In 2009 Satoshi Nakamoto, an elusive and mysterious person, invented bitcoin. Some people believe Nakamoto doesn’t even really exist, that his name is a pseudonym hiding the true inventor’s identity.
Regardless, Nakamoto started something that has taken the economic world by storm. He invented a digital currency that has no national backing
What does this mean? What is bitcoin good for, then, if there’s no gold in the bank to back it up? And how do people even use this digital currency?
Keep reading to learn everything you need to know about bitcoin.
What is Bitcoin?
Bitcoin is a digital currency that has no middleman. Its value depends wholly on the free market.
When you use a bitcoin, you make a transaction with no banks between you as the buyer and your seller.
The value of bitcoin remained relatively low in its early years, but in the past several years, it has skyrocketed. Here are a few reasons why:
- Anonymity: Individuals have begun using bitcoin more because they can purchase goods anonymously.
- Cost Efficiency: People can make international payments for less money because bitcoins are not subject to regulation like other forms of currency are.
- Investments Some individuals have seen the skyrocketing prices of bitcoin and purchased them just as an investment and not as a means of currency.
Because bitcoins have several uses, individuals seek them out, and as a result, the coins are worth more. It’s the law of supply and demand at work. The more individuals want the coins, the more they are worth.
How to Use Bitcoin
So then, how does one go about getting their hands on this popular digital currency? You can acquire a bitcoin in a few different ways.
Buy Them
You can purchase bitcoin at an online marketplace referred to as a bitcoin exchange. The exchange will allow individuals to both buy and sell bitcoins using different currencies.
Here are a few ways you can purchase bitcoins:
- Exchanges: cryptocurrency exchanges will exchange currency for bitcoins and other types of cryptocurrency. Currently, Coinbase sells more cryptocurrency than any other exchange in the U.S.
- ATMs: The U.S. has thousands of bitcoin ATMs, designed specifically for individuals to purchase bitcoin.
- Investments: You can purchase bitcoin through a brokerage.
- Bitcoin owners: You can buy bitcoin directly from other individuals who have bitcoins. Peer-to-peer apps exist for this purpose.
Transfer Them
Individuals can use computers or mobile apps on their smartphones to send bitcoins to each other. You could even gift bitcoins to someone this way.
Mine Them
Bitcoins are created through the mining process. You need a high-end computer as well as the technical expertise to mine effectively.
People will earn bitcoins by solving difficult math puzzles. When they solve the puzzle, they receive bitcoin.
Storing Bitcoin
Because bitcoin is digital, you can’t go to the bank and bring home a roll of coins for your piggy bank. You need a virtual wallet to store your digital currency.
The digital cryptocurrency world refers to the bitcoin wallet as “hot” or “cold.”
Hot Wallet
When you store your bitcoin in a hot wallet, you’re keeping your currency in the cloud of an exchange or bitcoin provider that you trust. You can access your wallet through any device connected to the internet.
Cold Wallet
A cold wallet looks like a thumb drive. You download the bitcoin to your portable device and then carry it with you (even in your literal wallet).
To have a cold wallet, you first need a hot wallet. You download your cryptocurrency from the hot wallet to your cold wallet, and then you can carry your bitcoin.
Investing in Bitcoin
The volatile price of bitcoin makes it a temptation for many investors. Like all stocks on the open market, it has had highs and lows. The most recent highs make it a noteworthy investment.
Bitcoin reached its current peak in April 2021 at over $60,000. One year prior to this, it was worth $6,500. Thus, many individuals will purchase bitcoin with the sole idea of using it as an investment, not intending to ever use it as currency.
Spending Bitcoin
Purchasing bitcoin seems pretty straightforward, but how does one spend them? Can you convert them?
Here are a few ways you can both spend and convert bitcoin:
- Charitable giving: you can use bitcoin to financially reward blog post authors by clicking on the bottom of their page. You can also use it to donate to causes that accept bitcoin.
- Food: More restaurants worldwide are accepting bitcoins. Prague even has a coffee shop that will only accept bitcoin.
- Household products: you can use bitcoin at a growing number of stores to purchase things you need for your home. Ovestock.com is a place that accepts bitcoin.
- Airfare and hotels: booking sites like Expedia and CheapAir have begun to accept bitcoin.
- Gift cards: while some stores may not accept Bitcoin, you can use bitcoin to purchase gift cards for those stores at gift card websites.
- Video games: many companies have begun accepting bitcoin as payment for apps and games.
The longer Bitcoin exists, the more normalized it has become. As a result, more businesses are accepting it as a valid form of payment.
How to Make the Transaction
Paying with bitcoin looks much like sending an email. However, you’re sending money rather than a note. When you pay with bitcoin, the seller will want the following information:
- Your name
- Your email address
After that, you will have to provide one of the following pieces of information:
- A link to your exchange wallet: you will have to sign in to your account for your hot wallet, and then confirm the order. That’s the end of the transaction. Your exchange will contact the merchant to notify them you have paid.
- A QR code: your bitcoin payment process will give you a QR code when you checkout. This QR code indicates your payment amount and the bitcoin address. Scan the QR code to complete the transaction.
- A bitcoin address: You feed the recipient’s bitcoin address as well as the amount of bitcoin you will send. Then you enter the information into the “send” form in your wallet.
If you’re donating money, then you may only need to provide your name and address.
Get Digital With It
Bitcoin has made its mark and is growing in popularity. Now that you can answer the question, “what is bitcoin,” you can move forward and join the digital currency world.
Did you find this article educational and helpful? Keep visiting our site. We aim to provide you with informative, helpful business-focused articles.
