Most videos lie or obfuscate what Bitcoin actually is to sell their crypto products.
Cryptocurrency such as Bitcoin or Ethereum is the equivalent of owning a set of virtual numbers in a centralized blockchain. Others can see and verify transactions in this blockchain. You can think of a blockchain like an online database or ledger that anyone can see. Your set of virtual numbers is verified through your private key which is an autogenerated password. If you want to buy or sell crypto, you give others your public key (similar to a bank routing number) that tells the blockchain where to allocate your set of virtual numbers. You can think of your 'wallet' as your set of private and public keys. This is mostly represented with a QR code. (square thing)
Bitcoin you can think of is like digital gold and gets its value for being the 1st cryptocurrency.
Ethereum you can think of like digital gas that is used to drive web applications and services that operate on the blockchain.
The security of crypto (and the name) relies on the encryption of your public and private keys which are generated in hopes that supercomputers aren't capable of cracking their algorithm. It also relies that a majority of the mining nodes are honestly representing the blockchain ledger and allocated your set of virtual numbers to the right public keys. (The same as your bank is honestly representing your bank account except your bank is the public bitcoin blockchain). Supercomputers and a 51% attack are the biggest threats and can take crypto to near 0 overnight.
You can buy cryptocurrency through an exchange such as coinbase or binance. You will probably need to upload your ID to connect it to your bank account. IRS will know exactly who you are and your transaction regardless.
So the big question should you buy crypto?
I would take it as payment and cash it out after each big news pump. Too many threats exist that can easily cripple it overnight. Right now it seems to be the main currency for 3rd world nations. Russia and US are going to allow it for now and probably heavily regulate and tax it. If you pay taxes (big if) crypto accounting is a nightmare and the laws are still very unclear what counts as a taxable event. You are also getting double taxes if you buy/sell through an exchange.
Ok thank you. Lots of stuff.
One more question, if you need an ID to buy crypto then how is it anonymous? Is that a myth? I personally don't need it to be real anonymous but it would be nice to have to option for certain things.
You can create a wallet and trade centralized cryptocurrencies like Bitcoin and Ethereum without an ID. There are many different websites that do this. The problem comes when you want to cash out your crypto for cash through an exchange such as coinbase.
Most reliable and trusted exchanges are KYC which means they follow banking/finance laws and require customer information to validate their identity and most likely store it on record in case of fraudulent activity. Some exchanges allow you to send crypto to your bank without ID, but the risk is high they aren't legit and they are often limit your transaction amount.
Is crypto on the Bitcoin or Ethereum blockchain anonymous?
Absolutely not, it's open book accounting. However, the blockchain only contains the public keys (numbers represented through QR codes) and their transaction history. If someone figures out that a public key belongs to a certain person then they can be actively tracked and monitored. You can bet all law enforcement and FBI have already been doing this.
What is anonymous?
Privacy-based tokens such as Monero (XMR) are designed to be more anonymous and do a better job at hiding your identity and transaction information. Not much experience with that crypto but seems to be the best bet for anonymous transactions. Assuming that there aren't any hidden backdoor methods for FBI to crack it.
I cashed out of my (meager) Bitcoin winnings buy buying some real money (gold) from an online metals dealer who accepted crypto. No special ID requirements, just place an order normally.
if you need an ID to buy crypto then how is it anonymous
You only need an ID from companies that require an ID. Coinbase, for example, wants to stay on the good side of the law, so they'll do everything they can to keep authorities from giving them hard questions to answer.
If I say "send me money via cash/check/moneyapp/giftcard/etc, and I'll send you bitcoin," then your name is never tied to your account. Similar to buying stuff on Craigslist vs Walmart.
And yes, there's websites that coordinate meeting in person for transactions. Problem is, finding an individual person to sell you bitcoin is a lot harder and slightly higher market value than just going to coinbase.
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