Bitcoin has been tagged as the hottest cryptocurrency on the planet and for good reason. Taking the concept of currency and flipping on its head, this digital innovation is arguably the most important financial development to occur in recent years. With the interest in Bitcoin growing substantially during 2017, more and more people are being drawn to it, from both an investment and spendable currency standpoint. But, for those that aren’t in the know, we understand that the Bitcoin movement – as well as the cryptocurrency market itself – can be a bit confusing to understand. Not to leave our members – or our readers – in the dark, we’ve decided to put our collective knowledge down on paper. The following is a conclusive Bitcoin FAQ that’ll have you up to speed on what the world’s most talked about cryptocurrency is all about in no time!
What is Bitcoin?
Staring with the most common question of them all, defining what Bitcoin is certainly isn’t as complicated as some would have you believe. Bitcoin is the world’s leading digital currency (more commonly addressed as a cryptocurrency), with it being created and held electronically, rather than in physical coin and paper form. Produced by people, the currency is created via mining rather than printing. How a Bitcoin is uncovered is through a computer (or multiple computers) that operates software that solves complex mathematical equations.
What makes it different from normal currencies?
There are some similarities between Bitcoin and other currencies, with the most obvious being that you can buy things with it – in the same vein as dollars, euros, pounds, yen, and so forth. However, Bitcoin shines through its differences. Unlike the currencies we just mentioned, Bitcoin is decentralized, which means that financial institutions or banks don’t control it – at least not directly anyway. The decentralized nature of Bitcoin appeals to many, as it eases the minds of those that want their money out of the reach of the banking industry.
How does Bitcoin work?
The technical site of Bitcoin isn’t the easiest to grasp, but we will do our best to break matters down for you in as simple a fashion as possible. Bitcoin is backed by something known as a blockchain. The blockchain is a software system that will routinely be described as a ledger of the immutable digital variety. Residing within thousands of different computers spread all throughout the world, these devices are managed and maintained by Bitcoin miners.
Bitcoin mining is a truly painstaking process that requires a large amount of processing power to handle, although you certainly shouldn’t get wrapped up in the Bitcoin energy consumption myth. The mining process works by compiling transactions into blocks, breaking down complex puzzles and equations into solvable formats. When this process is completed satoshis, mBTC, and BTC are created and subsequently available for holding, spending, or distribution.
Who stands behind Bitcoin?
On the grand scheme of things, the answer to this question is effectively no one, as Bitcoin is decentralized. With no central body controlling matters and no direct economic ties, blocks of transactions are validated on the blockchain network through a computing “consensus”. This feature of Bitcoin is what allows it to form what is effectively the world’s leading independent currency format.
Who invented Bitcoin?
Here is where things get a little murky, as Satoshi Nakamoto is publicized as the creator of Bitcoin, but his actual identity is shrouded in mystery. The goal of “his” project was to create an electronic currency that operates outside of any central authority, with low transaction fees and fast movement speeds. This goal has largely been achieved, but finding more about the man – or whoever it is – behind Bitcoin is easier said than done.
What can Bitcoin be used for?
Bitcoin is a currency, so it can generally do whatever any other currency can do. Available to spend at a number of leading stores, you can easily buy your favourite products with any Bitcoin you have at hand. That being said, Bitcoin is probably at its best when mixed in with a touch of online gambling. All its attributes blend seamlessly with the gambling experience, from speed to low-cost fees, by using Bitcoin to gamble with, you’ll find the thrills, spills, and real cash wins are that much more enjoyable.
How do you buy Bitcoins?
If mining Bitcoins and handling all the hard graft that comes along with it isn’t for you, then you can look to buy Bitcoin outright instead. For this, you have two options; you can buy Bitcoins from an exchange or directly from other people via marketplaces – although the former option is considered much safer than the latter. You can pay for Bitcoin in a number of ways, from cold hard cash to direct bank transfer – or even via other cryptocurrencies. Should you want to get your hands on Bitcoin, you’ll be able to pay for it any way you feel comfortable with.
How can I use Bitcoin?
Well, before you start looking to snap up Bitcoin, you need to get yourself a wallet, we’re not talking about an old-fashioned leather wallet or something you slip into your back pocket either. A Bitcoin wallet is a digital product that houses private Bitcoin keys that equate to the value of Bitcoin held. It sounds a bit complicated, but in many ways it resembles a traditional ewallet, as you can use it to send and receive money using public and private addresses. If you have any designs on owning, holding (or should we say “hodling”), and spending Bitcoin you have to have a wallet that’ll allow you to manage and control your funds.
What are my Bitcoin wallet options?
When it comes to Bitcoin wallets you have two choices – hot or cold. The most popular method for storing Bitcoin is a hot wallet, which is solely hosted online. Through sites and apps like Coinbase, you can hold your Bitcoin balance on an ewallet-like platform. What a hot wallet allows for is the easy movement of Bitcoin, as such can usually be handled in just a few clicks. For those that are more security conscious, it’s worth heading down the route of creating a cold wallet, which usually results in handling private Bitcoin keys via paper or through a secure USB drive.
What does the future hold for Bitcoin?
This is a pretty big question, but not one that the BitStarz team will skirt around. In our opinion, the future for Bitcoin is exciting, with some pretty huge developments currently on the horizon. The Lightning Network is gathering momentum, which could very well solve the cryptocurrency’s scalability problem, while another ATH certainly isn’t out of the equation. Powerful and fulfilling its massive potential, you can rightfully expect big things from Bitcoin in 2018 and beyond in our opinion.