Online trading has mushroomed. In today’s smartphone technology, digital currency has become the more popular mode of making transactions. It is very convenient and easy compared to the conventional method and the fees are minimal. So the intense interest in the digital phenomenon called the BitCoin comes as no surprise. It is the most popular and widely used digital currency.
What is BitCoins
BitCoins is a digital currency based on the open source peer-to-peer Internet protocol. They are basically just numbers and codes we use to pay for online trades. Values of Bitcoins are established online, peer to peer. They are not real coins and they don’t have a physical presence, although there may be instances when they are represented in small notes or coins. BitCoin values are tracked in an online database that records and processes debits and credits of two transacting parties.
BitCoin is decentralized; meaning no government agency or any other financial institutions like banks is backing up or regulating BitCoins. Unlike any other digital currency, BitCoins are traded and distributed across the internet without the need for middlemen. So it eliminates the usual transaction fees that come with conventional methods and is therefore the cheapest way to move money around. Since BitCoin is open source, no one is solely operating it and no one is profiting from it.
How is Started
BitCoin first started in 2009. The creator never revealed his true identity and only uses the pseudonym of Satoshi Nakamoto. Since inception, it has grown significantly. The BitCoin community has grown quickly with new users joining every day. It has become one of the largest distributed computing networks in the world with a total value of BitCoins in circulation of over US$1.3 Billion.
How it Works
BitCoin uses plenty of jargons that may be difficult to comprehend by most new users. To use BitCoin, you don’t have to necessarily understand all the technical details. If you know how email works, then using BitCoin may be simpler.
First, choose a wallet. It can be either a SOFTWARE wallet, a MOBILE wallet, or a WEB wallet.
Software wallets are installed in your computer. An app called BitCoin-QT is an example which allows you complete control over your BitCoins. Mobile wallets are installed in your mobile device. BitCoin Wallet app for Android is an example and it allows you to exchange coins easily and pay in physical stores by scanning a QR code or using NFC tap to pay. Web wallets are online hosts of your BitCoins. It requires less effort to secure your wallet. However, be careful in choosing your web wallets host as it may be possible for them to lose your BitCoins.
Once you have installed your chosen wallet, your first BitCoin address will be generated. You can create more BitCoin addresses if you want. To transact with BitCoins, just give one of your addresses to your friends so they can pay you. You can pay one of your friends if they give you one of their BitCoin addresses also. It is recommended that you use a new address each time you transact with BitCoins to keep your anonymity.
BitCoins must be treated with the same care as you would on your regular wallet. Always keep in mind that you cannot reverse any transaction you make with BitCoin. Once you issue or receive a fund, that’s it.
Where to Get BitCoins
BitCoins can be purchased with real money from BitCoin exchanges. You may also get them from friends or from online giveaways. New BitCoins are created through “mining” where you use free BitCoin mining software and solve complex algorithms.
What it Promises
BitCoin is said to improve the way users carry digital currency. It promises to be disaster proof and is impossible to counterfeit unlike gold reserves and paper money. BitCoin is said to be virtually difficult to trace, making it the go-to method of those who do business in the underworld and are afraid of the government meddling.
Unlike gold and paper money, BitCoins are easy to transfer, easy to secure, easy to verify, easy to manipulate, and faster and cheaper to transfer.
However, it may be useful to note that BitCoins remain today as experimental.