What is a Bitcoin and how people use it

November 17, 2015
What is a Bitcoin

What is a Bitcoin?

Money is an important and vital entity in the economy that everybody knows something about. It is common knowledge but so sought for because of its nature and capabilities. According to BusinessDictionary.com money is anything of value that serves as a

· Generally accepted medium of financial exchange,

· Legal tender for repayment of debt,

· Standard of value,

· Unit of accounting measure, and

· Means to save or store purchasing power

Many items have fit into this definition as has come to be used as money, such items as gold, silver, banknotes or paper money, etc. serve this purpose adequately. It was not until 2009 that another item called Bitcoins joined this list.

Bitcoin is an open source, peer-to-peer payment system that was introduced in 2009. It was first published in 2008 by an individual with the pseudonym of Satoshi Nakamoto. The true identity of the inventor is unknown, all that is known about him are only calculated speculations and then the Bitcoin source codes. He made the project public in 2009 and left the Bitcoin community in late 2010.

Bitcoin is the very first decentralized peer-to-peer payment system. It is powered by its users solely, with no central authority or middlemen regulating its operation. That is to say, there are no banks involved. This in turn means no transaction charges and no identity check. Merchants all around the world are now turning towards this very prominent triple entry bookkeeping system.

It is also known as the first cryptocurrency (also known as “altcoins”). A cryptocurrency is a medium of exchange, just like normal currencies, but it is designed for exchanging digital information some cryptography-enabled processes. Cryptography is used to secure the transaction and to control the creation of new units. Because of this security measure, cryptocurrencies especially Bitcoins are difficult to counterfeit.

Let us take a nosedive into understanding how to use these coins.

How to use Bitcoins

After having heard so much about this futuristic payment solution and its tons of benefits, it can be difficult to know where to start. Starting to use Bitcoins can be exciting, as it is a new technology that is so powerful it can be used to purchase just about anything desired.

Step One: Understand Bitcoin

This is very important as Bitcoin transactions vary from your regular everyday bank operations. Here are some things that you should take care to understand additionally about Bitcoins:

· The Bitcoin Price is very volatile. It can unpredictably increase or decrease over short period due to its young economy, novel nature and sometimes illiquid markets. It is advised that you don’t, as at yet store your money with Bitcoins. Use the many available services to convert any payment to other local currency.

· Payments in Bitcoins are largely irreversible. As there is no intermediary, only the receiver has the power to refund. So deal with people you can trust. This will likely be taken care of in the near future.

· Take special care to secure your Bitcoin wallet, just as you would with your physical wallet.

· Your privacy is secured but your transactions are not completely anonymous. All transactions are stored publicly on the network for transparency.

· Although Bitcoin is not an official currency, many jurisdictions still require you to pay taxes on anything that has value, like Bitcoin. Adhere to these jurisdictions carefully.

· Finally, Bitcoins are still in its developmental stage. This means great new improvements are being added regularly even as its adoption is on the increase.

Step Two: carefully choose a wallet

You have the responsibility to consider and choose the best Bitcoin wallet that works for you. There are many good options to choose from in almost every platform. There is Bitcoin Core, mSIGNA, Electrum, Armory, Bither and many others. Adopt good practices in safeguarding your wallet.

Step three: fund your Bitcoin wallet

How to get Bitcoins is actually much easier than you may think. Several online marketplaces allow people to purchase or sell Bitcoins using different currencies. These are called Bitcoin Exchange sites. Other ways are:

· Bitcoin mining,

· Bitcoin ATMs,

· P2P Bitcoin to Fiat trades,

· Bitcoin Clearing Houses.

You can also accept payment through Bitcoin, purchase it from a friend or win it in some other online activities available on the internet.

Step Four: Spending using Bitcoin

The numbers of merchants that are accepting Bitcoins are on the increase all over the world. You can use Bitcoins from your wallet to pay for their services or products. You can start by looking up a service or product desired at UseBitcoins.info

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