About Bitcoin

Here is an overview of bitcoin and an introduction to how you can use it.

What is Bitcoin?

Bitcoin is the largest and most popular open-source, digital currency and it allows instant payment directly from one individual to another anywhere in the world. It operates without the need of a central authority or bank and it is not controlled by any government or organisation. Nobody owns bitcoin, it’s known as peer to peer technology where thousands of computers around the world agree on a consensus system.

Bitcoin is like electronic cash that you use to pay any merchant that is set up to accept it. You can use bitcoin to transfer to someone else. Transactions are made using bitcoins and can be made from any digital device to any other, including a smartphone, tablet, PC or laptop.

Bitcoin is growing popularity in business and in banking because it is very efficient, fast and secure. It’s the leading global currency and more governments are officially recognising it.

How safe is Bitcoin?

Bitcoin transactions are considered extremely safe and are secured by powerful cryptography, which provides a high level of protection and ensures that only the owner of bitcoins can actually spend them. The next level of security is the blockchain, which is a shared public digital ledger that records every transaction as it takes place and on which the entire peer to peer decentralized network relies. Transactions are anonymous and your personal information is not stored in the blockchain. All transactions have to be verified on the blockchain before a transaction is confirmed and the blockchain requires a minimum of 6 confirmations which takes about 1 hour to prove the transaction is authentic. A very small fee is charged for the verification of the transaction when making payments.

Do you need a bitcoin wallet?

Yes you need to have a bitcoin wallet to store your bitcoin. A bitcoin wallet is piece of software that can downloaded onto any device to create a digital wallet. This allows you to receive, store and send bitcoin. It really is just a digital equivalent to your ordinary wallet or purse that you store money in. There are plenty of wallets available so take time to check out which one to choose, depending on the device that you wish to use it on. Your wallet is personal to you and anyone else who you exchange bitcoin with will need their own wallet.

Bitcoin Transactions

When you want to receive bitcoin from anyone, you generate a payment request in your wallet which produces a bitcoin address for them to know where to send your payment. You email them that address. A new address is automatically generated for each time you want to receive a payment. The address look like a very long alphanumeric number, or a QR barcode. Every transaction usually has a new address which is how people’s anonymity is protected.

When you buy from us we generate the bitcoin payment request when it becomes time in our website checkout for you to pay for your order. You click the button and approve the payment and your bitcoin wallet makes the payment. It is very simple as there are no numbers to type, no personal details to enter, no declined payments as long as you have a bitcoin wallet with enough bitcoin available in it to spend.

The difference between Bitcoin, bitcoins and bits

Bitcoin is the name of the digital currency.

Bitcoins are the units of currency of the Bitcoin system referred to as “BTC” and represent the price you will pay for a purchase.

The bitcoin is broken down into decimal metric units and the most commonly used unit is the “Bit”, which is a micro-bitcoin or a millionth of a bitcoin (1/100,000 or 0.000001 bitcoin).

Many wallets allow you to change the measurement unit simply by clicking on the currency icon.

How do you get bitcoins

You must get some bitcoin into your wallet before you can go shopping. Here is an overview on how this is done.

Before you can get bitcoins you need to create a wallet to store your bitcoins. Once you have done this, the most common way for individuals to get bitcoins is to either accept bitcoins as payment from another bitcoin address or to buy bitcoins from a bitcoin exchange. You can also buy bitcoins directly with a credit card or through online banking. Bitcoin prices are a little more volatile than traditional currencies so generally you should consider only holding enough bitcoin for your short term requirements.

The price you pay for bitcoin also varies between exchanges. Some exchanges are very easy to use and accept credit cards but they can be more expensive. Other exchanges feel more like a currency trading desk and can be a bit more complicated to use but they often are cheaper to buy from. Exchange rates are constantly changing so it is worthwhile checking exchange rates before you buy.

It’s important to understand that buying bitcoin from an exchange only gets bitcoin into your wallet. You have not spent it yet. Once your bitcoin arrives in your wallet you will see that transaction being confirmed by the blockchain. This is the bitcoin system confirming that deposit you received is genuine and each confirmation takes about 10 minutes. After you see 6 or more confirmations (about 1 hour) you can then go shopping and spend your bitcoin.

Trust and security

Before bitcoin, we trusted in banks to hold our funds safely and protect our credit card transactions. For that service we pay them fees. The bitcoin system has a robust trust system that does not depend on a central bank or government protection. To explain the bitcoin trust system in simplistic terms, it uses a system called a blockchain utilizing powerful cryptography. This is replicated over thousands of computers all testing and confirming transactions. Every ten minutes the latest transactions are collated into the next block on the blockchain and the rest of the bitcoin network have a process to confirm that block. This creates a “confirmation” for all those transactions in that block. The process continues to build the blockchain about every ten minutes.

It’s generally accepted that you should wait for 6 confirmations to occur (about 1 hour) before you know the transaction you are interested in is fully trustworthy. So when you make a payment or receive some bitcoin, both parties see the transaction instantly the trust comes in the 6 confirmations that follow.

An important security aspect is your anonymity. Every transaction has a new address so the transactions you make are private. This is an automatic system and it prevents anyone from identifying all your bitcoin transactions on the blockchain.

Other parties cannot pull funds from your wallet. You must approve a payment request for the payment to happen. This is a big security advantage compared to the risks of revealing credit card numbers or bank account details. You funds are safe in your wallet as long as you don’t lose it. The people you pay use the confirmation process to trust the payment without fear of it been fraudulent.

How to install a bitcoin wallet