Bitcoin, 7 beginner questions that you should analyze

Bitcoin, 7 beginner questions that you should analyze

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 seven basic questions.

What are 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.

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.

Where do the bitcoins come from?
In a conventional financial system the creator of money is the central bank. But the Bitcoin network does not have a central bank. Then, the system requires an alternative mechanism to introduce the currency in circulation.

The father of Bitcoin solved this problem in a very intelligent way. Hundreds of computers scattered over the internet work together to process Bitcoin transactions.

These computers are called "miners" and the transaction resolution process is called "mining." It's called that because every 10 minutes, on average, a miner creates a "hash" and gets a prize.

Currently that reward is 25 bitcoins, which equals about $ 147,401.25 (125,536 euros). These awards provide a strong incentive for more people to join Bitcoin's transaction compensation process, helping the currency remain decentralized.

This reward decreases in a fixed calendar: every four years the reward is reduced by half. Therefore, from 2009 to 2012 it was 50 BTC, but at the end of 2016 it fell to 12.5 BTC.

If you do the calculations you will see that there will never be more than 21 million bitcoins in circulation.

How to acquire Bitcoins? (To buy)
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.

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 exchange medium.

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.

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 Etsy, Wordpress, Overstock and Amazon providers. Some retailers are beginning to accept Bitcoins in their stores.

What is the current value of Bitcoin?
You can check the daily prices in the CoinDesk Bitcoin Price Index and in Huobi.Pro, but the values ​​change often from one day to the next. 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.