Things you need to know
Important Bitcoin Basics and How It All Works
No Central Command
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.
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.
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.
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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What is Bitcoin Mining?
Bitcoin Mining is a peer-to-peer computer process used to secure and verify bitcoin transactions—payments from one user to another on a decentralized network. Mining involves adding bitcoin transaction data to Bitcoin's global public ledger of past transactions. Each group of transactions is called a block. Blocks are secured by Bitcoin miners and build on top of each other forming a chain. This ledger of past transactions is called the blockchain. The blockchain serves to confirm transactions to the rest of the network as having taken place. Bitcoin nodes use the blockchain to distinguish legitimate Bitcoin transactions from attempts to re-spend coins that have already been spent elsewhere.
What is Proof-of-Work?
Bitcoin Mining is intentionally designed to be resource-intensive and difficult so that the number of blocks found each day by miners remains steady over time, producing a controlled finite monetary supply. Individual blocks must contain a proof-of-work to be considered valid. This proof-of-work (PoW) is verified by other Bitcoin nodes each time they receive a block. Bitcoin uses a PoW function to protect against double-spending, which also makes Bitcoin's ledger immutable.
How Does Mining Create New Bitcoins?
The primary purpose of mining is to allow Bitcoin nodes to reach a secure, tamper-resistant consensus. Mining is also the mechanism used to introduce bitcoins into the system. Miners are paid transaction fees as well as a subsidy of newly created coins, called block rewards. This both serves the purpose of disseminating new coins in a decentralized manner as well as motivating people to provide security for the system through mining.
What Are Bitcoin Mining Pools?
During the last several years an incredible amount of Bitcoin mining power (hashrate) has come online making it harder for individuals to have enough hashrate to single-handedly solve a block and earn the payout reward. To compensate for this pool mining was introduced. Pooled mining is a mining approach where groups of individual miners contribute to the generation of a block, and then split the block reward according the contributed processing power.
Introducing the Bitcoin.com Mining Pool
Bitcoin.com has developed its own modern Bitcoin mining pool which offers two different payout methods, Pay Per Share (PPS) and Pay Per Last N Shares (PPLNS). Start mining on pool.bitcoin.com today to take advantage of our competitive cloud mining contracts.
Start Accepting Bitcoin!
Bitcoin is a faster and cheaper monetary exchange for merchants providing any service or goods. Whether online, or in a physical location using Bitcoin has significant benefits compared to credit card services and other methods of payment.
The plus side to using Bitcoin is that the fees are extremely lower than traditional payment mechanisms, and payments settle instantly. There is no possibility of charge back as Bitcoin transactions are final and confirmed on the blockchain which gives merchants the final say on returns and fraudulent activity. Some Bitcoin merchant solutions also provide invoices and easy to use Point-Of-Sale (POS) applications that run on a smart phone or tablet. Many merchant processors instantly convert the Bitcoin payment to your local currency at the current exchange rate. There are also a number of stand-alone tools available online for merchants to identify the current conversion rate quickly if needed.
A Few Services That Offer Merchant Solutions
BitPay Atlanta GA, payment processor and merchant service API Blockchain, a very simple, bitcoin only, merchant app that gets you started in a few seconds. Coinbase San Francisco CA, wallet, cryptocurrency payment processor and API Blockonomics, enables Bitcoin acceptance without an account. Permissionless invoicing and API with immediate, guided setup. CoinGate, Vilnius, Lithuania, Accept Bitcoin payments and receive payouts in Euros, U.S. Dollars or bitcoins. E-commerce plugins, API, Point of Sale app for Android / iOS / web, payment buttons. BitcoinPay London, payment gateway operating with PLN, EUR, CZK, and USD Paxful Wilmington DE, Point of Sale, peer to peer market Spectrocoin London, all-in-one merchant services solution that processes in Europe. CoinPip Singapore, CoinPip enables businesses to send and receive digital payments BitPagos Wilmington DE, cryptocurrency payment gateway credit card solutions. CoinsBank United Kingdom, payment processor, exchange and card issuer. Bitaps Russia, payment processor. GoUrl Dominica, Official Bitcoin/Altcoin Payment Gateway for WordPress.
Bitcoin Terminals, POS Solutions And Brick-and-Mortar Apps
XBTerminal London, Bitcoin Point-of-Sale mobile application for Android and iOS. Coinify Denmark, Point-of-Sale application for Android and IOS. CoinGate, Vilnius, Lithuania, Bitcoin Point of Sale apps for Android, iOS and Bitcoin Point of Sale web app which can be accessed from any internet enabled device directly in a web browser.
Want to learn more about Bitcoin?
Bitcoin.com is the place for people who want to research this new and exciting technology. You can also conveniently find where to purchase Bitcoin at our buy Bitcoin page. We also offer a directory of wallet service solutions and Bitcoin debit/credit cards.
Our news section has up to date headlines about cryptocurrency. Our wiki has a vast collection of information for all things Bitcoin. If you're looking to connect with the Bitcoin community the Bitcoin.com Forum is an active and friendly place to communicate and learn.