What Bitcoin is all about?

Bitcoin is a new currency that was created in 2009 by an unknown person using the alias Satoshi Nakamoto. Transactions are made with no middle men – meaning, no banks!

 

Who is the inventor of Bitcoin?

Bitcoin was created by Satoshi Nakamoto, who published the invention on 31 October 2008 to a cryptography mailing list in a research paper called "Bitcoin: A Peer-to-Peer Electronic Cash System".

 

Who is Satoshi Nakomoto?

That is a question that, until now, nobody has been able to answer. Bitcoin’s founder and original developer chose anonymity, but that is not as suspicious as it sounds. Bitcoin and its payments system, the blockchain, have the potential to disrupt the global banking and payments systems as well as reducing the power that governments hold over their subjects. Whether it fulfills that potential is yet to be seen, but it isn't hard to imagine that the founder envisaged making some very powerful enemies. Given that, anonymity looks like a sensible precaution.

 

What is the meaning of bit coin?

Bitcoin is a digital currency (also called crypto-currency) that is not backed by any country's central bank or government. Bitcoins can be traded for goods or services with vendors who accept Bitcoins as payment.

 

What currency is Bitcoin?

Bitcoin is a form of digital currency, created and held electronically. No one controls it. Bitcoins aren't printed, like dollars or euros – they're produced by people, and increasingly businesses, running computers all around the world, using software that solves mathematical problems.

 

How does a Cryptocurrency work?

Cryptocurrency is an encrypted decentralized digital currency transferred between peers and confirmed in a public ledger via a process known as mining. ... First, let's review the basics and essentials of cryptocurrency, and then we will do an overview of the other properties that have made cryptocurrency what it is today.

 

What is the Blockchain?

The blockchain is a decentralized network of all Bitcoin users that essentially checks and records every transaction. When you download the Bitcoin client software it connects via the internet to every other user and generates a pair of mathematically linked codes or keys. One of those keys is public and the other private. When you transfer payments in Bitcoin the software checks one against the other to verify that you have verified Bitcoin to make the payment, then logs the transaction in a record available to all users. Every legitimate Bitcoin can therefore be traced back to its original miner

 

How is the Blockchain Different from Banking Ledgers?

Banks and accounting systems use ledgers to track and timestamp transactions. The difference is that the blockchain is completely decentralized and open source. This means that people do not have to rely on or trust the central bank to keep track of the transactions. The peer-to-peer blockchain technology can keep track of all the transactions without the fear of having them erased or lost. Furthermore, the blockchain, because of its open source nature, is more versatile and programmable than central banking ledgers. If programmers need new functionality on the blockchain, they can simply innovate on top of already existing software through consensus. This is difficult for central banks because of all of their regulations and central points of failure.

 

What is the Cryptocurrency?

A cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units of the currency. Cryptocurrencies are a subset of alternative currencies, or specifically of digital currencies.

 

What is a digital coin?

Digitalcoin is a decentralized peer-to-peer cryptographic medium of exchange that is not controlled by any central authority. Digitalcoin is designed for security, stability, and ease of use. This regard for stability is inherent in the design of the economy and in the spirit of the community.

 

What is the virtual currency?

Virtual Money can be defined as a digital representation of value that is issued and controlled by its developers, and used and accepted among the members of a specific (virtual) community. Unlike regular money, it is relying on a system of trust and not issued by a central bank or other banking authority.

 

What is the electronic money?

Electronic money, or e-money, is the money balance recorded electronically on a stored-value card or other device. ... Examples of electronic money are bank deposits, electronic funds transfer, direct deposit, payment processors, and digital currencies.

 

What is the virtual currency?

Virtual currency, also known as virtual money, is a type of unregulated, digital money, which is issued and usually controlled by its developers, and used and accepted among the members of a specific virtual community.

 

Which is the best Cryptocurrency?

