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Hey folks, 

 

I thought I'd bring up the topic of cryptocurrency, as it's something that interests me, and I think could help both providers and clients. Especially now with all the online services, and the recent thread about why some clients don't want to use them, re payments.

 

Be warned this is a long post, a lot of stuff in it.  If this is way more text than you expected, time to stop now.  If not, allons y!

 

TL;DR

 

Why would I want to do this?

 

- it's a way to instantly transfer something of value to another person somewhat anonymously 

- it can be easily converted into real money in a bank account

- there is also a risk involved due to the volatility.  If you hold on to the crypto for too long before converting it to fiat, the price could go down and you could lose value.  Conversely if the price goes up, you could gain value 

 

The too long version:

 

I'm sure by now everyone has at least heard of bitcoin.  It's the big dog of crypto, was the first real implementation of it, and definitely the most lucrative. A lot of people have also probably heard that it's only used for evil, that it's really shady, and very difficult to deal with.  Hopefully I can help dispel some of those thoughts.

 

So what is it really?  It's a currency that is not centrally controlled.   And what does that mean? Well, unlike fiat currency, such as Canadian dollars, there is no central authority that governs the making, distribution, value Etc.

 

Essentially bitcoin is controlled by a network of computers that collectively keep track of all transactions.  This network also issues new bitcoins for participating in the network. There is a hard limit of 21 million bitcoins that can ever exist.  This is a control put in place by the mysterious person(s) who created it in the first place.  Other cryptocurrencies are done in a similar manner, while some are less distributed. 

 

So that's a rough non-techy overview of the technical side of it, now let's talk about what you can do with it.  

 

When you get right down to it, it's money.  It's something that you can trade for other things.  Not quite as easily as you can with fiat money, but that's the long and short of it.  

 

You can exchange it for fiat currency via a third party.  As I write this, a single bitcoin is worth over $9400 USD (13000 CAD).  You can buy/send/receive partial bitcoins.

 

It's value is very volatile, especially right now.  So you could buy some bitcoin at 9400 USD and tomorrow it could be worth $8000 USD or $10000 USD.  It's hard to predict. Right now there's a high probability the value will continue to increase over the short term because of an event coming up in the next few days that makes it about twice as hard to get as it is right now.  More or less. But I won't really get into that.

 

So back to why I'm posting this and how it can help this industry. 

 

Right now, exchanging fiat currency with a provider other than in person handing over of physical money is fraught with issues.  Etransfers are easily traceable. Using a CC is the same. Ditto PayPal. Some providers will accept a gift card of some sort, which is somewhat less traceable, but means you are basically trading money for something else as payment.

 

So why not use crypto?  I've mostly talked about bitcoin, but there are multiple other types of cryptocurrencies out there.

 

If providers were willing to accept a cryptocurrency as payment, the transaction can be completed online fairly anonymously.  That's not to say it's not traceable, it completely is, but it leaves a different trail than most fiat based transfers.   Plus there are ways to make them more anonymous, but that's a whole other story.

 

Now, down to the process.  It takes a bit to get setup initially, but once setup, transactions are pretty easy.  It's pretty similar to signing up with a bank to open an account.

 

Step 1 - you need to register with an exchange that conducts business with Canadians.   I'd recommend Kraken. They've been around awhile and are serious about security. There are others as well.  This involves creating an account on the exchange, using an email address (go protonmail!) And setting up your account with your real information and bank account info.  This all gets verified and you need to provide copies of documents to do so. It's part of the anti money laundering rules that exchanges operate under. 

 

Step 2 - once you are setup and have a bank account linked, you are pretty much ready to receive crypto.  If you want to send crypto, the next step is to buy some. You need to send the exchange some fiat to do so.  Depending on the exchange this could be an interac etransfer, a wire transfer, or with Kraken you can even walk into a post office and hand over cash (for a fee).  Once the fiat arrives on the exchange (depending on the funding method it can be almost instant, or take a few days) you are ready to buy.  

 

Step 3 - Time to buy some crypto!  What you are doing is asking the other users of the exchange to take your money and send you crypto.  The simplest method is to use the market price. This will get actioned pretty much immediately and now you will have crypto available in your exchange wallet.

