a minimum, you'll need an email address and ID.

Both exchanges accept e-transfers and bank wires for funding and withdrawal, among other options. Unfortunately, though, neither accepts credit cards.

For that, many turn to San Francisco-based Coinbase, which also allows Canadians to use their debit cards. However, as of September, Coinbase stopped supporting the conversion of digital currency into Canadian dollars, according to its website.

You can also buy and sell Bitcoin and other cryptocurrencies by trading directly with other users.

"To buy his first Bitcoin in 2012, [...] Diiorio used the localbitcoins.com website to find and meet up with a person looking to sell theirs," Kupka recalled. "They traded at a rate of $9.74 per 1 Bitcoin."

That rate is about 1,600 per cent higher today.
READ MORE: Winklevoss twins are now Bitcoin billionaires. What that means for the rest of us
A third way to get your hands on digital money is Bitcoin ATMs. Most major Canadian cities have a few, and a simple Google Map will reveal the closest one to you.
WATCH: Bitcoin: hot investment opportunity or looming bubble?
Yes, you can buy only a few dollars' worth of Bitcoin

One Bitcoin can be split into up to 100 million bits, so you don't have to purchase $16,000 of it. The smallest unit is called satoshi after Bitcoin's mysterious founder, Satoshi Nakamoto. It is currently worth $0.00016.

There are a couple of catches, though. One is that exchanges often require a minimum funding transfer of $100. The other is that Bitcoin transactions often come with steep fees (more on that below).
WATCH: Consumer Matters: What is 'cryptocurrency?'
Cryptocurrency wallets

If you aren't holding Bitcoin simply through an exchange, you'll need a digital wallet. Available in app or desktop format, a virtual currency wallet will create a digital address through which you can send or receive money. It works a lot like email, except that you'll need a new address for every transaction.

Processing wait times and fees

Every Bitcoin transaction must be registered on the blockchain, a shared public ledger. This is what allows for the existence of a digital currency in the first place. Before blockchain, everything digital could be duplicated. Now, it's possible to keep track of who owns what and when digital assets change hands.

But the necessity to confirm every transaction creates backlogs, with wait times of 10 minutes on average. It's also why Bitcoin transactions often aren't free.

Bitcoin depends on people and entities called miners that use an enormous computing power to maintain the network. Miners confirm transactions by including them in a new block on the blockchain and while they are rewarded with a set amount of new bitcoins for their labour, they also generally demand a processing fee.

"Miners get to pick which transactions they want to verify first and tend to pick the ones that are paying them the highest fees," said Park.

The average fee, which not long ago was US$7, currently sits at around US$60, he added.
READ MORE: New Bitcoin fraud sends real police officers to your door
How to track prices

For tracking cryptocurrency prices, " Coinmarketcap.com certainly is the largest cryptomarket tracking website out there," said Kupka.

However, he added, "I personally prefer Coinlib for its portfolio features that makes it easier for me to track market changes of the blockchain projects I care most about."

What you can buy with it

A growing number of retailers are now accepting bitcoins, from Etsy vendors to Expedia. Still, the list is rather short and living on Bitcoin alone would be a challenge.

On top of that, transaction fees often make small payments uneconomical with Bitcoin, according to Park.

Your virtual money is not insured

Federal and provincial deposit insurance doesn't extend to cryptocurrencies.

If the wallet provider or exchange that holds your money goes bankrupt, you are likely on your own.

Keep in mind that virtual currency exchanges have also been the victim of high-profile hacks leading to millions of dollars worth of virtual money stolen.
READ MORE: Want to buy Bitcoin? Do your homework first: B.C. regulators
Taxes

Think Bitcoin is beyond the reach of the Canada Revenue Agency? Think again.

"Using digital currency does not exempt taxpayers from Canadian tax obligations," the agency told Global News.

But which taxes apply depends on how you're using Bitcoin or other digital currencies.

If you're using your virtual tokens to pay for goods and services, the rules for barter transactions apply.

If, like most people, you're treating Bitcoin more like gold - buying it for the purpose of selling it at a later date for a profit - you'll have to declare any capital gains or losses on your tax return.

The CRA also pointed to this fact sheet on digital currencies for more information.

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Bitcoin for Canadians: Where to buy it - and the taxes you'll pay

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Bitcoin continued its gravity-defying trajectory on Wednesday, breaking through the C$16,000 mark. The skyrocketing rise of the cryptocurrency this year, and particularly over the past few weeks, has prompted comparisons to the dot-com bubble of the late 1990s and the tulip bulb craze of the early 17th century, both textbook cases of booms that went bust, leaving many in financial ruin.