Top 6 Best Cryptocurrencies & Alt-coins Investment (at time of printing):

 

    Ripple (XRP)

    Bitcoin ( BTC )

    Monero (XMR)

    GoldCoin (GLD)

    Litecoin (LTC)

    Ethereum (ETH)

 

What is a crypto wallet?

A cryptocurrency wallet is a secure digital wallet used to store, send, and receive digital currency like Bitcoin. Most coins have an official wallet or a few officially recommended third party wallets.

Who owns the Bitcoins?

That doesn't make the FBI the world's largest bitcoin holder. This honor is thought to belong to bitcoin's shadowy inventor Satoshi Nakamoto, who is estimated to have mined 1 million bitcoins in the currency's early days. His stash is spread across many wallets.

 

Who controls the Bitcoin network?

Nobody owns the Bitcoin network much like no one owns the technology behind email. Bitcoin is controlled by all Bitcoin users around the world. While developers are improving the software, they can't force a change in the Bitcoin protocol because all users are free to choose what software and version they use. In order to stay compatible with each other, all users need to use software complying with the same rules. Bitcoin can only work correctly with a complete consensus among all users. Therefore, all users and developers have a strong incentive to protect this consensus.

 

How does Bitcoin work?

From a user perspective, Bitcoin is nothing more than a mobile app or computer program that provides a personal Bitcoin wallet and allows a user to send and receive bitcoins with them. This is how Bitcoin works for most users.

Behind the scenes, the Bitcoin network is sharing a public ledger called the "block chain". This ledger contains every transaction ever processed, allowing a user's computer to verify the validity of each transaction. The authenticity of each transaction is protected by digital signatures corresponding to the sending addresses, allowing all users to have full control over sending bitcoins from their own Bitcoin addresses. In addition, anyone can process transactions using the computing power of specialized hardware and earn a reward in bitcoins for this service. This is often called "mining". To learn more about Bitcoin, you can consult the original whitepaper.

 

Is Bitcoin safe to use?

Security and control - Bitcoin users are in full control of their transactions; it is impossible for merchants to force unwanted or unnoticed charges as can happen with other payment methods. Bitcoin payments can be made without personal information tied to the transaction. This offers strong protection against identity theft. Bitcoin users can also protect their money with backup and encryption.

 

Why do people trust Bitcoin?

Much of the trust in Bitcoin comes from the fact that it requires no trust at all. Bitcoin is fully open-source and decentralized. This means that anyone has access to the entire source code at any time. Any developer in the world can therefore verify exactly how Bitcoin works. All transactions and bitcoins issued into existence can be transparently consulted in real-time by anyone. All payments can be made without reliance on a third party and the whole system is protected by heavily peer-reviewed cryptographic algorithms like those used for online banking. No organization or individual can control Bitcoin, and the network remains secure even if not all of its users can be trusted.

 

 

Is Bitcoin an Internet scam?

If you spend much time online, you, probably, often meet an advertising of different scams. These ads usually promise big benefit for simple work. Such schemes are likely to be financial pyramids/matrices, which simply want to cash in on their employees and don’t offer anything worthwhile. Most often they convince people to buy certain block of shares that will bring ones pots of money. But in fact, customer has to spread more those ads without any gain. Bitcoin has nothing in common with such schemes. Bitcoin does not promise superior returns. Developers can’t cash in on you. The biggest plus is Bitcoin can’t be bought without the owner’s agreement. Bitcoin is an experimental virtual currency, which is going to be a success or fail. None of the developers expects to get rich because of it.

 

What determines bitcoin’s price?

The price of a bitcoin is determined by supply and demand. When demand for bitcoins increases, the price increases, and when demand falls, the price falls. There is only a limited number of bitcoins in circulation and new bitcoins are created at a predictable and decreasing rate, which means that demand must follow this level of inflation to keep the price stable. Because Bitcoin is still a relatively small market compared to what it could be, it doesn't take significant amounts of money to move the market price up or down, and thus the price of a bitcoin is still very volatile. Plus, many people do not really know how Bitcoin margin calls work.