 

Whoa now old nerdy guy, this is a lot of reading and sounds shady and complicated.   And WTF is a wallet?

 

It sounds more complicated than it is.  Conceptually it's like a regular wallet.  I won't get into the technical aspect of it but it's a repository for crypto.  Each type of crypto has a separate wallet.  

 

Ok. So now you have a wallet with some crypto in it.  Now what?

 

If you want to send it to someone else, you ask them for their wallet address, and then perform a transfer.   For bitcoin it takes anywhere from 20 minutes to an hour on average for the transfer to complete. This is because of that network across the globe that I talked about earlier.  Every transaction on the network is queued and processed and double triple etc checks are done to make sure it's valid. Once it is marked as valid on the network, it appears as sent and will be in the receivers wallet.

 

Once someone has crypto, it is very easy to send to someone else.  There are apps that you can use to instantly send between two wallets, as much as you want, basically for free.

 

So if someone wanted to pay a provider for a service, they could instantly send them crypto.  Once sent, it cannot be recovered unless the recipient agrees to send it back.  

 

Great. So it's a harder to track way to send fake money then.  Wonderous!

 

Well the great thing is you can easily trade it for fiat currency again.  Go back to your exchange, sell your crypto for fiat, and have the exchange send it to your verified bank account - it takes up to 5 days to receive. 

 

Ok weirdo, once again whyyyyy would I want to do this?

 

- it's a way to instantly transfer something of value to another person somewhat anonymously 

- it can be easily converted into real money in a bank account

- there is also a risk involved due to the volatility.  If you hold on to the crypto for too long before converting it to fiat, the price could go down and you could lose value.  Conversely if the price goes up, you could gain value 

 

Personally I've done very well over the short and long term by holding onto bitcoin for certain periods.  With the volatility right now, buying at the right moment you could double your investment. Or you could just as easily lose it.

 

As with every type of currency transaction there is risk involved.   With traditional fiat transfers, it's very traceable. With crypto, it's a bit harder to trace and there are ways to make it even harder, but for the most part it won't show up on a bank statement when you are sending it to someone which helps the clients.  For the providers it can add a bit more of a process to cash out vs physical cash.

 

There's a lot more than can be covered here, especially around security, trading and wallets.  I'm happy to answer questions to the best of my ability. 

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The topic was partially adressed in this thread when LL temporarely stopped accepting credit cards in favor of bitcoins. To say the least, the reactions were mixed....

 

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Yeah I remember seeing that thread a year ago. In the world of tech, things change a lot in a year.

 

The biggest barrier to getting into crypto is understanding it, it's complicated in concept, but there are new apps and services popping up, especially recently, to make it more accessible to the masses.

 

The next barrier is thinking of it as fake money.   All money is fake when you get right down to it, we as a society just decide it has value and accept that. 

 

As time goes on money is becoming less physical and more virtual.   I rarely use physical cash to pay for anything anymore.  

 

But to each their own really.  I'm here as a resource if anyone (providers and non-providers alike) have questions about it.  I'm pretty well versed, but definitely not a high level super expert when it jumps into the full technical side.

 

 

Edited by OldandNerdy
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2 minutes ago, OldandNerdy said:

The next barrier is thinking of it as fake money.   All money is fake when you get right down to it, we as a society just decide it has value and accept that. 

As time goes on money is becoming less physical andore virtual.   I rarely use physical cash to pay for anything anymore.  

But to each their own really.  I'm here as a resource if anyone (providers and non-providers alike) have questions about it.  I'm pretty well versed, but definitely not a high level super expert when it jumps into the full technical side.

     Using a currently electronically of with physical money, makes no difference. It's still the same currency.

     But unlike most form of currencies with values depending on a country's economy, price of main resources and investors confidence, Bitcoins are only supported by a mathematical equation and speculative markets. Reasons why career investors are still very cautious about recommending it. The longevity and name recognition allowed Bitcoin to survive where other cryptocurrencies have failed. But there still some work to do before it's embraced by all.

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Well, I definitely don't want an argument, they don't provide a lot of worth. But fiat currency only has value because we all agree that it has value, it's been a long time since it was based on a gold standard.  

 

While the value of it is reflected in the economy of a country, it's not that simple.  It only has value if the government maintains that value or if outside parties agree upon the value via exchanging it.  

