Required Bitcoin Basics for Beginners

Bitcoin backers say it’s ‘the future of money’, doubters call it ‘evil’. Good, bad, or misguided, these days everyone has something to say about Bitcoin, even if they don’t necessarily understand the world’s most popular virtual currency. So, let’s slow down rumors and see what exactly it is and why everyone’s buzzing about it.

Bitcoin Logo (Representational Photo)

What are Bitcoins?

Bitcoins are decentralized, digital virtual coins exchanged directly between two parties online with no middle man. Bitcoin, which has often been called “cash for the Internet,” is not controlled or backed by any bank or central government authority, like the Federal Reserve.
Bitcoins are pieces of computer code — mathematical algorithms — that represent monetary units. There are currently approximately 11 million Bitcoins in existence. In all, only about 21 million Bitcoin will ever be generated through the year 2140. Unlike credit card transactions, Bitcoin transactions are irreversible; they can only be refunded by the person receiving the funds.

Here are the five basic facts about Bitcoins

1. Are bitcoins anonymous and untraceable?

Contrary to popular belief, they aren’t. While Bitcoin users don’t have to divulge certain pieces of identifying information, like their bank account and social security numbers or physical addresses, a traceable trail of each transaction is left behind in a public log known as the ‘Blockchain’. The public record prevents people from spending the same Bitcoins more than once. Bitcoin exchanges that operate in the U.S. collect personal identifying information from their users, which can be requested via Subpoena.

2. How can bitcoins be purchased?

Bitcoins are bought online using real analog money (U.S. dollars, Japanese yen, etc.) via Bitcoin exchanges and private sellers. Some of the more popular Bitcoin exchanges include Bitstamp and Coinbase, though there are dozens to choose from around the globe.

3. How can one start using Bitcoin?

First, you’ll need to install a Bitcoin wallet on your computer or smartphone. Or you can use a web wallet in the cloud. Some desktop Bitcoin wallets (also sometimes called clients) include Bitcoin-Qt, Armory, Electrum, Hive, and MultiBit. If you use a desktop wallet provider, be sure to back-up your computer regularly.

Mobile Bitcoin wallets, like Bitcoin Wallet for Android, let you use Bitcoin to pay for items in physical stores that accept them by scanning a QR code or using NFC “tap to pay”. Web wallets, such as Coinbase and Blockchain.info enable you to use Bitcoin from any browser or mobile device and often offer additional services, like current Bitcoin prices and news and the ability to buy, use and accept the cryptocurrency.

Once you’re signed up, your Bitcoin wallet provider should generate your first Bitcoin address and you can create more whenever you need one. You can also share your addresses with friends and contacts so they can pay you and you can pay them in Bitcoin.

4. Which companies accept Bitcoin payments?

Thousands of businesses throughout the world currently accept Bitcoin as a form of payment including reputable e-commerce businesses like Etsy vendors, WordPress, Overstock.com, Amazon.com. Large brick and mortar retailers are beginning to accept Bitcoins in their stores, including Kmart, Sears, Home Depot and CVS.

5. What are Bitcoins currently worth?

The currency today is trading at about $650 – $675, according to the CoinDesk Bitcoin Price Index. Values often fluctuate wildly from day to day. Though Bitcoins are relatively new, but they’re growing at a breakneck pace. The Bitcoin market is worth approximately $7 billion at current market rates, with millions of dollars of the digital currency being traded daily.

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