 

How do you get a Bitcoin?

First, get yourself a bitcoin wallet. Next, you will need a place to store your new bitcoins. In the bitcoin world, they're called a 'wallet' but it might be best to think of them as a kind of bank account. Depending on the security levels you want, different wallets will provide different levels of security.

How does a Bitcoin have any value?

Bitcoins do not have value as a physical commodity like gold and are not widely accepted as legal tender like dollars. ... In short, people accept and trade in Bitcoin because other people accept and trade in Bitcoin. It is recognized and accepted as a currency by many. Bitcoin is decentralized and limited.

 

How a Bitcoin is made?

New bitcoins are generated by a competitive and decentralized process called "mining". This process involves that individuals are rewarded by the network for their services. Bitcoin miners are processing transactions and securing the network using specialized hardware and are collecting new bitcoins in exchange.

 

Is Bitcoin a Cryptocurrency?

Bitcoin is a cryptocurrency and a digital payment system invented by an unknown programmer, or a group of programmers, under the name Satoshi Nakamoto. It was released as open-source software in 2009. The system is peer-to-peer, and transactions take place between users directly, without an intermediary.

 

Is Bitcoin anonymous?

Bitcoin is designed to allow its users to send and receive payments with an acceptable level of privacy as well as any other form of money. However, Bitcoin is not anonymous and cannot offer the same level of privacy as cash. The use of Bitcoin leaves extensive public records. Various mechanisms exist to protect users' privacy, and more are in development. However, there is still work to be done before these features are used correctly by most Bitcoin users.

Some concerns have been raised that private transactions could be used for illegal purposes with Bitcoin. However, it is worth noting that Bitcoin will undoubtedly be subjected to similar regulations that are already in place inside existing financial systems. Bitcoin cannot be more anonymous than cash and it is not likely to prevent criminal investigations from being conducted. Additionally, Bitcoin is also designed to prevent a large range of financial crimes.

Bitcoin transactions are pseudo-anonymous. The inputs in every transaction can be tracked in the blockchain to every previous transaction's outputs. However, there are Bitcoin privacy technologies being developed.

 

Is Bitcoin legal?

To the best of our knowledge, Bitcoin has not been made illegal by legislation in most jurisdictions. However, some jurisdictions (such as Argentina and Russia) severely restrict or ban foreign currencies. Other jurisdictions (such as Thailand) may limit the licensing of certain entities such as Bitcoin exchanges.

Regulators from various jurisdictions are taking steps to provide individuals and businesses with rules on how to integrate this new technology with the formal, regulated financial system. For example, the Financial Crimes Enforcement Network (FinCEN), a bureau in the United States Treasury Department, issued non-binding guidance on how it characterizes certain activities involving virtual currencies.

 

What is Cryptocurrency trading?

Cryptocurrency Trading is the Forex (Foreign Exchange) of cryptocurrencies. This means, you are able to trade different bitcoin and altcoin normally for USD and BTC. Cryptocurrency Trading is an alternative way to get involved in the Crypto-World!

 

What is a bit wallet?

A “wallet” is basically the Bitcoin equivalent of a bank account. It allows you to receive bitcoins, store them, and then send them to others. There are two main types of wallets. A software wallet is one that you install on your own computer or mobile device.

 

What is a hardware wallet?

A hardware wallet is a special type of bitcoin wallet which stores the user's private keys in a secure hardware device. They have major advantages over standard software wallets: private keys are often stored in a protected area of a microcontroller, and cannot be transferred out of the device in plaintext.

 

What is a cold wallet?

Bitcoin cold storage is achieved when Bitcoin private keys are created and stored in a secure offline environment. Cold storage is important for anyone with bitcoin holdings. Online computers are vulnerable to hackers and should not be used to store a significant amount of bitcoins.

 

Can Bitcoin be stored on a flash drive?

