Bitcoins are the equivalent of Internet cash. You can send Bitcoins over the Internet directly to anyone with no middle man. Like cash, Bitcoin transactions are irreversible. Bitcoins are traded worldwide. First there was gold/silver, then cash, then checks, then credit cards, and now there’s Bitcoin.
Bitcoin is based on an open source, peer-to-peer network. Transparency is the backbone of the network. This is where people gain confidence in Bitcoin. Its ledger is public and completely open for everyone to see.
You can also read an excellent write up called: Bitcoin Explained In Laymen’s Terms.
Here is a list of things that you can only do with Bitcoin:
- Spend and transfer money internationally for less than a penny.
- Sell on the Internet without setting up with a payment service.
- Protect your wealth from devaluation by the government.
- Donate to any Bitcoin-accepting organization anywhere.
It’s easy to get Bitcoins
Step 1: sign up for a reputable website that trades and sells bitcoin: Here are examples
(It’s important to do your own research before signing up for a website to buy and sell bitcoins.) There are three types of services (websites), buy and sell with individuals services, bank type services, or bitcoin exchanges. Here are examples below. For more information on these three types of services visit here.
Bitcoins don’t have to be bought in whole numbers. You can buy a half of bitcoin .50, a quarter .25, a tenth .10, etc. A bitcoin can be divided to 8 decimal places. 1 Bitcoin looks like this 1.00000000
There is a lot of discussion about the naming of these fractions of bitcoins. The leading candidates are:
- 1 BTC = 1 bitcoin
- 0.01 BTC = 1 cBTC = 1 centibitcoin (also referred to as bitcent)
- 0.001 BTC = 1 mBTC = 1 millibitcoin (also referred to as mbit (pronounced em-bit) or millibit or even bitmill)
- 0.000 001 BTC = 1 μBTC = 1 microbitcoin (also referred to as ubit (pronounced yu-bit) or microbit)
The above follows the accepted international SI prefixes for hundredths, thousandths, and millionths. There are many arguments against the special case of 0.01 BTC since it is unlikely to represent anything meaningful as the Bitcoin economy grows (it certainly won’t be the equivalent of 0.01 USD, GBP or EUR). Equally, the inclusion of existing national currency denominations such as “cent”, “nickel”, “dime”, “pence”, “pound”, “kopek” and so on are to be discouraged; this is a worldwide currency.
One exception is the “satoshi” which is smallest denomination currently possible
- 0.000 000 01 BTC = 1 satoshi (pronounced sa-toh-shee)
which is so named in honour of Satoshi Nakamoto, the pseudonym of the inventor of Bitcoin.
Consumers Love Bitcoin
There are lots of reasons consumers love Bitcoin:
- Easier Checkout
- Paying with Bitcoins is easier than using a credit card at check out. Unlike a credit card, with Bitcoins, you don’t need to fill out a credit card number, an expiration date, a card holder name, or a CCV.
- Cheaper Prices
- Merchants typically pay from 2% to 3% in credit card transaction fees. Merchants who accept Bitcoins will be able to avoid credit card fees and can pass these savings on to consumers.
- Increased Privacy
- With Bitcoin, you only provide the necessary information to the merchant. For example, if the product is not being shipped to you, you don’t need to give the merchant your address.
- Increased Security
- With Bitcoin, you directly pay merchants and just like with cash there is no need to give them any payment information that can be lost, stolen, or used to make unauthorized charges.
- Using Bitcoins Increases their Value
- If you have some Bitcoin saved, you can make them more valuable by using Bitcoins. Using Bitcoins increases their demand which in turn increases the value of your saved Bitcoins.
Merchants Love Bitcoin
There are many reasons merchants love Bitcoin:
- No Reversals
- Reputable merchants can still provide refunds as needed. But, this is at the merchant’s option and the merchant has no risk of fraudulent charge backs.
- Low Transaction Fees
- Receiving Bitcoins is free and sending Bitcoins costs less than a penny. Merchants can convert Bitcoins to dollars and get volatility protection for half a percent (0.5%).
