The Complete Guide to Bitcoin
If you’re like many people, you’ve probably read the headlines about Bitcoin. Talk of this cryptocurrency is almost everywhere from the news outlets to sitcoms and movies. In fact, it’s one of the most talked about forms of currency available in years, but it can be a bit confusing if you’re just getting started. Not sure exactly what it is, how to get it, or how to use it? Don’t worry – this guide can help.
What Is Bitcoin?
Bitcoin is a form of cryptocurrency, which basically means it’s digital money. It uses blockchain technology to conduct financial transactions. There’s no central bank involved or any central country. You can sent it from one person or one party to another on a blockchain network. Bitcoins are mined over time by those who verify transactions on the blockchain. There is a limited supply of them. The total number that can be digitally mined sits at close to 21 million, and since they’re tougher and tougher for miners to get, this currency can’t be suddenly devalued with a flood of other Bitcoins.
What Exactly is Blockchain?
Blockchain is a kind of public ledger. Every transaction is another block in the chain. As each block enters the system, the peer-to-peer computer network of users involved with the cryptocurrency validate it so everyone can see the transaction. That means it’s not really possible to double-spend or somehow fudge the numbers.
Why Does It Exist?
Bitcoin was founded just after the financial crisis in 2008. At the time, many were upset that banks weren’t using money properly and were looking for a way to get rid of interest and create transparency within the world of currency. The result was Bitcoin, a completely independent system where you controlled your currency. You didn’t need a bank or anyone else to help you move, invest, or protect your funds.
Do People Actually Use Bitcoin?
Many people and companies accept Bitcoin. You can pay for a brand new Dell from the company with Bitcoin. PayPal honors it as well. Increasingly, many are finding all kinds of businesses accept a Bitcoin transaction, and while there are still some problems with it, it’s a powerful way to move money around the globe and in some locations, it’s the only way to do so safely.
How Do You Use Bitcoin?
To transfer Bitcoin from one person to another, you give them a line of security code which has been carefully encrypted. The purchaser decodes that with an app or a service to move those funds to their bitcoin account. Each transaction is secured by a peer-to-peer computer network. It works a lot like BitTorrent.
Why is Bitcoin So Powerful?
This cryptocurrency is powerful for a number of reasons. The most important one is that transactions can’t be reversed. If you’ve sent money, you cannot get it back. It’s incredibly secure because the money is locked in a system that can only be unlocked with your private key. It’s far more secure than most banks, but anyone can send and receive Bitcoins. There are no permissions involved. You just download and install the software. More than that, though, your Bitcoin money isn’t sent to you. It’s sent to an “address”, which is a random chain of characters. While people and entities can track the flow of a given transaction to figure out who is behind it, it’s not quite as revealing as a bank account might be, so it’s sometimes tough to figure out who a given user is. If you’d rather not have individuals understanding just exactly how much money you have and with whom you’ve interacted, Bitcoin has quite a bit more privacy than traditional currency options. Additionally, Bitcoin means a fast transaction that can happen on a global basis. Transferring Bitcoin to even the other side of the world takes just a few moments.
How Do I Get Bitcoins?
If you’re ready to get involved with the system, there are a few different ways to get your first Bitcoins. First, you can use a cryptocurrency exchange. In this situation, you trade in traditional currency for Bitcoins. Second, you can use a classified service that offers the ability to trade Bitcoin for cash. Places like LocalBitcoins do it on a regular basis. Finally you may want to begin selling products or services for Bitcoin. Many sites that help manage the gig economy today will allow for payment in Bitcoins. Keep in mind, though, that Bitcoin has experienced its own share of scams in recent weeks, so before you use any service or sell any products, you’ll want to be sure it’s completely legitimate or you could be out some serious cash.
What is a Bitcoin Wallet?
Those who are ready to use Bitcoin begin by signing up for a cryptocurrency wallet. There are three basic kinds of wallets. Full client wallets handle every aspect of the process. This is not the best step forward for beginners. If you don’t know what you’re doing, you’ll want a bit more help than this. Lightweight client wallets store Bitcoins, but need third-party servicers to access the network and make the transaction. Web clients are a bit like a web-based email account. It relies on a third-party server to make the transactions and operates them from start to finish.
No matter what kind of wallet you have, you can choose from technology that works only from your desktop computer, that working from a mobile device, or that working from the web.
It’s important to protect the Bitcoin in your wallet. Only store part of your Bitcoin treasure in your wallet. You may want to store some of it in a disconnected, offline wallet to add a layer of security. Back your online wallet up regularly and encrypt it with a strong password. Update your software regularly, and be sure you protect your address. In fact, you may want to change Bitcoin addresses with every transaction.
Bitcoin offers many unique advantages, and getting started is the only way to truly understand if this is the right investment for you.