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What is Bitcoin, and How Can it be Used?

What is Bitcoin, and How Can it be Used?

Published by Press release

Bitcoin is a type of digital currency, created and held electronically. Bitcoin is not controlled by a bank or government – instead it works like physical cash, in that users exchange it directly to and from their Bitcoin wallets. The Bitcoin wallet and Bitcoin payment system are called the Bitcoin protocol, and Bitcoin is also often called a P2P (peer-to-peer) Currency. The Bitcoin protocol was first described by Satoshi Nakamoto in 2008, but who exactly he/she/they were remains unknown.All of this information together then forms the background of the bitcoin network like this trading app.

How Does Bitcoin Work?

Bitcoins can be used just like other kinds of money. You can buy products and services with it online, you can save your bitcoins for use later, or you can buy and hold for future appreciation. Bitcoin is the same as Bitcoin, Bitcoin Cash, or Bitcoin Gold. This makes Bitcoin simple and easy to use for everyone

Most Bitcoin wallets make it easy to convert your local currency (like US Dollars) into and out of Bitcoin by connecting directly to an exchange website like MtGox or BitStamp. The Bitcoin can then be sent or withdrawn in almost any amount in between users without requiring anything other than the Bitcoin wallet software using the approved rates which are based on market conditions. To understand how Bitcoin really works, you need to know a little about Distributed Public Ledger Technology (DLT). Distributed Public Ledger Technology is very similar in concept to BitTorrent, where every participant has full information about every Bitcoin transaction. Bitcoin’s security is based on Bitcoin Mining, which involves adding Bitcoin transactions into Bitcoin blocks and trying to solve a computationally intensive puzzle. The more miners that are mining Bitcoin, the more difficult (and thus expensive) it becomes to perform this validation process.

The Bitcoin protocol runs on open-sourced software and anyone can review the code base. This makes it transparent and virtually impossible to manipulate Bitcoin in any way without being noticed by thousands of other users who have access to exactly the same information as you.

What Can You Do with Bitcoin?

There are over 100,000 merchants worldwide accepting Bitcoin today, from small businesses like bars, restaurants, law firms and popular online services such as Namecheap & OK Cupid to major retailers like Overstock, Dell & Expedia. Bitcoin users can buy anything legal using Bitcoin, if they have Bitcoin in their Bitcoin wallet.

Most Bitcoin merchants are very transparent about how much Bitcoin is needed for a purchase and while some do accept Bitcoin as payment, it is usually only offered as an alternative method of payment and not at all costs available via credit card or PayPal alone.

Bitcoin’s benefits: 

Lowest Transaction Fees (compared with all possible online and fiat currencies) No Chargebacks or Refunds (buyers cannot reverse transactions on Bitcoin once they complete which makes Bitcoin extremely attractive to Merchants) Security (Bitcoin wallets are encrypted and transactions must be approved by the user before they’re executed). Trust (No third party or central authority has control over Bitcoin and Bitcoin users can transact money as easily as they send email)

Bitcoin is a very attractive currency for merchants because Bitcoin offers much lower transaction fees than credit card processors. Bitcoin payment processors have been popping up all over the world to help existing businesses accept Bitcoin, from Uber in China to Tesla in Norway. Bitcoin’s future: Bitcoin’s fixed 21 million supply means inflation will never happen and it is commonly used as a store of value against fiat inflation rates. 

In theory this growth should be best news for Bitcoin but there are also some serious problems that need to be resolved first before Bitcoin truly becomes an everyday currency for everyone. The main issues being security, regulation and volatility – each one of these things alone would cause Bitcoin’s value to drop overnight.

Bitcoin is a high risk investment and Bitcoin investors need to make very careful decisions about when to buy Bitcoin, how much Bitcoin to invest in Bitcoin, where Bitcoin can be bought from and the Bitcoin wallets that need to be used for Bitcoin transactions.  

Bitcoin’s value fluctuates from month to month and Bitcoin should never be seen as a short term investment. Bitcoin needs to grow a lot before Bitcoin can become a reliable, everyday currency for everyone in the world, Bitcoin still has a long way to go. 

Photo by Mitchell Luo from Pexels