What is Bitcoin? – Beginner’s Guide to Bitcoin

What is Bitcoin?

The phrase “What is Bitcoin”, was the third most searched term in google in 2014. This shows the huge demand for this digital currency known as Bitcoin.

Bitcoin is a revolutionary and decentralized new form of money. To put it simply, bitcoins are digital money and you can use them just as you would use your Euros or Dollars.

You can buy them, exchange them for goods, receive them for services rendered and even speculate them against your Dollars or Euros.

These are just a few of its many applications.

Bitcoin is a kind of Cryptocurrency; it is a decentralized digital currency whose price fluctuates in the open market. It is highly suitable for making payments on the internet as compared to other payment methods like Credit Cards.

 Benefits of Bitcoin

With Bitcoin, You Can Send Money:

  • Directly from one person to another
  • For next to nothing in transaction cost
  • As anonymous as you want
  • As easy as sending an email
  • Instantly via the internet
  • Without a bank or other authority
 Infographic source: newsbtc.com

bitcoin infographics

Characteristics of Bitcoin

  1. It is Decentralized

    Bitcoin is the first decentralized digital currency in the history of humanity. The main feature that makes bitcoin revolutionary is that there is no central authority or regulator as a central bank to oversee its transactions.

The generation new of coins and confirmation of transactions are controlled by the Bitcoin network itself. Bitcoin network is made up of people like you and me who have made themselves available to run the bitcoin software.

  1. It is Money in the Cloud

    Bitcoin is money in the cloud you can always use anytime and everywhere to make payments in a quick and fast way. Since bitcoins are held in the cloud like the Internet, it is not restricted by any nation or borders.

Another way to look at this Cryptocurrency is to see it as digital cash. Bitcoin transactions are also irreversible and can have a high level of anonymity.

An Image of Bitcoin

source: Shopify

You don’t need to know or trust the other party to make a bitcoin transaction; the network serves as an intermediary and ensures fairness in all transactions.

  1. Can be Sent and Received Easily

    Spending bitcoins is as easy as scanning a QR code and pressing a button on your computer or smartphone. You no longer need to fill out unnecessary personal information as you normally do in your traditional bank.

Accepting bitcoin is also simple. All you need is a bitcoin wallet address which people can pay to. And if you don’t want to keep the bitcoins for personal reasons, you can automatically convert them into fiat currency using a payment provider.

It’s quick, easy and cheap, without conditions or subscription fees.

Why Should You Use Bitcoin?

Bitcoin is versatile in its applications and there are many reasons why you should use it.
The most common reasons are:

  • Transactions are instant; no need to wait for 2-5 days for international transfer
  • Low transaction costs, whether you are sending 0.5 or 2 million bitcoins
  • No fraud purchase or chargeback. Transactions are final and irreversible
  • No entry or subscription fees
  • Transactions can have a high degree of anonymity
  • Independent from governments, borders, countries, censorship
  • Ability to transfer very small amounts
  • Ability to diversify from the euro/dollar against inflation
  • Independent from banks and third parties

How are Bitcoins Generated?

Bitcoins are generated from within the Bitcoin network. It is the process of using the computing power of your Computer (or dedicated hardware) to process and verify bitcoin transactions and protect the network.

Bitcoin Mining provides rewards in exchange for services needed for a secure payment network. In this way, the bitcoins are evenly distributed within the network.

You Can Also Buy Bitcoins

Those who can’t mine them for some reasons can also buy them. There are various places you can buy bitcoins from.

The easiest way is to buy from a currency exchange. They buy bitcoins from users at a discount and sell them at a premium. These exchanges allow you to buy bitcoins with PayPal, Credit Cards or bank transfer.

Another way to trade bitcoins is through an exchange marketplace. An exchange market does not buy nor sell bitcoins, but they offer a platform to bring buyers and sellers together.

Where to Spend Your Bitcoins?

As bitcoin adoption continues to increase, more and more businesses around the world have started accepting bitcoin as a payment option. For example, you can buy a domain name and host your website with bitcoin using NameCheap.

Some popular businesses that now accept bitcoin:

  • Overstock – A company that sells big-ticket items at lower prices due to overstocking
  • CheapAir – An inexpensive and stress-free way to book your next flight, hotel, car, or cruise.
  • ExpressVPN – A High speed and ultra-secure VPN network

You will find a comprehensive list of Companies that accept bitcoin as payment method here

What Determines the Price of Bitcoin?

The price of Bitcoin is not determined by any central body. Bitcoins are sold in different places at various prices. There is an average rate obtained by taking the average price of all major exchanges.

At BitcoinAverage you will find the real-time average price of Bitcoin listed in over 30 different currencies.

Is there anything not really clear to you, check out our FAQ to find answers to most of your questions? You can also ask your questions or tell us what you think in the comment section below. We love to hear from you!

 

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