Bitcoin isn’t owned by anyone. Think of it like email. Anyone can use
it, but there isn’t a single company that is in charge of it. Bitcoin
transactions are irreversible. This means that no one, including banks,
or governments can block you from sending or receiving bitcoins with
anyone else, anywhere in the world. With this freedom comes the great
responsibility of not having any central authority to complain to if
something goes wrong. Just like physical cash, don’t let strangers hold
your bitcoins for you, and don’t send them to untrustworthy people on
the internet.
➲ Secure Your Wallet
There are several different types of Bitcoin wallets, but the most
important distinction is in relation to who is in control of the private
keys required to spend the bitcoins. Some Bitcoin “wallets” actually
act more like banks because they are holding the user’s private keys on
behalf. If you choose to use one of these services, be aware that you
are completely at their mercy regarding the security of your bitcoins.
Most wallets, however, allow the user to be in charge of their own
private keys. This means that no one in the entire world can access
your account without your permission. It also means that no one can help
you if you forget your password or otherwise lose access to your
private keys. If you decide you want to own a lot of Bitcoin it would
be a good idea to divide them among several different wallets. As they
saying goes, don’t put all your eggs in one basket.
➲ Bitcoin Price
Like everything, Bitcoin’s price is determined by the laws of supply
and demand. Because the supply is limited to 21 million bitcoins, as
more people use Bitcoin the increased demand, combined with the fixed
supply, will force the price to go up. Because the number of people
using Bitcoin in the world is still relatively small, the price of
Bitcoin in terms of traditional currency can fluctuate significantly on a
daily basis, but will continue to increase as more people start to use
it. For example, in early 2011 one Bitcoin was worth less than one
USD, but in 2015 one Bitcoin is worth hundreds of USD. In the future,
if Bitcoin becomes truly popular, each single Bitcoin will have to be
worth at least hundreds of thousands of dollars in order to accommodate
this additional demand.
➲ Bitcoin Exchanges
There are several ways to buy Bitcoin, but trusted exchanges are a
great way to acquire Bitcoin. Because there are inefficiencies in the
traditional banking system, exchanges will sometimes have slightly
different prices. If the difference is too great, traders will buy low
on one an exchange and sell high on another and close the gap. If an
exchange constantly has substantially different prices than others, it
is a sign of trouble and that exchange should be avoided. As with
everything else, do your research and find an exchange you can trust.
It’s also a good idea not to use an exchange as a wallet. Move your
Bitcoin to your personal wallet so that you have control over your funds
at all times. You can view our list of Bitcoin exchanges here.
➲ Bitcoin Isn't Completely Anonymous
Because all Bitcoin transactions are stored on a public ledger known
as the blockchain, people might be able to link your identity to a
transaction over time. Some companies offer various tools such as
Bitcoin mixers to help achieve greater privacy, but it takes a huge
amount of effort to use Bitcoin anonymously. You may want to follow
your country’s tax regulations regarding Bitcoin in order to avoid
trouble with the law, but you have the power not to should you choose to
take that risk. To improve privacy, most newer Bitcoin wallets will use
a new Bitcoin address each time someone sends bitcoins to you.
➲ Unconfirmed Transactions
Bitcoin transactions are seen by the entire network within a few
seconds and are usually recorded into Bitcoin's world wide ledger called
the blockchain, in the next block. While it’s possible that a
transaction won’t be confirmed in the next block, in the vast majority
of circumstances it is fine to accept a transaction as soon as it has
been seen by the network. Unlike traditional payment systems, Bitcoin
transactions are lightning fast and can be sent globally. Bitcoin is
still relatively new, but with each passing day the technology becomes
more reliable. It is more and more unlikely that a major bug will emerge
in the system as time goes by, and people can trust the technology more
with the passing of time. Each month people transact hundreds of
millions of dollars worth of Bitcoin.
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