Bitcoin is an online alternative currency system that serves as a form of digital currency. Bitcoin is used as an investment and as a means of payment for goods and services, and is said to be a trading tool without the need to involve any third parties with crypto prices.
Despite the growing popularity, most businesses still do not accept bitcoin, and their usefulness as an investment is highly questionable and risky. Before proceeding to buy bitcoin, it is important to understand what it is, and its advantages and disadvantages.
Understanding Bitcoins
Understand the basics of bitcoin
There is no need for names to transfer money because there is little risk of identity theft.
Learn about Bitcoin trading
To understand Bitcoin, it is important to understand the Bitcoin transaction, which is the process of creating Bitcoin. The transaction is complex, but each time a Bitcoin transaction is made between two people, the transaction log from computers to the log of a transaction log that describes all the details of the transaction (such as time, and how many Bitcoin owners).
These transactions are publicly known as “blockchain”, which states every transaction, and who owns each bitcoin.
Bitcoin traders are people who have computers that constantly check the blockchain to keep it up to date. They are individuals who confirm transactions, and instead of doing so, they are paid in bitcoin, which increases the supply.
Since the Bitcoin is not maintained by the central authority, does the business have enough Bitcoin for the person to transfer the Bitcoin ?, is the amount transferred? And is the balance of each member of the transaction correct? Confirms that. Get familiar with the legal issues surrounding Bitcoin.
Recently, the federal agency responsible for combating money laundering announced new guidelines for virtual currencies. The updated guidelines control bitcoin exchange but leave the rest of the bitcoin economy alone.
Bitcoin Network is immune to government control and has gained loyal followers among people who engage in illegal activities such as drug dealing and gambling because it can be anonymously exchanged. However, transactions can still be traced, and the FBI has been able to seize several Bitcoin wallets used by bad movie actors.
Federal law enforcement may eventually conclude that Bitcoin is a money-laundering tool and look for ways to cover it up. The complete shutdown of Bitcoin is a challenge, but severe federal regulation may push the system underground. This reduces the value of bitcoins to legal currency. Learn the advantages and disadvantages of using bitcoins
The advantages of Bitcoin
The main advantages of Bitcoins are low fees, protection from identity theft, protection from payment fraud and immediate settlement.
Low fees: Unlike traditional financial systems, where the system itself (such as PayPal or bank) can cover fees, Bitcoin bypasses the entire system. The Bitcoin network is operated by “businessmen” who are solved by the new Bitcoin.
Protection from identity theft: Bitcoin use does not require a name or any other personal information, just an ID for your digital wallet (the method used to send and receive Bitcoin). Unlike a credit card where the merchant has full access to your ID and credit line, bitcoin users operate completely anonymously.
The disadvantages of using Bitcoin
With conventional banking, there are laws to limit the loss of customers if someone trades on your credit card or engages in fraudulent transactions in your bank account. Unlike traditional banks, Bitcoin does not have a safety net if your bitcoins are lost or stolen. You have no intermediary to repay any lost or stolen bitcoins.
Keep in mind that bitcoin network is not immune to hackers, and the average bitcoin account is not completely safe against hacking or security breaches.
One study found that 18 out of 40 businesses offered to exchange bitcoins to other currencies, while only six exchanges repay their customers.
Price volatility is also a major concern. This means that the price of bitcoin in dollars will fluctuate sharply. For example, in 2013, 1 bitcoin was worth about US $ 13. This means that if you are converting to Bitcoin, it is important to stay in it, as returning to the US could result in significant loss of funds.
Understand the risks of Bitcoin as an investment
Bitcoins are an investment in popular usage, and it deserves a special word of caution before proceeding. One of the main risks of investing in bitcoin is its volatility. With prices moving up and down rapidly, the risk of loss is considerable.
Bitcoin storage setting
Store your Bitcoins online.
To purchase bitcoins, you first need to create a storage site for your bitcoins, and this is the first step to buying bitcoin. Currently, there are two ways you can collect bitcoins online:
Store your Bitcoins
In an online wallet. Wallet is a computer file that collects your money, much like a real wallet. You can create a wallet by installing the Bitcoin client, which is the software that powers the currency. Always back up your wallet to an external hard drive to avoid losing your bitcoins.
