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As you might suspect, the applications of Bitcoin, as well as its many benefits, are very exciting. It is often dubbed the currency of the future. Below is a brief overlook of everything that you need to know about this amazing new crypto-currency.
What is Bitcoin?
As is mentioned above, Bitcoin is a digital currency that follows a set of ideas that are laid out in a white paper by its founder. It promises no transaction fees like traditional online payment mechanisms. Furthermore, it is operated by a decentralized authority.
One of the best aspects of bitcoin is that transactions are made without middlemen. This means no banks are necessary! Along with no middlemen and transaction fees, you don’t have to provide your real name to use bitcoin. Anyone can use it and will remain anonymous in the process.
An increasing number of merchants are beginning to accept bitcoins. Indeed, their use is now not only restricted to online purchases. You can now use bitcoin for offline purchases, even in brick-and-mortar establishments.
History of Bitcoin
The history of bitcoin is nearly as interesting as the virtual currency itself. Created in 2008, it was first launched as public software in 2009.
A fascinating aspect of bitcoin's creation is the person behind it. Going by the pseudonym Satoshi Nakamoto, the currency's inventor remains unknown. In fact, it isn't even clear whether Nakamoto is a single person or a team of people operating together.
Since its release to the public in 2009, bitcoin has continued to grow. With this growth have come some tweaks and refinements including the repair of a major bug in 2010. As bitcoin has grown in popularity, more and more merchants have started to accept it for payment in countries around the world.
Why Use Bitcoin
The benefits of using bitcoin simply cannot be overstated. For one thing, it is very easy to use. Because bitcoins are not tied to any country or are subject to regulations, there are not a lot of hoops to go through when using them. This also makes using them cheap as well.
Bitcoins also appeal to merchants, especially small businesses, because there are no credit card fees involved. Still other people see bitcoins as an investment. They buy them as an investment with the hope they will go up in value. Finally, other people use bitcoins because they allow you to remain anonymous. You can purchase merchandize and services anonymously without anyone knowing who you are.
Acquiring Bitcoin
There are currently three primary ways that you can acquire bitcoins for yourself. These include buy on exchange, transfers, and Bitcoin mining.
Buy on exchange is the easiest way for newcomers to virtual currency to buy bitcoins. You simply buy and sell Bitcoins with other users in a virtual marketplace using different types of currencies. Among the most popular bitcoin exchanges are Kraken, Bitstamp, and Bitfinex.
Transfers are another popular way to acquire bitcoins. This method is similar to sending cash digitally. With a transfer, you send bitcoins to another person using an app or your computer. Or they send them to you. This is the way that most online payments are made with bitcoins.
Finally, we come to Bitcoin mining. It is the most complex yet most interesting way to acquire new bitcoins. Though the process itself is too complex to discuss in detail here, it consists of people competing to solve complex math puzzles. These increasingly complex calculations are what create bitcoins in the first place. Creating a bitcoin is rewarded with the prize of several bitcoins.
Owning Bitcoins
A "digital wallet" contains your Bitcoins. Your personal digital wallet can exist either in the cloud or on your personal computer. Each method of storage has its list of pros and cons. Your wallet is a sort of virtual bank account that allows you to send and receive bitcoins including paying for goods and services. It's important to note that unlike bank accounts, bitcoin wallets are not insured by the FDIC (Federal Deposit Insurance Corporation).
Bitcoin Anonymity
One of the biggest reasons for bitcoin’s explosion in popularity is that using them is a completely anonymous process. Each bitcoin transaction is recorded in a public log although the names of the buyers and sellers are never revealed. The only thing that is revealed is their wallet IDs.
Gambling with Bitcoins
Gambling with bitcoins is becoming increasingly popular in the United States and around the world. It is currently a legal method of gambling in the United States, as there is not yet any legislation written regarding the digital currency.
The Future of Bitcoin
No one knows how the future of bitcoin will look. In fact, no one knows what the future of virtual crypto-currency will look like in general. Though bitcoin has been highly successful to date, that is no guarantee that it won’t fail in the future. There is also the chance that the currently unregulated state of bitcoins could someday become regulated. Many governments have expressed concern over the lack of taxation and lack of control over the crypto-currency.
Final Thoughts on Bitcoin
Bitcoin is fast becoming the currency of the future. Will it end up panning out? Though the future is uncertain, most experts agree that bitcoins will become even more popular in the next five to ten years. It is more important than ever before to understand the ins-and-outs of bitcoins as well as their many online and offline applications.