On removable media. You can store Bitcoins on removable media, including USB flash drives and CD-R's. These can then be kept in drawers, safes, safe deposit boxes, etc. Storing Bitcoins on removable media is done by saving a copy of the wallet.dat file, and then removing it from the computer.

 

What is a trezor?

TREZOR is a single purpose device which allows you to make secure Bitcoin transactions. With TREZOR, transactions are completely safe even when initiated on a compromised or vulnerable computer.

 

How many Bitcoins are in the world?

As of 6 February 2016, there are 15.2 million bitcoins circulation of a capped total of 21 million. Here's an up-to-date graph and other bitcoin network statistics. That means over 72% of all bitcoins are already in circulation. Currently there are 25 new bitcoins produced (mined) every 10 minutes.

 

What is the virtual currency?

Virtual currency, also known as virtual money, is a type of unregulated, digital money, which is issued and usually controlled by its developers, and used and accepted among the members of a specific virtual community.

 

What is a Cryptocurrency mining?

Mining programs tap into your computer's hardware resources and put them to work mining Bitcoin, Litecoin, or another type of cryptocurrency. And no, even if your hardware is used to generate money for them, you don't get any of it. They get all the money from putting your hardware to work.

 

What is a wallet address?

A Bitcoin address is a single-use token. Like e-mail addresses, you can send bitcoins to a person by sending bitcoins to one of their addresses. However, unlike e-mail addresses, people have many different Bitcoin addresses and a unique address should be used for each transaction.

 

Won't the finite amount of bitcoins be a limitation?

Bitcoin is unique in that only 21 million bitcoins will ever be created. However, this will never be a limitation because transactions can be denominated in smaller sub-units of a bitcoin, such as bits - there are 1,000,000 bits in 1 bitcoin. Bitcoins can be divided up to 8 decimal places (0.000 000 01) and potentially even smaller units if that is ever required in the future as the average transaction size decreases.

 

Is the Bitcoin legal?

Bitcoin is of interest to law enforcement agencies, tax authorities, and legal regulators, all of which are trying to understand how the cryptocurrency fits into existing frameworks. The legality of your bitcoin activities will depend on who you are, where you live, and what you are doing with it.

 

When you're on the receiving end of a Bitcoin transaction, it is advisable to generate a new Bitcoin address each time. To do this, go to your Blockchain Wallet and click on Receive Money. On the bottom-right, click on New Address. Make sure to label the address so you know what it's for.

 

How old is Bitcoin?

The software has been running and the blockchain has been growing since January 3, 2009 at 2:15PM EST, when the genesis block was created. The paper, Bitcoin: A Peer-to-Peer Electronic Cash System, was published on October 31, 2008 at 2:10PM EST.

 

What is the meaning of Satoshi?

A Satoshi is the smallest fraction of a Bitcoin that can currently be sent: 0.00000001 BTC, that is, a hundredth of a millionth BTC. In the future, however, the protocol may be updated to allow further subdivisions, should they be needed.

 

What is meant by digital currency?

Digital currency can be defined as an Internet-based form of currency or medium of exchange distinct from physical (such as banknotes and coins) that exhibits properties similar to physical currencies, but allows for instantaneous transactions and borderless transfer-of-ownership.

 

How much money is there in Bitcoin?

Of the 400 or so digital currencies in existence, bitcoin is the best-known and most mainstream. There are 13.1 million bitcoins in circulation (each worth about $600, though like other currencies they're divisible in much smaller units).

 

Is it safe to use Bitcoin?

Bitcoin has no such safety net. If your Bitcoins are lost or stolen, there's no intermediary with the power to make you whole. There are two basic ways to hold Bitcoins. You can participate in the Bitcoin network yourself, storing the keys to your Bitcoins in a wallet stored on your hard drive.

 

How does a Bitcoin works?

A transaction is a transfer of value between Bitcoin wallets that gets included in the block chain. Bitcoin wallets keep a secret piece of data called a private key or seed, which is used to sign transactions, providing a mathematical proof that they have come from the owner of the wallet.

