9 Things you need to know about bitcoin

Nearly a decade since it was launched, Bitcoin is still a mystery to many. Questions about who founded the network, how it works, its drawbacks and its future are regular topics on the Internet. Despite this, bitcoin continues to grow. Here are 10 things to help you understand the digital currency and the payment network better.

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1. The Network versus the Currency

What is bitcoin? Bitcoin refers to the blockchain based network and the cryptocurrency. Bitcoin (capitalized) is used to refer to the network and bitcoin (small caps) refers to the currency. Most people don’t follow these rules and as such it’s common to find anyone using either spelling to refer to the cryptocurrency or the payment network.

2. Bitcoins are Created, used and Controlled by the Public

The Bitcoin algorithm was created by Satoshi Nakamoto, a mysterious figure who has never been identified to date. The bitcoin network is decentralized. Neither Satoshi nor any government regulates the network. Bitcoin follows a cryptic algorithm that regulates itself. Users can also trade bitcoins any time of the day and from any place around the world.

3. Bitcoin Payments are Irreversible

Unlike debit card transactions, traders cannot cancel their bitcoin transactions. Once a payment is made, only the receiver can send the coins back. This feature can be beneficial or harmful. Businesses that incur lots of losses through credit card cancellation can benefit from bitcoin payments. Once customers complete payments, they can’t cancel their transactions. By contrast, this feature can be a disadvantage on several levels.

• It’s easy to get scammed with a bitcoin trade-the fact that bitcoin addresses do not display identities makes it possible to get scammed.

• Customers are at a disadvantage when they pay in bitcoins and receive sub-standard products.

4. Bitcoin does not Offer total Anonymity

It’s difficult to make a completely anonymous transaction with bitcoin. With some cryptocurrencies such as Monero, it’s possible. But with bitcoin, you can still be traced. Here is how:

• Bitcoin offers pseudo anonymity-the transactions you make through bitcoin are linked to an address made up of cryptic characters.

• When you buy using bitcoins, you can only be identified by the electronic addresses.

However, there is a loophole. Businesses ask for personal addresses to complete the transactions or make deliveries. When your personal details are linked to your bitcoin address, you purchasing history can be revealed. This makes it possible to reveal the identity of the bitcoin address.

5. Bitcoins have Many Users

Similar to money, bitcoins can be used to make purchases. There are thousands of online organizations that accept bitcoins. Companies that accept bitcoin as a payment network trade fashion items, computer accessories, music and virtually everything else that can be bought online. Bitcoins are also an investment opportunity. The value for bitcoins keeps rising. Bitcoins can be acquired in a Variety of Ways

There are several ways to acquire bitcoins:

• Mine bitcoins-you can earn bitcoins by taking part in verifying bitcoin transactions. This process is called mining.

• Buy bitcoins-purchase bitcoins on a trusted exchange platform and hold them in a wallet (a special app or hardware device that stores your coins).

• Work and get paid in bitcoins-join an affiliate program that pays you when you market their platform.

• Join a website that pays you bitcoins to complete simple tasks.

6. Bitcoin wallets are Vulnerable

Bitcoin wallets store the addresses that help you send or withdraw bitcoins. There are many types of bitcoin wallets. Each one of them has its own pros and drawbacks. Here is an outlook:

• Paper wallets are vulnerable to physical damage.

• Mobile wallets are vulnerable to cybercrimes.

• When you lose the computer with your desktop wallet, you lose your coins.

7. There are Taxation and Rules in the Bitcoin Industry

Bitcoins may be decentralized, but many governments now partner with cryptocurrency networks to enforce tax regulations. Major Bitcoin exchange platforms already enforce KYC (know your customer) regulations to help prevent money laundering.

8. Bitcoin users are by the Millions

It’s not possible to know the exact number of people who trade or earn bitcoins, but they are in the millions. With bitcoin’s adoption increasing year after year, it’s fair to assume that more than a million people across the world use bitcoins. The fact that there are more than 15 million bitcoin wallets in the world also gives an indication of the networks’ adoption.

9. The Hidden Costs of Mining

Bitcoins are created through mining. But mining doesn’t come without costs. The process of mining bitcoins is energy intensive and requires the use of highly specialized equipment. The equipment consumes a massive amount of energy. It’s estimated that bitcoin mining consumes more power than over 150 countries around the world.

Conclusion

There are many myths and unproven theories about the bitcoin network. However, what matters is that Bitcoin continues to stabilize. A stable bitcoin network will increase its adoption and value.