The matter of bitcoins has been increasingly popularized as it entered some of the greatest spheres of online payments.
As a potential or exclusive payment method to several online shops and firms, as well as a large segment of the massive online gambling industry, there is bound to be greater interest for the currency of the future.
Despite being a widespread trend, bitcoin still needs to be understood on every level in order to allow proper use. People are able to get bitcoins, pay for things with them and use those things for their purpose.
What they are not able to do is explain how they did it, how the system enabled them to perform those transactions. This is indispensable for the system’s continuation, primarily so that people would be better informed and could recognize any errors and fix them.
What Is Bitcoin & How It Ended Up Where It Is Today?
Bitcoin is a crypto currency which exists solely on digital platforms, i.e. computers as a form of digital code. In order to understand how it ended up with today’s status, you need to know how it began. It was first released back in 2009 along with a paper which provided explanation for the entire Bitcoin network. It is said to be built by Satoshi Nakamoto, which is a pseudonym for a single developer or a group of such experts.
Since its beginnings, Bitcoin has both suffered serious blows in value and witnessed great rises. It is a decentralized currency which is completely independent of any institution. That is why it is not backed by any currency of precious metal, with a completely volatile value. The main factors which manage to influence its market worth are legalization matters and market demand.
Step-By-Step Instructions to Buying Bitcoins
If you are new to the matter of buying bitcoins, a step-segmented guide is bound to help your understanding of the general procedure.
Step 1: Before you even think about buying bitcoins, you need to consider where you are going to keep them. This crypto currency, as the name suggests, exists only in a digital form which is why it requires the same type of storage. E-wallets have been invented a while before Bitcoin, but they have proved to be extremely useful.
You can choose between an online, offline and hardware e-wallet. The online e-wallet requires third party involvement which takes care of your bitcoins. Offline e-wallets are practically software which you have installed on your device. The third type is directly related to hardware computer parts, such as USB or hard disk storage devices.
Step 2: Bitcoin e-wallets function in the same manner as the Bitcoin network and don’t demand too many personal information. All you need to do in order to set up is enter an email address and password. This provides you with an e-wallet address where you can keep the bitcoins you will buy.
Step 3: When buying bitcoins, you can choose to buy them from an online bitcoin exchange service or through a peer-to-peer transaction. The first option requires you to sign up at the service’s website and input the amount of bitcoins you want. After that, you just need to send the corresponding amount of your chosen fiat currency in order to pay for the bitcoins.
After you get them at your bitcoin exchange account, it is highly recommendable to transfer them to your isolated e-wallet as soon as possible by entering the e-wallet’s address. These services are a regular target for hackers and have been known to shut down unannounced, along with all your bitcoins.
Step 4: Once your purchased bitcoins are in your possession, you are able to use them anyway you want. Some people decide to try their luck on games of chance and use bitcoin’s virtues to their own benefit.
Bitcoin’s Advantages & Disadvantages
If you are still having second thoughts about buying bitcoins, the best thing you can do is distinguish between the benefits and shortcomings of the system. That way, you can prioritize and decide for sure.
On the one hand, bitcoin has quite attractive advantages. It is surely one of the fastest payment methods as bitcoin deposits take only a couple of minutes, while withdrawals could last a bit longer until they are verified. These transactions are nearly charge-free, as bitcoin fees are extremely low.
The two remaining advantages have won over the most bitcoin owners – security and anonymity. The security segment is guaranteed with the highest protocol, while being decentralized allows every bitcoin owner in the network to check transactions’ reliability alone. Anonymity can be felt from the process of setting up an e-wallet, as these transactions don’t need any bank account details, SSNs or place of residency information.
The network’s negative sides have also had their effect on people. A major concern for most people is its volatile value which fluctuates with every government act against it. If a certain bank or jurisdiction happens to back up the currency, it is bound to provoke a total bitcoin boom.
Other people’s concerns relate to its digital nature instead of its value. They are worried that a lack of any hard evidence regarding transactions could lead to massive losses.
Mining Instead of Buying Bitcoins
Bitcoin mining is a unique process which goes on at all times and helps maintain the Bitcoin network.
Instead of purchasing them, you actually create bitcoins this way. Apart from developers which regularly maintain and repair it, bitcoin owners are also invited to participate in the process. They use specific software designed to solve the complex mathematical problems in the Bitcoin network. This supports the validity of each transaction and rewards the bitcoin miners in the end with a certain amount of bitcoins.
Many people wonder whether this can help them produce as many bitcoins as possible. The system is created in such a way that it caps the production of bitcoins at 21 million, which means that all the possible bitcoins will be created at a specific moment. Some believe that this will cause chaos due to lack of bitcoins, but the currency’s ability to split into smaller units will help avoid it.
Since bitcoins are a crypto currency, they do not actually exist in real life. However, if you want to have some kind of proof on paper, you could write down your e-wallet address. It is an alphanumerical sequence which can be shared publicly, mostly with those that are supposed to send bitcoins to it. As long as the access key remains private, no one can access it except the owner.
Some countries, such as the UK have higher bitcoin tolerance than others. This enabled the most reliable bitcoin exchange services to flourish to the point where they provide actual Bitcoin ATMs. These allow you to input hard cash and store it on your e-wallet either by scanning the QR code, most often from your phone app or by providing you with a receipt as proof of your cash payment.
Any currency’s value could alter in certain pre-set limits. Bitcoin’s value may not be strictly limited, but it tends to follow a certain trend. The currency’s present value at the moment of purchase will determine the exchange rate at which you can buy your bitcoins.
Yes, you can. Since PayPal has enabled their merchants to choose bitcoins as a payment method, it has been able to synchronize with various services. They require that you open an account and either fund it with your own bitcoins or purchase them using a chosen fiat currency before transferring them to PayPal.
The latest technology has enabled bitcoin owners to store their crypto currency on specialized Bitcoin debit cards. These charge a certain fee for using their services, but often come with many other benefits which make the trouble worthwhile.
Bitcoins are still rising in popularity as more and more gambling sites, online shops and even brick-and-mortar businesses are starting to accept it as a valid currency. Others plan to get rich by waiting for the opportune moment to exchange them with a fiat currency. Even if you haven’t figured out your intentions, it’s still exciting to participate in such a phenomenon.