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Just like the internet in general, there is a huge amount to learn about Bitcoin, but anyone can use it without having to understand all the details. Bitcoin is different than any currency you’ve used before, so it's very important to understand some key points. Unlike government issued money, that can be inflated at will, the supply of bitcoin is mathematically limited to twenty one million bitcoins, and that can never be changed.
Bitcoins are impossible to counterfeit or inflate. You can use them to send or receive any amount of money, with anyone, anywhere in the world, at very low cost. Bitcoin payments are impossible to block, and bitcoin wallets can’t be frozen. Short of turning off the entire world's internet, and keeping it turned off, the Bitcoin network is unstoppable and cannot be censored.
The easiest way to get bitcoin is to buy some. You can start with a small amount like a dollar or two. Yes there are ways to get 'free' bitcoin, but these usually involve some amount of work and 'give' fractions of a cent. For most people it is going to make more sense to trade money for bitcoin. Typically this means using a Bitcoin exchange to buy bitcoin. If you are in another country then Google or DuckDuckGo (a more privacy oriented search engine) is the best way to find out how to buy bitcoin.
Bitcoin uses addresses for sending and receiving bitcoin.
Bitcoin works similar to email. If Alice wants to email Bob, Alice needs Bobs email address. After getting Bob's email address she writes a message and hits the send button on her email client. Almost instantly Bob will receive her message.
Bitcoin works in a similar way. If Alice wants to email Bob, Alice needs one of Bobs public bitcoin addresses. After getting Bob's public bitcoin address she creates a transaction in her bitcoin client and sends it. Almost instantly Bob will receive her bitcoin.
A bitcoin address looks like this:
- 26-35 characters long
- Begin with the number 1 or 3
- Generated at no cost by any bitcoin user
- Case sensitive
- Publicly visible to everyone in the world
To send bitcoin you need two things:
- A public address to send bitcoin
- Some bitcoin
Person to Person
In a person to person transaction the typical process for sending bitcoin from Alice to Bob works like this:
- Alice owes Bob some money (USD, BTC, EUR, JPY, etc)
- Alice and Bob decide bitcoin is an acceptable form of payment
- Alice asks Bob for his bitcoin address
- Alice sends the equivalent amount of bitcoin to Bob for the money she owes him.
One of the great things about bitcoin is there is no question of if the money was sent, if it is in the mail, etc. Alice, Bob, or anyone else can see that Alice sent money to an address.
The only questions that might arise are
- Did the bitcoin go to the right address as agreed by Bob and Alice?
- Was the amount of bitcoin sent sufficient for the amount of money Alice owed?
Preventing the above issues is simple:
- Document the address the receiving party asked for the bitcoin to be sent to. If Bob asks Alice to send it somewhere and she does, her debt is settled.
- Agree on how the value of bitcoin will be calculated. Often times this is handled by a 3rd party service such as Blockchain.info or Coinbase.
Person to Business
A consumer to business transaction is somewhat simpler.
At checkout, either in person or online, the checkout system will present the user with a bitcoin address, often in the form of a QR code and an amount to pay.
The bitcoin user sends the requested bitcoin amount to the merchant and the merchant processes the order.
In person transactions at restaurants or REEDS Jewelers, the point of sale system typically presents a QR code and the bitcoin user typically sends bitcoin from a smartphone.
To receive bitcoin users just need a bitcoin address.
Bitcoin wallet software provides users with bitcoin addresses.
3rd party wallet services such as Coinbase often allow users to request bitcoin payments through email or SMS message.
If you don't already have a bitcoin wallet then first choose a wallet.
After choosing a wallet, use the software to get your bitcoin address.
Send the bitcoin address to the person who wants to pay you and then watch for the payment to come through.
Most wallets will notify you in some manner that you have received bitcoin.
Important Things to Understand
- No one controls Bitcoin.
- Just like physical cash in your own wallet, you are responsible for keeping track of your own bitcoins.
- Just like with any other kind of money, there are people who would like to cheat you, or steal from you, so buyer beware!
- Unlike normal government issued money, the supply of bitcoin is limited by the laws of mathematics. Politicians in fancy suits, working in buildings with flags in front, can't just print extra bitcoins out of thin air.
- Because the supply of bitcoin is limited, and like everything else in the world, the price is set by supply and demand, if more and more people start to use bitcoin, the price will have to go up in order to accommodate this additional demand. In 2010 one bitcoin was just worth a few U.S. cents. In 2015, one bitcoin is worth hundreds of U.S. dollars. In the future, if Bitcoin becomes truly popular, they will have to be worth at least tens of thousands, if not hundreds of thousands of dollars each.
Practical reasons to use Bitcoin
- Save 20% at every Starbucks in the USA, Canada, UK, Australia, and more!
- Save 20% or more on every purchase from Amazon.com using Purse.io
- Gambling on the internet with your own money regardless of where you live.
- Thanks to Dark Net Markets you can buy things that are not necessarily permitted by the politicians in your area.
- The Bitcoin.com Forum
- Reddit Bitcoin discussion groups.
- Bitcoin Stack Exchange