What You Need To Know About Bitcoin

 

Photo by David McBee

Even if you’re never bought it, you’re sure to have heard of it. Bitcoin is steadily moving into the mainstream. That means it’s time to think about what it could potentially do for you. With that in mind, here is a quick guide to bitcoin for beginners.

The basics of bitcoin

Bitcoin is essentially digital cash. The words used to describe it reflect this fact. For example, you store bitcoins in a wallet. Unlike regular cash, bitcoin itself is not managed or regulated by any government or central authority. With that said, the platforms that deal in bitcoin are increasingly likely to be regulated.

How to acquire bitcoin

There are basically two ways you can acquire bitcoin. One is to mine it and the other is to buy it. Mining bitcoin means using the power of your computer to find new bitcoins. When you find them, they legally belong to you. You can save them or spend them as you wish.  

Mining bitcoin is technically very straightforward but it can take a long time to get a result. If you don’t want to wait then you can just buy bitcoin. You do this through online exchanges. The process is much the same as buying international currency.

How to use bitcoin

A lot of the publicity about bitcoin relates to its use as an investment vehicle. You absolutely can invest and trade bitcoin itself. For most people, however, the real benefit of bitcoin is the fact that it provides an alternative to established payment methods. Here’s why this is good news for both customers and merchants.

Bitcoin has no transaction costs

There is a cost for buying and selling bitcoin. There is, however, no cost to using it. Overall, therefore, bitcoin often works out more cost-effective than established payment methods such as ewallets and payment cards.

With cross-border transactions, the differential becomes even greater. Traditional methods of payment typically use adjusted exchange rates and/or charge high fees. With bitcoin, the two parties can just agree on a price in bitcoin and exchange the funds for the goods. As long as the transaction is made on the same day, the parties can use the real exchange rate.

Bitcoin is fast

Technically, making payment by bitcoin can actually be slower than making payment by other methods. In practice, however, it often works out a lot quicker. The reason for this is that most payment methods have some kind of holding period before passing funds on to the recipient. Bitcoin, on the other hand, is available for use as soon as it’s been received.

Bitcoin is secure

Bitcoin itself is one of the most secure payment systems around. In fact, it’s so secure that its technology is being adopted to improve security in other environments.  

From a buyer’s perspective, the key to using bitcoin safely is to remember that it’s digital cash. In other words, make sure you know who you’re dealing with before you hand it over.

From a seller’s perspective, bitcoin can be a lot less hassle than other payment methods because you don’t have the hassle of dealing with chargebacks.