The ins and outs of Bitcoin

Bitcoin was invented in 2009, and the first bitcoins were issued in 2011. Since then, the currency has grown to become the most commonly used alternative to traditional currencies like the U.S. dollar or British pound. 

If you’re not sure what Bitcoins are or how they work, this guide will explain everything from the ground up. 

So it doesn’t matter if you’re brand new to digital currencies or if you’ve been using them for years, you’ll be able to understand everything there is to know about Bitcoin.

What Is Bitcoin?

Before we delve into what bitcoin is, it’s worth taking a step back to talk about money. Put simply, all money is an instrument that facilitates transactions. 

In our modern economy, currency -such as U.S. dollars or euros -is created by governments who then determine how much of that currency can be in circulation at any given time (which is why inflation occurs). Bitcoin was created as a medium for financial transactions free from governmental control or oversight. 

It operates on a peer-to-peer network with no central authority overseeing its use. Instead, transactions are verified by network nodes and recorded on a public ledger known as a blockchain. 

The security of these transactions is ensured through cryptography, which keeps track of every transaction ever made within the system. This means that no one person or entity has control over bitcoin. 

No one person or entity can decide to make more bitcoins available than there already are in existence.

How does one get started with bitcoin?

First, sign up for a bitcoin wallet. Each bitcoin user has an electronic wallet where bitcoins are stored. There are dozens of wallet options out there, from bitcoin-only options to hybrid wallets (which work with regular currencies like dollars). 

Then it would help if you found someone to sell or buy btc for you. If you’re looking to trade in person, LocalBitcoins is one option. It’s essentially Craigslist for bitcoin buyers and sellers; people post advertisements on it describing what they want to buy/sell/trade and at what price they’re willing to do so. 

You can also use online exchanges such as Coinbase or Mt Gox, which let users exchange cash for bitcoins using bank accounts or credit cards.

What can you do with bitcoins?

For consumers, bitcoin is a great way to make small purchases without having to enter your credit card details online. Online retailers can help you save time by not requiring shoppers to create an account or enter payment information when they check out. 

Some people have even made bitcoins a full-time income stream by accepting them as payments for goods or services on their websites. The most common use for bitcoins remains speculation: investors buy up coins in hopes that their value will increase over time.

What are the risks involved in dealing with bitcoins?

Bitcoins are a great way to make payments across borders, whether you’re sending money to family overseas or buying goods from overseas merchants. 

As with all electronic transactions, though, there are risks involved. Before you start dealing in bitcoins, be sure you know what those risks are. Here are some things to consider

1. Any central bank or government does not regulate Bitcoins, so if you lose your bitcoins, there’s no one to turn to for help. If you forget your password or otherwise lose access to your bitcoin wallet, there’s no way to retrieve them. You can try asking around on forums or using a search engine to see if anyone has been able to crack their own forgotten password-but don’t get your hopes up too high. 
2. Your bitcoins are only as safe as whoever is holding them for you. This means that if you entrust your coins to an exchange or online wallet service, they could be stolen from that third party at any time. To protect yourself from such risks, it’s best to use a desktop client (instead of an online service) and store your coins in an encrypted file on an external hard drive. 
3. Bitcoins aren’t necessarily anonymous. Because every transaction ever made with bitcoins is recorded in a public ledger called the blockchain, law enforcement agencies may be able to track down transactions made by criminals even after those criminals have laundered their ill-gotten gains through various exchanges and wallets.
4. Bitcoins aren’t universally accepted yet. While some merchants have begun accepting bitcoins, many more still do not. As a result, you might find it difficult to buy everyday items like groceries or gas without first converting your bitcoins into another currency.