Bitcoin supporters say that this currency is the future of money. Those who doubt call it an “evil”. Good or bad, these days everyone has something to say about Bitcoin, although they do not necessarily understand the most popular virtual currency in the world.
Many are trying to understand the concept of Bitcoin. And we do not blame them; the controversial digital medium of exchange is incredibly confusing, especially if you believe the misconceptions that have been recycled in the media.
So we are stopping the bitcoin rumor train a bit more and learn exactly what it is and why they are all so frenetic about this, starting with these six basic questions.
1. What is Bitcoins?
Bitcoins are completely digital virtual currencies and exchanged directly between two parties through the web and without the need for an intermediary. They were created in 2009 by a programmer under the pseudonym of Satoshi Nakamoto.
Unlike modern fiduciary money, Bitcoin, which has often been called “money for the internet,” is not controlled or backed by any central bank or government authority, such as the Federal Reserve or Banxico, for example. Bitcoins are pieces of computer codes – mathematical algorithms – that represent monetary units. Today there are approximately millions of Bitcoins in existence. In theory, only around 21 million Bitcoins will be generated until the year 2140. Unlike credit card transactions, those made from Bitcoin, which take place internationally every day, are irreversible, can only be reimbursed by the person who receives the money.
2. Are Bitcoins anonymous and untraceable?
No, contrary to what people think, they are not. While Bitcoin users should avoid disclosing certain personal information, such as their bank account, social security number or address, a trace of each transaction is left in a public record known as a blockchain. This helps prevent people from spending the same Bitcoins more than once. The exchanges of Bitcoins that take place in the United States gather personal information of the users that can be requested through a subpoena.
3. How are Bitcoins purchased?
They are purchased online using real analog money (Mexican pesos, US dollars, Japanese yen, etc.) through Bitcoin exchanges and individual sellers. Some of the most popular exchanges include Bitso and Coinbase, but there are many to choose from around the world. Even, since a few days ago you can buy bitcoins at Oxxo and 7Eleven stores in Mexico.
4. How do I start using Bitcoin?
You do not have to master all the Bitcoin technical processes to start using it. First you need to install a Bitcoin wallet on your computer or Smartphone. Or you can use a web wallet in the cloud. Some Bitcoin desktop portfolios (sometimes called clients) include Bitcoin-QT, Armory, Electrum, Hive and MultiBit. If you use a provider in your desktop portfolio, make sure to back up your computer regularly.
The Bitcoin mobile wallets, like the Bitcoin wallet for Android, lets you use it to pay for items in physical stores that accept them when scanning a QR code or when using the NFC (Near Field Communications). Web portfolios such as Coinbase and Blockchain.info allow you to use Bitcoin from any server or mobile device and regularly offer other services, such as current Bitcoin prices, news and the ability to buy, use and accept this digital medium of exchange.
Once you are registered, your Bitcoin portfolio provider should generate your first address and according to the Bitcoin Foundation, you can create more when you need it. You can share your Bitcoin address with friends and contacts so they can pay you and you can pay them by this means.
5. Which companies accept Bitcoin payments?
Thousands of businesses around the world now accept Bitcoin as a form of payment. While some time ago it was used as payment for illegal goods online, thousands of reputable e-commerce businesses are accepting them as payment, including the suppliers of Etsy, WordPress, Overstock and Amazon. Some retailers are beginning to accept Bitcoins in their stores.
6. How much are Bitcoins worth now?
You can see the daily prices in the CoinDesk Bitcoin Price Index, but the values change often from one day to the next. This week it reached a new record after exceeding the $8,000 level for the first time as it went up 50% in just eight days. Even though Bitcoins are relatively new, they are growing exponentially. This market has an approximate value of several billion dollars in current market rates, with millions of dollars of digital currency being traded daily.