What Bitcoin Is All About

Why do people buy bitcoins?

If I can buy everything using my credit card then why do I need bitcoins?

Bitcoin is a new form of currency. Some people believe that the value of bitcoins will grow over time once more and more people and businesses start using them. People buy bitcoins as an investment vehicle. As a matter of fact, the value of 1 bitcoin has increased from $800 to $13,000 in past 12 months.

Some people are frustrated with current banks and financial institutions. They would rather pay via bitcoins.

Bitcoins may also be used to stay anonymous when paying for services and products.

Where do I buy bitcoins?

There are several cryptocurrency marketplaces (online websites or apps) called “cryptocurrency exchanges” that allow people to buy or sell bitcoins using different currencies. You can buy bitcoins using your local currency and start buy and selling bitcoins like any stock trade.

When you open an account, you get a digital address and that address is your identity to buy, sell, or pay in bitcoins.

Some of the top cryptocurrency exchanges include Coinone, Bitthumb, Bitfinex, Quoine, Bittrex, HitBTC, Kraken, Coinbase, and Bitstamp.

Where do I store bitcoins?

Bitcoins are stored in your online accounts like your bank account, called a “digital wallet”. Digital wallets are stored in the cloud or on a server and are used to buy and sell bitcoins, and transfer bitcoins from one account (address) to other account as a form of a payment or transaction.

Let’s say, you want to buy a sofa from Overstock valued at $1,300 and the current bitcoin price is $13,000. You will send 0.10 bitcoin to Stackoverflow for the item. There is no bank or credit card involved in the transaction.

What is the risk in bitcoins?

Bitcoin is a virtual currency and has no tangible value that you can hide under the bed and use in difficult times. Bitcoins are not accepted everywhere. Bitcoin value fluctuates a lot. Even though the value of bitcoin is going higher, it doesn’t mean it will not go down. There may be a day, when bitcoin can go down 30% in just matter of hours. Some experts have even predicted that Bitcoin is a bubble.

Bitcoins are stored in digital wallets and there have been many hacks into these wallets and bitcoins have been stolen. More and more hackers will target bitcoins as the value grows.

Who owns bitcoins?

Bitcoin is not owned by a country, group, or person. Bitcoin is owned by users of bitcoin. Initially, new bitcoins have to be mined and the miners get some bitcoins, those later can be sold to other people.

Today, many large institutions and crypto leaders have invested heavily in Bitcoin. As a matter of fact, 4% of people own 96% of bitcoins. See graphic below, source howmuch.

Is Bitcoin legal?

Bitcoin is not regulated or backed by any country or government. It is private peer-to-peer transaction. All parties in bitcoin transactions are anonymous. Bitcoin is not illegal but it has been regulated in some countries.

Why do people buy bitcoins?

Most people buying bitcoins for investment purposes are assuming the value of bitcoin will continue to grow. Some people use bitcoins to buy and sell products and services to hide their identity.

What is bitcoin mining?

Bitcoin mining is the process of creating new bitcoins and the person creating new bitcoins are called bitcoin miners. Learn more here: What is bitcoin mining.

Next > What Is Blockchain

References

References and learn more about Bitcoin here: https://bitcoin.org/

How does Bitcoin mining actually work?

Miners hash an 80-byte block header until its double SHA-256 falls below a target. Difficulty retargets every 2016 blocks, and nodes follow the chain with the most cumulative work.

#basics#consensus#mining