- Accept Payments Internationally
- Take payment from anyone, anywhere in the world with confidence. In seconds, merchants will see the payment is on the way. Usually, in one hour, the transaction is fully completed. Services are coming to eliminate the hour delay.
- No Payment Processor Set Up or Fees
- Merchants accept payments directly from consumers. Merchants do not need a relationship with any service to begin accepting Bitcoins. Merchants do not need to worry about a payment processor refusing their business, delaying their funds, or cutting off service.
Bitcoin is Better than Regular Currencies
Some of the reasons Bitcoin is better than regular currencies:
- Bitcoin is an International currency
- Bitcoin can be spent all over the world.
- Bitcoins cannot be counterfeited
- There is no printing technology that will ever be able to fool the bitcoin network.
- Bitcoin cannot be devalued
- Only 21 million Bitcoins will ever be issued. Unlike regular currencies, since Bitcoin is not controlled by any government or bank, the raising of a debt ceiling and quantitative easing can not devalue Bitcoins.
Bitcoin vs Gold
For thousands of years, gold has been one of the safest stores of value. Many people hold gold to reduce their fiat risk. Bitcoin has many advantages over gold:
- Gold is not divisible
- You can not easily cut up gold to give people small amounts. Bitcoin is easily divisible to 8 decimal places.
- Gold is not instantly assayable
- You can’t instantly tell if gold is pure. You can instantly prove you have real Bitcoins.
- Gold is not instantly weighable
- You need a scale to weigh gold. You can instantly prove how many Bitcoins you have.
- Gold is not transmittable over the Internet
- Sending gold notes has counterparty risk. Bitcoins are easily sent on the Internet.
- Gold can be outlawed and confiscated.
- The US government can and has in the past made it illegal to own gold. You can memorize your Bitcoin private key.
Bitcoins are implemented using the latest trusted technologies:
- The same cryptography that powers Internet banking.
- Peer-to-peer networking protects Bitcoin from governmental or individual interference.
- Allows anyone to audit and improve the Bitcoin source code.
Make an investment for the future and purchase 1 or 2 Bitcoins today. Or diversify your savings and put 1% or 2% into Bitcoins. There are many reasons for Bitcoins to easily become worth thousands of dollars each:
- The Legitimization and Inevitability of Bitcoin
- A Business Owner’s Bitcoin Lament
- An Example of Bitcoin’s Potential Value
- Credit card companies charge gas stations a 2% transaction fee. By eliminating credit card transaction fees, gas station owners could double their profits. The US consumes 65 billion gallons of gasoline per year. At $3.60 per gallon, this could be a $234 billion dollars going through the Bitcoin economy per year. If the market cap for Bitcoin was $234 billion, each Bitcoin would be worth $34,400 dollars.
What To Do With Your Bitcoins
- Save your Bitcoins
- The easiest way to save your Bitcoins is simply to leave them on the exchange.
- Sell your Bitcoins
- Whenever you want, you can convert your Bitcoins to cash by selling them on the exchange.
- Transfer your Bitcoins
- You can transfer your Bitcoins to a wallet service or your own computer. If you’re sure your computer is secure and you backup regularly, you can download and install the Bitcoin wallet software on your computer and transfer your Bitcoins to your computer
- Spend your Bitcoins
Do not invest anything in Bitcoin you can not afford to lose. Investing in Bitcoin or any other currency is not without risk. For example, any of the following could happen to Bitcoin:
- Another crypto-currency might surpass Bitcoin.
- Several have already tried and failed.
- A weakness in the encryption might be discovered.
- This is the same encryption used in online banking. Like banking systems, if a flaw is found in a particular algorithm, the Bitcoin client can be upgraded to use different encryption algorithms.
- Governments might try to ban or regulate Bitcoin.
- This would be similar to the government banning the Internet because of illegal uses. Banning the Internet is unlikely because it would place the government and its people at a strategic communications disadvantage. Banning Bitcoins, is similarly unlikely as it would place the government and its people at a strategic economic disadvantage.
- An unfixable flaw might be discovered in the Bitcoin protocol.
- People have been trying to find a flaw for over two years..