What is bitcoin
Bitcoin is the currency of the Internet. Created in 2009 it became popular due to its basic properties:
- Currency - Bitcoin is a decentralized currency maintained by a global network of millions of computers and is not controlled by any government or bank.
- Secure way to store wealth - Through its structure it is a very secure way to store money. It is based on cryptographic rules, that means that only the holder of the access keys can access the money. No third party (like a bank, state, government or any other entity) can gain access to your funds without your consent.
- Once received, bitcoins cannot be reversed - Bitcoin transactions are irreversible. This means that once you receive a payment for goods or services the sender is not able to return that payment. This provides a secure way for merchants to receive payments.
- Anonymity - The owners of the bitcoin accounts (addresses) are unknown. This allows for value to be stored without anyone knowing about it.
- Transparency - All bitcoin transactions are public and can be easily verified by anyone (transactions and addresses can be seen publicly but not the owners of the addresses)
- Deflationary - Bitcoin is a deflationary currency. The quantity of bitcoins in existence is limited to 21 Million. Because no new bitcoins will be minted, in the long term, the price of bitcoin can only increase - deflation as opposed to inflation.
- More secure than national currencies - Bitcoin is more secure then any national currency because it is maintained by millions of computers and millions of users who verify the integrity of the data in real time by using the currency.
- Secure - The base of bitcoin is blockchain. On average, every 10 minutes, the bitcoin network produces a new block of transactions that is then verified and confirmed by millions of computers. Each block is linked to the previous block through cryptographic link. A copy of the entire blockchain (that can also be seen as a journal of transactions) is stored on each of the millions of computers that run the bitcoin network.
- Immutable - It is impossible to modify a transaction from the past because you would have to change not only the block that contains the transaction but also all the following blocks, on millions of computers, at the same time.
BTC (abbreviation for bitcoin) is a digital, crypto currency, similar to cash. You can send BTC directly through the Internet, to any addressee without any third party being involved in the execution of the transaction. Just as cash transactions, the BTC ones are irreversible. This phenomenon will revolutionize the financial system of the world. It is a new payment method that acts in the same manner as the existent ones (for example PayPal or Western Union).
It has been designed based on “peer-to-peer” cryptographic technology, meaning "human to human" and it has the advantage that it is not controlled by any third party or single authority. There are no intermediaries, unlike banks or institutions, leading to a lower commissions. This payment method allows the anonymous asset transfer, meaning the users can protect their identity if they choose to. The system is cryptographic as is the case for Internet Banking, so it provides the same level of security and in some cases even higher.
What can you do with Bitcoin?
- you can spend and transfer money worldwide, at low costs;
- you can receive payments on the Internet, without the configuration of any payment service;
- protect your assets against devaluation and inflation caused by the states;
- you can donate bitcoin for any organization or cause.
Advantages for consumers
There are various reasons why consumers use bitcoin:
- it represents a flexible payment method
- it is simpler and easier to use than a credit card. With BTC you don’t have to write the card number, holder name or a CVV;
- prices are lower due to the lack of various agents;
- merchants pay 2-3% transaction commission for credit card payments. Merchants that use bitcoins do not have to pay these fees and can therefore pocket the difference or offer better pricing. When using credit cards as payment method merchants are also exposed to the risk of chargebacks that adds costs to accepting credit cards.
- increased privacy;
- using bitcoin on a large scale leads to an increase in demand that leads to the increase in bitcoin value. Bitcoin saved in your wallet leads to the rise of its value.
Advantages for merchants
There are many reasons why merchants use Bitcoins:
- it is irreversible, there is no risk of chargebacks or money being frozen due to fraudulent activity;
- the transaction fees are low, receiving bitcoin is free and sending costs less than a penny. Merchants can transform/convert bitcoin into dollars or any other fiat currency;
- payments in bitcoins can be made internationally with no limitations
- instant transfer! in a few seconds, merchant can verify the payment made by a customer. The transaction is usually fully completed in an hour;
- there are no payment processors or taxes;
- merchants accept payments directly from the customer. There are no intermediaries. This leads to the elimination of commissions and the money are received immediately without having to pass through numerous payment institutions
- we eliminate the problem of refused transactions from the payment processor, several days settlement to the bank account and the risk of being refused service
The advantages of Bitcoin as opposed to other crypto currencies
- bitcoin is the original crypto currency;
- bitcoin can be used anywhere in the world;
- bitcoin cannot be counterfeited;
- there is no printing technology which is capable of deceiving the bitcoin network;
- bitcoins cannot be devaluated;
- there is a limited number of bitcoins which can be emitted - 21 million. Unlike the other currencies, Bitcoin is not controlled by any government or bank, therefore actions like the increase of government debt or quantitative easing cannot affect bitcoin.
The advantages of Bitcoin in comparison to gold
Throughout time, gold was one of the most secure store of value. People have bought gold in order to reduce the risk of bankruptcy. BTC is better because:
- gold is not divisible;
- in the case of gold, a bullion for example, cannot be fragmented/parted in order to be divided in smaller pieces. BTC however can be easily divided up to 8 decimals;
- gold is not instantly analyzable;
- one cannot instantly determine the purity of gold, but one can instantly verify if a person holds authentic bitcoins;
- a measurement standard is required in order to accurately weigh gold. The amount of bitcoin in procession can be seen instantly;
- gold cannot be sent through the Internet;
- Gold can be confiscated and made illegal. The US Government has taken such measures in the past, thus transferring the gold to its own treasury. Comparatively, in the case of BTC, you can memorize the private key and no one will have access to your money.
What technology is used?
The bitcoin protocol is implemented using the latest technologies:
- the same cryptographic system as in case of Internet Banking;
- the “peer-to-peer” network protects Bitcoin against the government or any individual interference;
- it allows anyone to audit and propose improvements to the Bitcoin source code.
How can Bitcoins be bought?
It’s easy to buy BTC:
- open a free account at www.btcxchange.ro;
- click the Deposit button, make a deposit request and follow the instructions;
- make a deposit at one of the millions of banks in the world;
- buy BTC.
More details instructions can be found here.
How to manage your own bitcoins?
- saving BTC – the easiest way to store BTC is to simply leave them at the exchange; We are constantly monitoring the security of our systems and make sure that all deposits are safe.
- selling BTC – whenever you wish, you can convert BTC to fiat by selling them at the bitcoin exchange;
- BTC transfer – you can send bitcoins to your own wallet. Make sure your PC is secure and you are making periodic backups. You can then install the bitcoin wallet software on your computer;
- you can spend your bitcoins on goods and service worldwide. The list of accepting store is constantly rising;
Invest in Bitcoin amounts you are comfortable to loose. Any investment in Bitcoin or any other crypto currency is not free of risk. For example, any of the following risks can arise in the case of bitcoin:
- another cryptographic coin could surpass BTC – there have been many attempts, but all of them have failed;
- a blind spot can be detected in the cryptographic technology;
- the governments can try to ban or regulate bitcoin – this would be similar to refusing Internet access due to its illegal uses. Something like this is difficult to imagine because it would put the government and population into a strategic disadvantage;
- a flaw can be detected in the BTC protocol – different people have tried in the past 2 years to do that, but have failed.