 

How many Bitcoins are left to be mined?

There are a total of ~16 million bitcoins in existence, and 21 million total will be available. Therefore, there are ~5 million bitcoins still to be mined from now until around 2140.

 

How many Bitcoins are in circulation?

As of 6 February 2016, there are 15.2 million bitcoins circulation of a capped total of 21 million. Here's an up-to-date graph and other bitcoin network statistics. That means over 72% of all bitcoins are already in circulation. Currently there are 25 new bitcoins produced (mined) every 10 minutes.

 

How many Bitcoins are mined in a day?

As of the latest block reward halving on 9th of July 2016 each block now generates 12.5 new bitcoins. On average a block should be mined each 10 minutes but, because of the constant growth of hashing power (at least until now) each block takes close to 9 min on average to be mined.

 

How much was a bit coin worth in 2009?

Guy named Koch bought 5,000 bitcoins in 2009 for $27, now worth $886,000. Talk about a degree that gives you bang for your buck. Kristoffer Koch was writing a thesis on encryption in 2009 when he spent about $27 to buy 5,000 bitcoins.

 

What is bit coin used for?

As you've noted, Bitcoin is a digital currency used to pay for a variety of goods and services. ... Although physical forms of Bitcoin exist, the currency's primary form is data so you trade it online, peer to peer, using wallet software or an online service.

 

How many Bitcoins have been mined to date?

14 million bitcoins have been mined so far. This represents two thirds of the 21 million bitcoin limit. According to The Genesis Block 10% of Bitcoins haven't been active since 2012, and a substantial 35% haven't been spent since 2011. This second number is most likely to consist of lost coins.

 

Are there a finite number of Bitcoins?

There are 21 million Bitcoins in the Bitcoin network. The reward for solving a block started at 50 Bitcoins, and is halved every 210,000 blocks. This means that the reward will continue to get halved, down to 1 satoshi (0.00000001 BTC). This process is estimated to take beyond 2140.

 

What is Bitcoin mining?

Mining is the process of spending computing power to process transactions, secure the network, and keep everyone in the system synchronized together. It can be perceived like the Bitcoin data center except that it has been designed to be fully decentralized with miners operating in all countries and no individual having control over the network. This process is referred to as "mining" as an analogy to gold mining because it is also a temporary mechanism used to issue new bitcoins. Unlike gold mining, however, Bitcoin mining provides a reward in exchange for useful services required to operate a secure payment network. Mining will still be required after the last bitcoin is issued.

 

Can Bitcoin be regulated?

The Bitcoin protocol itself cannot be modified without the cooperation of nearly all its users, who choose what software they use. Attempting to assign special rights to a local authority in the rules of the global Bitcoin network is not a practical possibility. Any rich organization could choose to invest in mining hardware to control half of the computing power of the network and become able to block or reverse recent transactions. However, there is no guarantee that they could retain this power since this requires to invest as much than all other miners in the world.

It is however possible to regulate the use of Bitcoin in a similar way to any other instrument. Just like the dollar, Bitcoin can be used for a wide variety of purposes, some of which can be considered legitimate or not as per each jurisdiction's laws. In this regard, Bitcoin is no different than any other tool or resource and can be subjected to different regulations in each country. Bitcoin use could also be made difficult by restrictive regulations, in which case it is hard to determine what percentage of users would keep using the technology. A government that chooses to ban Bitcoin would prevent domestic businesses and markets from developing, shifting innovation to other countries. The challenge for regulators, as always, is to develop efficient solutions while not impairing the growth of new emerging markets and businesses.

 

Is Bitcoin a Ponzi scheme?

A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money, or the money paid by subsequent investors, instead of from profit earned by the individuals running the business. Ponzi schemes are designed to collapse at the expense of the last investors when there is not enough new participants.