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This website is going over the dangers of using bitcoin. First of bitcoin is not backed up by any government or banking once so ever. It is not backed by anything like normal paper money. It is backed up by solely just the trust that people put in it. This being said not many businesses accept bitcoin because of how dangerous and not monitored it is in general. If all bitcoin sales were to stop, everyone who had already invested in it would lose their money since it is not backed up by anything. Investing in these digital currencies is so risky and it is important for everyone to be aware of this. We chose this website because of its educational properties on how dangerous bitcoin can be and just to keep everyone in the loop before they consider investing in this currency.

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Bitcoin has been making waves in the market as of late. The all-digital currency has challenged the very foundations of the world's financial system and has raised the question: Can a currency exist that isn't backed by precious metals or national governments? While the currency is still in its infancy, it maintains the potential to continue to grow and evolve. Still, potential investors and miners should be aware that there is a high amount of risk in the currency.

The first thing you need to understand is that Bitcoin is not backed by any government, treasury, or central clearing house. Its value does not derive from gold or any other precious metal. Throughout history and up until 1971 most national currencies were backed by Gold or another commodity. After the end of the Bretton-Woods agreement, however, most currencies were allowed to float in the free market, with buyers and sellers determining the actual value of the currency. National currencies are backed by the full faith of their respective national governments, and often act as a sort of referendum on a given nation and its fiscal health. For example, an economically vibrant country with sound fiscal policies generally enjoys a currency that is high in value.

Bitcoin is backed by no one except the faith of buyers and sellers in the market. There is no central bank to monitor and adjust currency developments and no leading authority to oversee the currency's development and evolution. In a certain sense, Bitcoins derive their value from labor and electricity costs. In order to create a Bitcoin, a "miner" must use advanced computer hardware to solve complex equations. When the equation is completed, new Bitcoins are made. This creates a sort of inherent value in Bitcoin.

Still, only a small number of businesses (at the time of writing this article, about 1000) accept Bitcoins as payment. There are numerous Bitcoin exchanges, however, that allow users to exchange coins for money. By-and-large these exchanges have proven to be stable and Bitcoins have been largely liquid, meaning you can exchange them for cash. Recent days have seen the value of Bitcoins swing wildly, however, surging to over $250 dollars before plummeting back below $100 dollars. Under these wild swings, several exchanges were forced to close down.

If all of the Bitcoin exchanges were to close down and the currency became illiquid, any investors left holding Bitcoins would lose all of their money. Even if Bitcoin remains convertible with other currencies, the wild price swings could hurt a lot of investors. While Bitcoin is a very interesting concept, it would be foolhardy at the moment to invest money into the currency that you cannot afford to lose.

People and companies looking to mine Bitcoins should also be weary of the potential risks. Initially, mining was very cheap and anyone with a PC could create Bitcoins. Over time, however, the difficulty of solving equations has increased, requiring more powerful equipment and larger amounts of electricity. Now, mining equipment can cost upwards of $20,000 dollars and electricity bills for running the equipment can add up very quickly.

If Bitcoin collapses, all of the equipment will become largely useless and miners will still have to pay down their electricity bills. Any potential miner looking to get into the market should weigh the costs and risks very closely. If investors are looking to get involved in mining, the best method might be to spread risk among a pool of investors. That way, should the market head south, losses to individual investors will remain limited.

The old saying goes, that you shouldn't put all of your eggs in one basket. The same is true of Bitcoin. Investing a small amount of money that you can afford to lose might eventually generate you substantial profits. On the other hand, if you invest a lot of money, you could stand to lose your life's savings in the long run. Also, you should be aware that eventually a government or organization may feel threatened by Bitcoin and decide to bring it down. If the U.S. Treasury, for example, decided to invest large sums in theBitcoin to drive prices up before suddenly withdrawing and flooding the market by selling off the coins, it could potentially bring the entire currency down. While this may seem like a speculative conspiracy theory, it remains a real world risk.

In short, invest with caution!

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Bitcoin has been making waves in the market as of late. The all-digital currency has challenged the very foundations of the world's financial system and has raised the question: Can a currency exist that isn't backed by precious metals or national governments?

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This image shows how many Canadian citizens are turning away from using the Canadian dollar and instead are using digital currency. People are able to buy and sell this currency and even make profit in some cases which is beneficial to them.

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This image shows how our money is being sucked into the internet and becoming digital currency. I feel like it also shows how fast we can lose money when changing it into digital currency depending on if we are uneducated while using it. Another factor that could lead us to losing money using digital currency is if the want for it decreases.