 

All we have to do is look at Venezuela as a recent example of a fiat currency crashing to little to no intrinsic value.   

 

Like with anything we use to exchange for goods and services, it's only worth what we all agree that it is worth at a particular point in time. Gold is only valuable because it has uses and is a finite resource.  If a billion tonnes of gold suddenly appeared on the planet, it wouldn't be worth as much anymore.  

 

Short term, using crypto to exchange for fiat has very little risk as it can be done easily and quickly.  Long term, who knows what will happen to bitcoin or any other crypto.

 

As for the reason that so many alt-coins failed, my personal opinion is that they didn't offer anything the differentiated them from bitcoin.  The ones that did survive, such as XRP, offered a unique and valuable use-case, and generally continue to grow in value (not necessarily straight fiat value, but solving a problem value)

 

But hey. If people arent interested in exploring it, they don't have to.  If they do, I can help.  🙂

Edited by OldandNerdy
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    We can also talk about crypto mining. The fact one can literally create money out of thin air sparked a virtual "gold rush" with many creating their own Bitcoin mining operation with a PC tower and a few video cards to accumulate "free money". But there's been a fair amount of BS on the subject.

    While any piece of electronic with a processor can generate bitcoins, it's quite demanding. Reasons why gaming video cards  are often used for that purpose. And also why those got so expensive in the past years. As those mining computers suck a lot of electricity, it takes a fair amount of time to see a return on the initial investment. On top of that, the constant load on the hardware generates a lot of heat and often cooks components. 

    There many YouTube videos of people claiming they pay their rent with the revenue from their home setup. I would call BS on that. Even if electricity was included in the rent and built their rigs from old machines, I highly doubt they would get remotely close to that level of profitability.

    If you got spare parts to make your own mining machine, there's not much to lose by seeing what can be generated. But I would think twice before investing too much in that type of operation and expect massive returns.

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Oh no. You cant make money from mining anymore, there are too many super Farms with specialized equipment to compete against.  The average mining rig costs thousands, if you can even get one, and like you said the electrical costs alone make it untenable for the average Joe.  You haven't been able to mine bitcoin with a regular PC even with 8 video cards for a few years now.

 

Anyone who says they are, are somewhat fibbing.  At best you can join a mining collective and get fractional bitcoin for doing so, but it's hard to break even with that.

 

Other cryptos, yeah you can probably do some mining, but again, it's not really going to be profitable, unless you can control a large number of rigs, and get cheap energy, like in Southeast Asia.

 

But the mining of it is quite separate from using it transactionally, other than using it depends on others mining it.

 

 

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Back to Kraken...best rum ever!!! 
@OldandNerdy
How easy is it to set up banking information? 
Do you need a US account as they don't trade to CDN? 
Would I have a worry about any flagging or getting locked out of accounts for exchanging the money? 
How often do their rates change for fee exchange? 

I'd personally stock up on bitcoin and make a single trade order (like 1 full BTC) before I would deposit it to useful funds for myself. As paying out when I have a couple of hundred worth of BTC doesn't make sense to me.

I have started using Bitcoin. I haven't had much ask for it yet but I know a few of my clients would be happy to pay that way over carrying large amounts of cash or sending e-transfers in the future.

I haven't fully worked out how to get it back to myself in 'useful' funds. So your answers will be very helpful! Thanks so much for taking the time. ❤️ 


 

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Overall the setup process is pretty easy, and no you don't need a US account.

 

The verification process for a Kraken account is in depth, but not difficult.   You are required to provide supporting documentation, such as Gov ID, and residental proof information (such as a recent utility bill) as part of the KYC process, but once you have done that and it is confirmed, you are in.

 

Then you basically just need routing information to link to your bank account.  Branch/transit/account.

 

Then when you want to "cash out", you would setup a BTC:CAD trade, and if set as a market trade, it would fulfill immediately, and you would have CAD funds in your Kraken account.  Then you would initiate a funds transfer to your bank account, which usually takes 5 days to fulfil.  

 

Fees are pretty low for the trade (0.26% for low volume) and also for the withdrawal (0.25%)

 

I haven't had any issues with being flagged, as it is a funds transfer happening between 2 institutions.

 

Let me know if you have other questions! 

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