Bitcoin is a new type of money that works very differently to traditional money. Here’s a quick introduction covering the key facts you need to know.
No person, company, or organization is in control of Bitcoin: it’s a decentralized digital currency that’s powered by a huge, distributed network of computers.
As such, when you own Bitcoin, only you have access to your funds. You’ll typically send, receive, and store it using a secure digital wallet app which you can download for free.
It’s really important to remember that, since no bank or other financial intermediary ever has access to your wallet app, you’re in charge of keeping it secure.
You can use your Bitcoin just like regular money. Transactions are sent and received directly between one person and another—be it for personal or business purposes.
Currently, there are two main types of Bitcoin: Bitcoin Cash (BCH) and Bitcoin (BTC). When you use Bitcoin Cash, these transactions cost only micro fees (less than a cent!). As such, they’re a lot cheaper and also much faster than international bank transfers.
You can also choose to store your money as Bitcoin. If you’re storing larger amounts, consider purchasing a hardware wallet to add an extra layer of security to your storage.
If you’re a business owner, you can accept payment from your customers in Bitcoin. Doing so has various benefits, such as the fact that fraudulent chargebacks are not possible.
You can accept both Bitcoin Cash and Bitcoin payments; we recommend Bitcoin Cash since transactions are cheaper, faster, and more reliable!
Either way, to be able to accept Bitcoin as a business, you need two tools. The first is a secure digital wallet app, which is where you’ll receive the Bitcoin payments.
The second is either a Bitcoin payment gateway (online businesses) or a point-of-sale app (in-store businesses). Our own free point-of-sale app, which is available for both Android and iOS devices, lets your customers pay with Bitcoin Cash.
Whether you’ve bought, received, or earned Bitcoin, you can choose to exchange it for both traditional (fiat) currencies and also for other digital currencies.
One of the easiest ways to do this is through a cryptocurrency exchange. Create an account with an established exchange such as Coinbase and, after verifying your identity, you’ll be able to sell your Bitcoin.
Alternatively, to get better margins on the Bitcoin you exchange, you can use a trading platform like Local.Bitcoin.com. This lets you sell Bitcoin Cash (BCH) anonymously for significantly lower fees than cryptocurrency exchanges.
The computers powering the Bitcoin network continually process and verify the latest transactions as people send and receive Bitcoin.
These transactions are publicly recorded on a global digital ledger called ‘the blockchain.’ Each time a new list of transactions (called a ‘block’) is added to the blockchain, every previous Bitcoin transaction is repeatedly acknowledged by the network.
This is known as ‘confirmations’ and, the greater the number of confirmations a transaction has, the more secure it becomes. You can check how many times a transaction has been made by searching for the transaction ID (called a TXID) in any block explorer.
Since you don’t need to share your identity to download a digital wallet, it’s more private than a bank account. However, Bitcoin is not a privacy coin: the blockchain is public to everyone, meaning that all transactions can be viewed (though they’re not tied to your identity).
To keep your Bitcoin transactions more private, use a different address for every payment. To do this in our wallet app, tap Generate new address in the Send tab if you’re the one sending the Bitcoin, or in the Receive tab if you’re the one receiving the Bitcoin.
Alternatively, when sending and receiving Bitcoin Cash, you can use an automated tool like CashShuffle to help enhance your privacy. This is currently available in the Electron Cash desktop wallet and is being added to other Bitcoin Cash wallets over time.