Bitcoin is a free software project with no central authority. Consequently, no one is in a position to make fraudulent representations about investment returns. Like other major currencies such as gold, United States dollar, euro, yen, etc. there is no guaranteed purchasing power and the exchange rate floats freely. This leads to volatility where owners of bitcoins can unpredictably make or lose money. Beyond speculation, Bitcoin is also a payment system with useful and competitive attributes that are being used by thousands of users and businesses.

 

Hasn't Bitcoin been hacked in the past?

The rules of the protocol and the cryptography used for Bitcoin are still working years after its inception, which is a good indication that the concept is well designed. However, security flaws have been found and fixed over time in various software implementations. Like any other form of software, the security of Bitcoin software depends on the speed with which problems are found and fixed. The more such issues are discovered, the more Bitcoin is gaining maturity.

There are often misconceptions about thefts and security breaches that happened on diverse exchanges and businesses. Although these events are unfortunate, none of them involve Bitcoin itself being hacked, nor imply inherent flaws in Bitcoin; just like a bank robbery doesn't mean that the dollar is compromised. However, it is accurate to say that a complete set of good practices and intuitive security solutions is needed to give users better protection of their money, and to reduce the general risk of theft and loss. Over the course of the last few years, such security features have quickly developed, such as wallet encryption, offline wallets, hardware wallets, and multi-signature transactions.

 

What is Double Spending?

Double-Spending is the act of using the same bitcoins twice. There is only a 21 million set cap on the protocol and no more can be produced. So the network protects against double spend by the verification of each recorded transaction. The blockchains ledger ensures that the transactions are finalized by its inputs confirmed by miners. The confirmations make each unique Bitcoin and its subsequent transactions legitimate. If one tried to duplicate a transaction the original blocks deterministic functions would change showing the network that it is counterfeit and would not to be accepted.

Why should I use Bitcoin? I already have a bank account/credit card/Paypal account.

 

Bitcoin has lots of advantages over existing payment methods:

 

  • There is no centralized middleman controlling the flow of money, so your funds can’t be frozen, held, or subjected to arbitrary spending limits.

  • You can send nearly instant payments anywhere in the world for a very small, optional fee; usually equivalent to a few cents.

  • Bitcoin transactions are irreversible. For merchants, this means no chargebacks and a much smaller risk of payment fraud.

  • All Bitcoin transactions are on public record, so it’s possible to prove a payment has been made or personal ownership of bitcoins.

  • Bitcoins cannot be counterfeited or debased — only a finite amount of bitcoins can ever be created.

  • Bitcoin can be an anonymous form of payment if certain precautions are taken.

Won’t governments try to kill Bitcoin?

Maybe. Bitcoin might be the idea that eventually brings an end to the global bank and government monopoly on money. Some governments might see that as a threat to their power. Others might embrace Bitcoin and its potential for economic growth.

 

Bitcoin is decentralized, so it’s a tough target for an adversary to hit. What could governments do to attack Bitcoin?

 

  •     Excessively regulate or tax centralized Bitcoin based businesses (i.e. online Bitcoin exchanges).

  •     Completely outlaw the usage of Bitcoin and cryptocurrency.

  •     Turn off the internet.

 

It can be argued that (1.) is already occurring in some jurisdictions: in China, banks are currently outlawed from processing Bitcoin related transactions. United States law requires expensive money transmitter licenses to operate payment and money exchange services, which has been determined to apply to related Bitcoin businesses. Yet Bitcoin continues to flourish.

 

Prohibition (2.) would probably be met with fierce opposition in free-ish nations, even from citizens that don’t use Bitcoin on the basis of freedom. But nonetheless, illegalization is always a possibility, but the outcome of prohibition might have the reverse effect on Bitcoin’s popularity and usage.

 

The likelihood of (3.) seems small. Most of the global economy relies on the internet. Yet in this case, decentralized internet access may be a viable solution.

 

What is a bitcoin faucet?

A bitcoin faucet is a website that gives small amounts of bitcoins or satoshi for simply entering your email wallet address and solving a captcha.