If you keep up with the web hosting industry headlines, you've probably heard of the term 'Bitcoin.' What Is Bitcoin And How Does It Work? There doesn't seem to be a day that goes by without another web host declaring their use of Bitcoin as a payment system.
Is Bitcoin another PayPal? Is this a brand-new currency?
What exactly is Bitcoin?
Bitcoin is a 'cryptocurrency' (or 'virtual currency') that can be used as a payment mechanism, but it is not a tangible currency in the same way that dollars and cents are. It debuted in 2009 as a "peer-to-peer" payment technique that posed a threat to more standard online payment methods.
People had previously accepted the notion that making an internet payment required the use of a third-party mediator. Whether it was a bank or a corporation like PayPal, the intermediary operated as a transfer channel and, of course, charged a fee for its services.
Bitcoin transactions have significantly reduced transaction fees because there are no middlemen. This makes Bitcoin extremely appealing.
Who owns Bitcoin?
Satoshi Nakamoto is said to be the creator of Bitcoin, according to Internet lore. Although Nakamoto's identity appeared on the initial research paper about Bitcoin in 2008, he has never been officially identified.
Newsweek magazine identified someone named Satoshi Nakamoto in February 2014, whom they believed to be the Bitcoin creator, but when questioned, the man they found claimed to know nothing about the cryptocurrency!
Since then, several candidates have surfaced, with Australian entrepreneur Craig S. Wright emerging as the frontrunner in late 2015. Other ideas include the moniker 'Satoshi Nakamoto,' which was circulated around a group of programmers who took turns using it.
While someone may have created Bitcoin, it only exists as recorded data and so cannot be held in the same way that a firm such as 'Paypal' can.
Is Bitcoin legitimate?
Bitcoin has had a tumultuous past. It's been dubbed a "digital Ponzi scam," and because it's an internet technology, it's been linked to the "Deep Web" or "Dark Web" - the 90% of the internet that requires a "Tor Browser Bundle" (rather than Google Chrome!) to access.
This is the world of the 'Silk Road,' drug trafficking, and other criminal activity.
Bitcoin is also the money of choice for hackers because it does not require the use of a name when conducting a transaction.
Bitcoin has had other issues aside from its links with the darker side of the Internet.
Matrix, a major Bitcoin exchange, went bankrupt in February 2014, leaving millions of dollars in Bitcoin owners' hands.
Despite difficulties, Bitcoin has matured and is now firmly entrenched in the mainstream. As we mentioned at the start of the post, more and more web providers are accepting Bitcoin, but it's also being accepted by companies like Microsoft - and it doesn't get much more mainstream than that!
Other organisations that accept Bitcoin include online travel firm Expedia, WordPress, and, as you might expect, a variety of pizza delivery services!
How is Bitcoin valued?
Bitcoin's worth is established by a set of complicated mathematical algorithms, and its value has nearly doubled in the last year.
It is also valued based on what the market will pay for it and the amount of activity surrounding the money, just like traditional currencies.
There are no Bitcoin notes or coins, unlike traditional legal money. There is a Bitcoin ledger, which is essentially a record of every Bitcoin transaction ever made.
One Bitcoin is currently worth $2,841.25 at the time of publication!
Because of its rapid growth, a $1,000 investment in Bitcoin in 2010 would have made you a billionaire 35 times over today!
I understand I can earn Bitcoins. How do I do that?
One option to make money with Bitcoins is to take part in 'Bitcoin mining.'
The practise of adding transaction data to Bitcoin's public ledger of prior transactions is known as bitcoin mining.
'Bitcoin miners' are rewarded with Bitcoins for their efforts.
However, in order to make any serious money mining Bitcoin these days, you'll need a LOT of servers.
Just how extensive is Bitcoin?
There are around 15 million Bitcoins "in circulation" right now, but the total number of Bitcoins in circulation will never surpass 21 million. When opposed to other currencies where money is printed regularly, Bitcoin is more stable and thus has true worth.
How is Bitcoin controlled?
A massive database of all Bitcoin transactions, both historical and present, exists. When Bitcoins are sold, a network of 'nodes' monitors the transaction and detects efforts to re-spend Bitcoins that have already been spent. It's a system that's quite safe.
How do you use Bitcoin?
To use Bitcoin, you must first create a 'virtual wallet.' Virtual wallets can be found on a variety of websites, with Blockchain being the most well known.
You can also purchase Bitcoin using online exchanges. Coinbase, LocalBitcoins, Kraken, Bitstamp, and BTC-e are some of the most well-known exchanges.
Bitcoin ATMs and several Bitcoin mobile apps are now available, believe it or not.
How do you get Bitcoin?
You'll need a 'Bitcoin address' to get your Bitcoins. An address is assigned to each wallet.
Digital wallets can be stored on a computer hard drive or a mobile phone, but keep in mind that if your hard drive fails or your phone dies, your Bitcoins are lost forever!
You'll need a 'Bitcoin address' to get your Bitcoins. An address is assigned to each wallet.
Digital wallets can be stored on a computer hard drive or a mobile phone, but keep in mind that if your hard drive fails or your phone dies, your Bitcoins are lost forever!
How do you spend Bitcoin?
Bitcoins are simply transferred between addresses, which contain 24-34 letters and digits. Sending and receiving money is simple since every wallet has a Bitcoin address. Bitcoins are simply taken from one wallet and put to another.
Is it here to stay?
Depending on who you ask, Bitcoin may or may not be here to stay.
Bitcoin is at an all-time high, but is it going to self-destruct? (Bitcoin Is At An All-Time High, But Is It About To Self-Destruct?), according to a Forbes story published in June 2017.
The issues appear to stem from within the Bitcoin community:
The story claims that "the power battle" is about "the simple matter of how to update the network to handle more transactions."
Although the "Satoshi"–one hundred millionth of a Bitcoin–is the smallest Bitcoin unit, its rising value implies that transfer fees are rising, making it almost worthless for some transactions.
However, the general assumption is that Bitcoin has made it this far and will continue to do so in the future.
How do I accept Bitcoin payments for my (web hosting) business?
Accepting Bitcoin payments is possible thanks to a variety of Merchant Services.
County, subterminal, and bootstrap are examples of 'Point-of-Sale' hardware terminal systems.
These units look a lot like the payment terminals that you can use to make credit card transactions.
Anything else?
Remember that Bitcoin payments, like traditional currencies, are considered income and hence taxable.
Remember to pay your taxes!!!
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