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Things You Need to Know About Bitcoin


Read an important announcement about Bitcoin from Bitcoin.com.

No Central Command

Bitcoin Core (BTC) isn’t owned by anyone. Think of it like email. Anyone can use it, but there isn’t a single company that is in charge of it. Bitcoin transactions are irreversible. This means that no one, including banks, or governments can block you from sending or receiving bitcoins with anyone else, anywhere in the world. With this freedom comes the great responsibility of not having any central authority to complain to if something goes wrong. Just like physical cash, don’t let strangers hold your bitcoins for you, and don’t send them to untrustworthy people on the internet.

(Update: Bitcoin Core is less usable as money due to much higher fees and delayed transaction times. The Core team has also expressed an interest in keeping these fees high since they view BTC as a “store-of-value” and not something to be transacted on a daily basis. In contrast, Bitcoin Cash’s transaction fees cost pennies and payments can be validated even with zero confirmations. These facts make BCH the ideal cryptocurrency for sending and receiving money anywhere in the world.)

Secure Your Wallet

There are several different types of Bitcoin Core wallets, but the most important distinction is in relation to who is in control of the private keys required to spend the bitcoins. Some BTC “wallets” actually act more like banks because they are holding the user’s private keys on behalf. If you choose to use one of these services, be aware that you are completely at their mercy regarding the security of your BTCs.

Most wallets, however, allow the user to be in charge of their own private keys. This means that no one in the entire world can access your account without your permission. It also means that no one can help you if you forget your password or otherwise lose access to your private keys. If you decide you want to own a lot of Bitcoin Core it would be a good idea to divide them among several different wallets. As they saying goes, don’t put all your eggs in one basket.

 

Bitcoin Price

Like everything, Bitcoin Core’s price is determined by the laws of supply and demand. Because the supply is limited to 21 million bitcoins, as more people use BTC the increased demand, combined with the fixed supply, will force the price to go up. Because the number of people using Bitcoin Core in the world is still relatively small, the price of BTC in terms of traditional currency can fluctuate significantly on a daily basis, but will continue to increase as more people start to use it.

For example, in early 2011 one Bitcoin Core was worth less than one USD, but in 2015 one BTC is worth hundreds of USD. In the future, if Bitcoin Core becomes truly popular, each single Bitcoin will have to be worth at least hundreds of thousands of dollars in order to accommodate this additional demand.

 

Bitcoin Exchanges

There are several ways to buy Bitcoin Core, but trusted exchanges are a great way to acquire BTC. Because there are inefficiencies in the traditional banking system, exchanges will sometimes have slightly different prices. If the difference is too great, traders will buy low on one an exchange and sell high on another and close the gap. If an exchange constantly has substantially different prices than others, it is a sign of trouble and that exchange should be avoided. As with everything else, do your research and find an exchange you can trust. It’s also a good idea not to use an exchange as a wallet. Move your BTCs to your personal wallet so that you have control over your funds at all times. You can view our list of Bitcoin exchanges here.

 

Bitcoin Isn’t Completely Anonymous

Because all Bitcoin Core transactions are stored on a public ledger known as the blockchain, people might be able to link your identity to a transaction over time. Some companies offer various tools such as Bitcoin mixers to help achieve greater privacy, but it takes a huge amount of effort to use BTC anonymously. You may want to follow your country’s tax regulations regarding Bitcoin Core in order to avoid trouble with the law, but you have the power not to should you choose to take that risk. To improve privacy, most newer Bitcoin wallets will use a new Bitcoin address each time someone sends BTC to you.

 

Unconfirmed Transactions

BTC transactions are seen by the entire network within a few seconds and are usually recorded into Bitcoin Core’s world wide ledger called the blockchain, in the next block. While it’s possible that a transaction won’t be confirmed in the next block, in the vast majority of circumstances it is fine to accept a transaction as soon as it has been seen by the network. Unlike traditional payment systems, Bitcoin transactions are lightning fast and can be sent globally. Bitcoin Core is still relatively new, but with each passing day the technology becomes more reliable. It is more and more unlikely that a major bug will emerge in the system as time goes by, and people can trust the technology more with the passing of time. Each month people transact hundreds of millions of dollars worth of BTC.

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