Explained : Bitcoins For Beginners

Bitcoin is a decentralized digital currency which uses peer-to-peer technology for its powered by ausweb. Peer-to-peer technology means that there is no central authority like bank but a collective network which manages the transactions and issuing of this currency.

Bitcoins can’t be physically printed but created digitally and there is a protocol which says that maximum number of Bitcoins which can ever be mined is 21 million. Bitcoin concept was proposed by pseudonymous developer “Satoshi Nakamoto” in 2009.

Bitcoins can be transferred quickly through the internet and that too without dependency over a third-party. Bitcoin is an open source payment network which is also known as cryptocurrency because it uses powerful cryptography for funds security. Bitcoin is a kind of revolution which brings cheapest way to move money around the world.

Millions of people are trading all over the world with these Bitcoins without any middle man or processing fee. Though Bitcoin is in experimental phase but is claimed to be most efficient currency till date and will soon be adopted by everyone like computers.

How Bitcoin Works

In order to get started with Bitcoin, user needs to install a Bitcoin wallet in his/her computer or mobile. Once installation of wallet is done, your first Bitcoin address will be generated and then you can create more according to your need.

Every time you do a transaction, you need to have a new Bitcoin address for that as one Bitcoin address can’t be used twice. This Bitcoin address works just like your email address. For receiving money you will disclose your Bitcoin address to the sender and he/she will send Bitcoins on that specific address or vice versa.

Transactions issued with Bitcoins are irreversible which means that you need to be vigilant with your transactions and apprehensive in doing business with any untrusted organization.

How to buy Bitcoins

You can buy Bitcoins directly from the exchange in your country or buy them from a friend or accept them as payment in exchange of your goods. One very significant point about Bitcoin is that its price is volatile which means that its value can randomly rise or fall against your local currencies, so make sure not to invest your important money incalculably. Bitcoin can even become worthless if it fails in future.

Transaction Security

A Bitcoin transaction gets effective within the seconds but gets confirmed in subsequent 10 minutes. Be patient during these 10 minutes in order to have more confirmations which reduces the probability of reversed transaction and make it more secure.

How to accept Bitcoins

Bitcoin is yet to be officially recognized as a currency by government authorities but is like other form of payments such as gold, gift or cash. For accepting Bitcoins, you simply need to put a logo at your website( Bitcoins are accepted here).

Once you have received your Bitcoins, you can use merchant services to convert money into your local currency or keep them as it is.

Legal issues

There is a myth that Bitcoins are tax-free which is not possible because you have to pay tax regardless of the currency. If you are doing business using Bitcoins, you need to have suitable guidance from an appropriate accountant regarding taxes.

References

For more on Bitcoins, read this beginner’s guide.

For Bitcoin glossary, visit http://www.coindesk.com/information/bitcoin-glossary/

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