FAQ: Demystifying BitCoin

Bitcoin has been around for nearly a decade and, as awareness has grown, the popularity of the currency has soared

FAQ: Demystifying BitCoin

Bitcoin has been around for nearly a decade and, as awareness has grown, the popularity of the currency has soared. However, many people are still in the dark about what BitCoin is, how it is used and who accepts it. Here's a handy Bitcoin guide, so that when you find yourself in another one of 'those' conversations, you can feel informed and answer appropriately.

Source: Pixabay

How did it begin?

Bitcoin was created in 2009 by an unknown developer who goes by the name of Satoshi Nakamoto. It was developed as an alternative to the traditional federal reserve banks and is a global currency not controlled by currency markets. The first commercial transaction occured in 2010 when Laszlo Hanyecz bought two Papa John's pizzas for 10,000 bitcoin

Can I use Bitcoin?

Yes! Anyone can use bitcoin. In recent years, bitcoin has gone mainstream and many online retailers accept it. If you're booking a holiday on Expedia, you can pay in bitcoin. It is also a recognised currency for many online casinos, you can read more about that here. If you're feeling peckish, sandwich giant Subway also accept Bitcoin, as do Microsoft and PayPal.  

Great, so where can I get my hands on some? 

So you've decided that you want to give bitcoin a go. There are different ways of buying bitcoin and unlike other currencies, you can't just visit your travel agent and hand over cash. The first option is to use a bitcoin exchange: these are businesses which will help you to transfer your cash into bitcoin. This will come with a fee, but if you know very little about bitcoin, it's a great way to get started. Recently, bitcoin ATMs have been popping up in various cities. These work like normal ATMs in reverse, transferring your cash into bitcoin. 

I've heard the phrase 'mining' for Bitcoin. But Bitcoin isn't a physical thing, so what are people mining for? 

Cryptocurrency Mining, Bitcoin mining stock photo
"Cryptocurrency Mining, Bitcoin mining stock photo" by  (CC BY 2.0)

You're right, this isn't mining in the traditional sense of the word, this is mining in the geeky, digital sense. Bitcoin miners create mathematical puzzles for new bitcoin to be created and released and they also solve these puzzles in order for new transactions to be completed. Becoming a bitcoin miner requires incredible mathematical knowledge and miners can expect to earn a lot of money. 

Okay, so I should go out and buy lots of bitcoin? 

Just like investing in any other currencies, the value of bitcoin is changeable, so you should be aware of the risk before you buy. However, just like any investment, the value can increase and bitcoin's value has been known to soar dramatically. If you make lots of online transactions and you would like to have more security around your purchases, you might want to invest in bitcoin.

It may have felt like a confusing topic to begin with, but Bitcoin's growing popularity has brought it into the mainstream and it is only going to grow. And it makes a great international currency and makes online transactions much safer.

Updated Date: 01 October 2018, 07:59

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