Knowledge base

What is Bitcoin?    

Bitcoin is an open source, p2p form of digital currency. What exactly does that mean? With Bitcoin, we have a “people’s currency” for the first time with no government or central figure controlling things like interest rates or inflation. Bitcoin transactions can’t be reversed, so users can receive payments without having to worry about chargebacks and the fees associated with them. At the same time, this feature means that you need to be careful with your coins; if you lose them, you can’t get them back. Because Bitcoin is peer to peer, fees for transactions are extremely minimal or even free.

Bitcoin takes a deflationary model. Only 21 million bitcoins are ever going to exist. There are no replacements, so lost coins are gone forever, making the supply even more scarce. This means that bitcoins will actually increase in value over time, unlike fiat currency that lose more and more value every year.

How to Use Bitcoin?

Before you can use Bitcoin, there are two things you need. First is a wallet. A wallet is an application that runs on your computer, in the web, or on your phone. Wallets store your private keys and addresses. These are two fundamental parts of what makes a bitcoin transaction work, so make sure you have a working and up to date wallet before proceeding.

The second part you will need is bitcoin itself. There are a multitude of ways to get bitcoin, from buying them outright at exchanges to receiving them from selling goods or services.

Instead of using names for payment, addresses are used which are long chains of characters used to identify a public key that is tied to a private key used to spend funds.

Why use Bitcoin?

Bitcoin saves on fees. Merchants will sometimes pass these discounts onto their customers. One good example of this is Gyft, where you have a 3% discount when using Bitcoin to purchase gift cards.

Another excellent example of enticing customers to use Bitcoin is purse.io. Purse.io allows you to purchase anything off of Amazon, and set a discount of your choosing that is between 10% to 30%. 10% discounts on orders are guaranteed to be filled within 24 hours, and other amount discounts should be filled in relatively quickly.

Besides saving money with merchants, sending money has never been easier. With the ability to send Bitcoin quickly and cheaply around the world, remittance services are running for their money.

Bitcoin also allows you to do many things that you couldn’t do conventionally. Because of the blockchain’s features, such as recording transactions permanently, you could for example sign documents proving that it is indeed yours.

You can also use multi signature wallets, with multiple people having to agree to a transaction before a transaction is made. This allows for small businesses to keep their money more secure. Multi signature wallets are ideal for companies that store their bitcoin and want to prevent someone from stealing funds. While they are typically more clunky to use, multisig wallets offer the security needed to prevent bad actors from harming the organization.

With Bitcoin you can implement a brain wallet. A brain wallet consists of a long phrase of letters that you have memorized. With this phrase you can access your Bitcoin from anywhere. It really is quite impressive that you can store money with essentially nothing but your brain.

Many people see Bitcoin as an investment vehicle. Bitcoin is essentially a high risk-high reward investment, on a scale like no other. Bitcoin’s value can fluctuate by over 30% on a daily basis, making a good target for day traders seeking a quick profit. All investing, however, involves risk.

 

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