Everything You Need to Know About Bitcoin

by Modis on May 16, 2017

BitcoinsBitcoin’s evolution from suspicious alternative currency to legitimate method of payment was powered by the need for a decentralized currency, one that was free from government controls, free from geographical boundaries, and spendable anywhere in the world. What’s more, as a decentralized currency, no single government, organization, group, or individual holds authority over it. Now that bitcoin has reached a record high in value, it’s being taken seriously as a currency option.

What exactly is bitcoin?

Bitcoin, when capitalized, refers to the network and software used for transactions, while the lower-case term, bitcoin, actually refers to the cryptocurrency itself. In other words, you spend bitcoins over the Bitcoin network. Bitcoins fluctuate in value. In the early days, they were only worth a few cents, but by 2013, the value for a bitcoin grew to $1,200. Today, a bitcoin has grown to over $1,800. However, like any other market, they’re are only worth what people are willing to pay, meaning the price can fluctuate.

How is it used?

Bitcoins are used like money – you can buy and sell physical (or virtual) items using bitcoins. However, there are other uses as well. Some people treat them as investments, purchasing them and then waiting for the value to increase before selling. Another use for bitcoins if for international money transfers. The decentralized nature makes them ideal for moving funds around electronically.

Where do you keep bitcoins?

Bitcoins are electronic and are kept in “bitcoin wallets.” Those wallets are electronic caches, which are representations of stored bitcoins. There are many different types of wallets, consisting of desktop wallets, mobile wallets, online wallets, hardware wallets, and so on. What makes those wallets viable is something called a blockchain. A blockchain is a public ledger, which is replicated across peer to peer networks, where every transaction is recorded. Blockchains cannot be edited or deleted and use an incorruptible audit trail that prevents tampering with any data.

How can I get bitcoins?

You can acquire bitcoins using three different methodologies. First, there is the concept of bitcoin mining, where you setup some dedicated, internet connected equipment and basically earn the coins for participating in adding transaction records to the bitcoin blockchain. Behind the scenes, bitcoin miners are providing computational power, as well as storage, to create a secure, tamper resistant consensus, which ensures the validity of the blockchain. When the currency first started out, mining proved to be an easy way to earn the currency. Today, the computational power needed, along with the overhead costs, have made it much more difficult to profit from bitcoin mining.

Another method to obtain them is to just buy them. There are numerous online exchanges that sell bitcoins and operate much like a currency exchange operation. The only major difference is that no physical currency change takes place, everything is done electronically.

People are also able to earn bitcoins by selling services or products. A whole industry of freelancer service sites has come into existence, allowing people to earn bitcoins for work

How can I send, receive, or spend bitcoins?

Bitcoin wallets have addresses, which are similar in nature to an email address except that they are assigned and made up of an alphanumeric sequence that is at least 27 characters in length. To send bitcoins, all you need to do is have a positive balance in your wallet and then address the payment to the recipient. The transactions occur rather quickly, and are entered into the public ledger by miners, who earn a small fee for handling the transaction.

Some online store make the process even simpler by offering a bitcoin payment option along with the traditional credit card options. Another method is using services such as Wirex or Coinbase, which link Mastercard and Visa accounts to bitcoin wallets, allowing users to translate bitcoin payments into credit card like payments with ease.

Should I trust bitcoin?

People using bitcoins can fall prey to scams and theft, although the blockchain technology behind the currency is one of the most secure, incorruptible ledgers in use, there have been cases where people have lost them or had them stolen. What’s more, there is a lack of protection with bitcoins. After all, it is not considered legal in many countries, meaning that theft or scam victims have no option for recourse. However, that is slowly changing and bitcoin users can vet others using Bitlegal.io.

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