A beginner’s guide to Bitcoin; What it is, How it works, Where you can buy it?
The Bitcoin is getting more and more publicity the last years as the controversial computer currency is used by many people and business in nowadays.
As the bitcoin is getting “famous”, governments are increasingly looking about the its taxation issues and how to best regulate it.
Countries are thinking to introduce their own cryptocurrency while major global banks may soon have their own digital currency.
Last Thursday (March 02), a unit of the digital cryptocurrency Bitcoin has exceeded the value of an ounce of gold for the first time. It closed at $1,268 on Thursday while a troy ounce of gold stood at $1,233.
What we know about the bitcoin…
What the Bitcoin is?
The Bitcoin currency was created back in 2009. An unknown person by the name Satoshi Nakamoto claims to be the inventor of the bitcoin protocol.
There are no middle men and transaction fees with Bitcoin. The anonymity that Bitcoin offers attracts some people.
Someone can buy Bitcoins though an online Bitcoin exchange or through Bitcoin ATMs. In Switzerland, a pilot project allows people to buy the digital currency from Swiss rail ticket machines.
The Bitcoin is not a a paper printed money but it is produced by people. Bitcoin doesn’t have a central Bank.
As a digital money, Bitcoin can be stored in a “virtual wallet“.
How the Bitcoin works?
The value of a Bitcoin has always face increased volatility.
Like all currencies, its value is determined by the exchange price. How much people are willing to exchange a Bitcoin.
A “mining” procedure takes place to process Bitcoin transactions. “Miners” use special software to issue a number of Bitcoins by solving a difficult mathematical problem with a 64-digit solution. “Mining” is a core part of Bitcoin while ensures the security and stability of the bitcoin network.
People to receive Bitcoins use a Bitcoin address which is like a virtual post box. This protect their anonymity.
From where someone can buy Bitcoins?
People are able, using different currencies, to buy and sell Bitcoins through the “bitcoin exchanges“.
People can also buy and sell Bitcoins from each other via marketplaces.
You can buy Bitcoins using cash, credir or debit cards, wire transfers and other cryptocurrencies. This depends from where you buy and where you live.
To store the bitcoins, people use “wallets. “Wallets” can be refereed as bank accounts and can act like everyday spending accounts.
The security levels of wallets is something that users must have in consideration when they begin to start buying and storing Bitcoins.
How much a Bitcoin worth?
The value of a Bitcoin closed last Thursday (March 02) at $1,268. Since its launched in 2009, the price of a Bitcoin has been volatile. The current high price is being attributed to surging demand in China.
The Bitcoin price plummeted in value in 2014, when the biggest bitcoin exchange that time which was handling 70% of all bitcoins’ transaction collapsed.
According the rules that make the Bitcoin to work, only 21 million bitcoins can ever be created by miners.
Currently there are about 15 million Bitcoins in existence.
The future of bitcoin
Will the Bitcoin affect the online trading of the future?
This is something that can not be projected. Bitcoin users are attracted by on the anonymity that this digital currency offers while at the same time governments around the world are looking for possible ways to tax and regulate the use of Bitcoin.
How people buy Bitcoin is a factor to affect its future. A simpler way may attract even more users.
The volatility of its price is also a factor that people think before to buy and invest. Volatility is also a factor for the future of Bitcoin as business have to think before to start accepting Bitcoins as a mean of payments.