It’s a while the word Bitcoin is getting more and more popular and rising very fast. Somebody see in it the new stream for investments and a quick way to get rich, somebody else just another bubble. But what is a Bitcoin?
“Bitcoin (฿) is an open source peer-to-peer electronic money and payment network introduced in 2009 by pseudonymous developer “Satoshi Nakamoto”. Bitcoin has been called a cryptocurrency because it uses cryptography to secure transactions. Bitcoins are stored by associating them with addresses called “wallets”. Wallets can be stored on web services, on local hardware like PCs and mobile devices, or on paper print-outs. Thefts of bitcoins from web services and online wallets have been covered in the media, prompting assertions that the safest way to store bitcoins is in a paper wallet generated on an uncompromised computer by yourself. Bitcoins are increasingly used as payment for legitimate products and services, and merchants have an incentive to accept the currency because transaction fees are lower than the 2 to 3% typically imposed by credit card processors. Speculators have been attracted to Bitcoin, fueling volatility and price swings. As of November 2013, the use of Bitcoin in the retail and commercial marketplace is relatively small compared with the use by speculators.” (Wikipedia)
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So, this means that even if already used for small transactions because the lower fee, bitcoin, is still a volatile currency due to the speculation and lack of liquidity. Do you want to start use Bitcoin? Here are 7 things you should know before get started.
1. Create and secure your wallet: As for your real money you need a safe place to keep them. In this case it’s a virtual wallet that allows you to send and receive quickly payments. You can visit MultiBit, Bitcoin-Qt and Armory to start.
2. Bitcoin price is very volatile: The price of a bitcoin can unpredictably increase or decrease over a short period of time so it’s not recommended to invest your savings in risky operations.
3. Payments are irreversible: Once you make a payment you cannot stop it. You can have a refund directly from the person you paid but you must keep attention to the organizations and people you are dealing with.
4.Bitcoin is not anonymous: Every transactions you do with bitcoins is tracked so everybody can see your identity online. it is your responsibility to adopt good practices in order to protect your privacy.
5. Instant transactions are less safe: A Bitcoin transaction is usually deployed within a few seconds and begins to be confirmed in the following 10 minutes. During that time, a transaction can be considered authentic but still reversible. Dishonest users could try to cheat. If you can’t wait for a confirmation, asking for a small transaction fee or using a detection system for unsafe transactions can increase security.
6. Bitcoin is new and experimental: Bitcoins are still something changing and in development, this means that there are no certainties for the future.
7. Don’t forget taxes: Bitcoin is not an official currency and so you still have to pay tax on transactions and goods you exchange and buy.