What is a bitcoin?
Bitcoins are decentralized, purely digital virtual coins exchanged directly between two parties online with no middle man. Bitcoin lets you exchange money in a different way than with usual banks. Bitcoins are pieces of computer code - mathematical algorithms, which represent monetary units. Unlike credit card transactions, Bitcoin transactions, which take place internationally every day, are irreversible; they can only be refunded by the person receiving the funds.
Contrary to the misconceptions of the anonymous and untraceable nature of bitcoins, bitcoins are not. All Bitcoin transactions are stored publicly and permanently on the network, which means anyone can see the balance and transactions of any Bitcoin address. However, the identity of the user behind an address remains unknown until information is revealed during a purchase or in other circumstances. This is one reason why Bitcoin addresses should only be used once. 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 of transaction is left behind in a public log known as the blockchain.
Purchasing Bitcoins
Bitcoins are bought online using real analog money (U.S. dollars, etc.) via Bitcoin exchanges and private sellers. For instance, a friend would want to sell his/her bitcoins, you exchange with the dollar equivalent. You can also buy them directly from an exchange with your bank account.
Owning Bitcoins
First, you will need to install Bitcoin wallet on your computer or phone. Bitcoins are stored in a bitcoin wallet which exists either in the cloud or on a user’s computer. The wallet is a kind of virtual bank account that allows users to send or receive bitcoins, pay for goods or save their money. Once you’re signed up, your Bitcoin wallet provider should generate your first Bitcoin address which you can share you addresses with friends and contacts, so they can pay you and you can pay them in Bitcoin.
Bitcoin is experimental but still more attractive
Bitcoin is an experimental new currency that is in active development. Each improvement makes Bitcoin more appealing but also reveals new challenges as Bitcoin adoption grows. Because it is still experimental, you might encounter increased fees and slow confirmations. Noteworthy is that the price of a bitcoin can fluctuate over a short period of time due to its young economy, novel nature, and the market value. Meanwhile, several companies are starting to accept bitcoins as better mode of payments.
Visit this page to understand how to use bitcoins.
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