Store your Bitcoins through a third party. You can also create a wallet using an online wallet through a third-party site like Coin base or blockchain.info, which stores your bitcoins in the cloud. This is easy to set up, but only if you trust a third party with your bitcoins !. These sites are the two largest and most trusted third party sites, but there is no guarantee about the security of these sites.
Create a paper wallet for your bitcoins
One of the most popular and cheap options to secure your bitcoins is paper wallet. The wallet is small, compact and made of paper with code. So it is not subject to cyber attacks or hardware failures.
Many online sites offer paper bitcoin wallet services. They can create a bitcoin address for you and create an image with two QR codes. One is a public address that you can use to receive bitcoins and another is a private key that you can use to spend bitcoins stored at that address.
Use a hard-wire wallet to store your bitcoins.
Hard-wire wallets are usually small and compact and are in the shape of some USB sticks.
Treasure hard-wire wallet is ideal for bitcoin miners who want to get a large number of bitcoins, but don’t want to rely on third-party sites.
The Compact Ledger Bitcoin Wallet serves as a USB storage for your Bitcoins and uses smart card security. It is one of the most affordable hardware wallets on the market.
How to exchange bitcoin?
Choose an exchange service
The easiest way to get bitcoin is to get bitcoin through the exchange. Exchange works just like any other currency exchange: you register and convert your currency to Bitcoin. There are hundreds of exchanges available, and the best exchange option depends on where you are, but the most popular exchange services are:
Cryptal: This is a Singapore based wallet service that allows users to trade Singapore dollars for bitcoins. The company currently has a web-platform that is mobile-friendly.
Coin Base:
This popular wallet and exchange service also trades US dollars and euros for Bitcoins. The company has web and mobile apps for more convenient Bitcoin buying and trading.
Circle: This exchange service gives users the ability to collect, send, receive and exchange bitcoins. Currently, only US citizens can link their bank accounts to deposit money.
Some exchange services also allow you to trade bitcoins. Other exchange services serve as wallet services with limited buying and selling capabilities. Most exchanges and wallets collect digital or fiat currency for you, just like a regular bank account. Exchanges and wallets are a good option if you want to engage in regular trading and don’t need total anonymity.
Provide your identity and contact information for the Service.
When signing up for the Exchange Service, you will need to provide personal information to the Service in order to create an account. Most countries legally require any person or financial system to meet anti-money laundering requirements using a Bitcoin exchange service.
While you may need to provide proof of your identity, exchanges and wallets do not provide the protection offered by banks. Buy bitcoins with your exchange account.
Once you set up your account through an exchange service, you will need to link it to an existing bank account and arrange to move money between it and your new Bitcoin account. Some exchanges allow you to personally deposit into their bank account.
If you need to link to a bank account to use the exchange service, it will only give you access to the country’s banks on which the exchange service is based. Some exchanges allow you to transfer money to overseas accounts, but the fees are higher and may delay the transfer of bitcoins back to the local currency. Using the seller. Search for vendors at Local Bitcoins.
This is the primary site for face-to-face trading with local vendors. You can arrange a visit and negotiate prices for bitcoins. The site has an additional layer of protection for both parties.
Use Meetup.com to find vendors.
If you’re not comfortable with one business, use Meetup.com to see the Bitcoin Meetup group. You can all decide to buy bitcoins in bulk and learn from other members who used vendors to buy bitcoins first.
Negotiate the price before the visit.
Depending on the seller, you can pay a premium of about 5-10% on the exchange price for face-to-face trading. You can check the current Bitcoin exchange rates online at http://bitcoin.clarkmoody.com/ before accepting the seller’s rate.
You should ask the seller whether you want to pay by cash or online payment service. Some sellers may allow you to use a PayPal account to pay, although most sellers prefer non-refundable cash payments.
A reputable dealer will always consult with you before you meet.
Avoid meeting in private homes, especially if you are making a cash transaction to pay a bitcoin seller. You should take all precautions.
Have access to your Bitcoin wallet.
When you meet a vendor face to face, you need to access your Bitcoin wallet through your smartphone, tablet or laptop. You need Internet access to confirm that the transaction has taken place.
