Bitcoins have taken the world by storm. No one anticipated that this cryptocurrency would overcome the challenges that plagued it during its inception in 2008. However, bitcoins have continued appreciating value. Will they replace the normal currency in the future?
Top 10 Bitcoin Questions & Answer:
1. What Are Bitcoins?
A bitcoin is a peer-to-peer paperless digital currency that came into existence in 2009. It is a decentralized form of currency that has not central regulator. It is controlled by the users. What this means is that no one, not even the government, can block your bitcoin transactions. You can transfer or receive bitcoins through your mobile phone without any bulky paperwork.
2. Who Invented Bitcoins?
The idea of having a cashless and decentralized money transfer system was conceptualized by an anonymous figure called Satoshi Nakamoto. In a white paper published in May 2008, Satoshi outlined in detail how the digital currency would work.
According to him, bitcoins were to be mined by specific computer software and hardware. After mining, the currency would be transferred directly from one user to the other without any intermediary. This movement of bitcoins would then be recorded in a tamper-proof public ledger.
3. What Makes Bitcoin Special?
One special thing about this digital currency is the fact that one can receive or send bitcoins without having to go through a third party. Transacting in other currencies requires third parties such as banks or financial intermediaries.
Every transaction is recorded in a bitcoin blockchain. All recorded transactions can be publicly viewed and are not editable. This reduces the chances of fraudulent bitcoin transfers.
4. What Is a Decentralization of Currency?
Most cryptocurrencies are decentralized. This means that no single entity or groups control them. The advantage of decentralization is that the currency can be spent anywhere in the world provided that the recipient acknowledges bitcoins as a form of payment.
Decentralized currencies have no geographical boundaries. Since there is no central regulation, some countries are wary to allow digital currencies as legal forms of payment. However, some countries like Japan have recognized bitcoins as a legal currency.
5. How Do You Use Bitcoins?
Bitcoins are similar to paper money in that they can be spent or used to settle debt. For some people, bitcoins are an investment because of their ever increasing value. For others, they are used for transferring money internationally. Bitcoins are stored in electronic digital wallets. These digital wallets can either be desktop, mobile, hardware or even online based.
6. How Many People Use Bitcoins?
The exact number of bitcoin users is hard to determine. This is because there are no official central records of the users. However, this number can be estimated based on the number of digital currency wallets. As of September 2017, there were about 20 million active bitcoin wallet users. Generally, there is a steady increase in the number of people transacting in bitcoins.
7. How Do I Get Bitcoins?
There are three ways of getting bitcoins. The first one is through mining. Initially, this was a very profitable venture. It is no longer, however, cost effective for individuals. In this method, one buys specialized mining equipment, rents spaces for them digitally and pays the associated costs for them. The associated costs include cooling, electricity and rental costs.
You could also buy bitcoins. There are plenty of online exchanges where buying and selling takes place. You can also buy them from other individuals. Alternatively, you could work for them. Some employers pay their employees in terms of bitcoins instead of normal currencies.
8. How Will I Spend, Receive or Send Bitcoins?
Every bitcoin wallet has its own unique address. This address represents a destination. The address is usually alphanumeric having between twenty seven and thirty four characters in length. Most wallets are user friendly and have interfaces that are easy to navigate. If you want to send bitcoins, you must first ensure that your wallet balance is positive.
You then insert the bitcoin address of the intended recipient and then press the send button. You will be charged a small fee for the transaction. Within a few minutes, the transfer will have been completed. One is able to spend bitcoins anywhere as long as the establishments recognize bitcoins as a means of payment.
9. What Are the Benefits of Bitcoins?
Bitcoin transactions are cheap. Normal currency transactions are expensive, especially where large amounts of money are involved. Another advantage of transacting in bitcoins is that it is tax free. Since it is not controlled by the government, no duties or taxes are payable by either party.
Cryptocurrency payments are also some of the safest payments methods of funds transfer. There is no identity theft as is the case with credit cards. Finally, bitcoin transactions are very fast and convenient. It only takes a few minutes for a transfer to be successful.
10. What Are the Disadvantages of Bitcoins?
Despite the many advantages of bitcoins, it still faces several challenges. It is not globally accepted as a form of currency. Some countries have banned any digital currency transactions. Only a few countries like Japan have fully legalized bitcoins. Another challenge facing bitcoins is the fact that they are exposed to massive fluctuations in value.
Some days are good while some days are bad. Depending with the date of the transaction, this can result in disputes. Finally, bitcoins are not regulated by any central authority. As such, buyers and sellers are not fully protected.