You’ve probably been hearing a lot about Bitcoin recently and are wondering what’s the big deal? Most of your questions should be answered by the resources below but if you have additional questions feel free to ask them in the comments.
The following videos are a good starting point for understanding how bitcoin works and a little about its long term potential:
- Video 1: What Is Bitcoin & Why Should You Care?
- Video 2: The real value of bitcoin and crypto currency technology
- Video 3: Bitcoin Is Independent Money
- Video 4: Bitcoin 101 – Balaji Srinivasan
Key properties of Bitcoin:
- Limited Supply – There will only ever be 21,000,000 bitcoins created and they are issued in a predictable fashion, you can view the inflation schedule here. Once they are all issued Bitcoin will be truly deflationary.
- Open source – Bitcoin code is fully auditable. You can read the source code yourself here.
- Accountable – The public ledger is transparent, all transactions are seen by everyone.
- Decentralized – Bitcoin is globally distributed across thousands of nodes with no single point of failure and as such can’t be shut down similar to how Bittorrent works.
- Censorship resistant – No one can prevent you from interacting with the bitcoin network and no one can censor, alter or block transactions that they disagree with, see Operation Chokepoint.
- Push system – There are no chargebacks in bitcoin because only the person who owns the address where the bitcoins reside has the authority to move them.
- Low fee – Transactions fees can vary between a few cents and a few dollars depending on network demand and how much priority you wish to assign to the transaction. Most wallets calculate the fee automatically but you can view current fees here.
- Borderless – No country can stop it from going in/out, even in areas currently unserved by traditional banking as the ledger is globally distributed.
- Trustless – Bitcoin solved the Byzantine’s Generals Problem which means nobody needs to trust anybody for it to work.
- Pseudonymous – No need to expose personal information when purchasing with cash or transacting.
- Secure – Encrypted cryptographically and can’t be brute forced or confiscated with proper key management such as hardware wallets.
- Programmable – Individual units of bitcoin can be programmed to transfer based on certain criteria being met
- Nearly instant – From a few seconds to a few minutes depending on need for confirmations. After a few confirmations transactions are irreversible.
- Peer-to-peer – No intermediaries with a cut, no need for trusted third parties.
- Portable – Bitcoins are digital so they are easier to move than cash or gold. They can even be transported by simply remembering a string of words for wallet recovery.
- Scalable – Each bitcoin is divisible down to 8 decimals allowing it to grow in value while still accommodating micro-transactions.
- Designed Money – Bitcoin was created to fit all the fundamental properties of money better than gold or fiat
Some excellent writing on Bitcoin’s value proposition and future can be found here. Bitcoin statistics can be found here and here. Developer resources can be found here and here. Peer-reviewed research papers can be found here. The number of times Bitcoin was declared dead by the media can be found here. Scaling resources here, and of course the whitepaper that started it all.
Where can I buy bitcoins?
Covered in my first article here.
Securing your bitcoins
With bitcoin you can “Be your own bank” and personally secure your bitcoins OR you can use third party companies aka “Bitcoin banks” which will hold the bitcoins for you.
- If you prefer to “Be your own bank” and have direct control over your coins without having to use a trusted third party, there are many software wallet options here. If you want easy and secure storage without having to learn computer security best practices, then a hardware wallet such as the Trezor or Ledger is recommended. A more advanced option is to secure them yourself using paper wallets generated offline. Some popular mobile and desktop options are listed below and most are cross platform.
The best ones that I have used are:
- For Android: Mycelium
- For iOS: Breadwallet
- For Desktop: Electrum, Armory
If you prefer to let third party “Bitcoin banks” manage your coins, try Xapo but be aware you may not be in control of your private keys in which case you would have to ask permission to access your funds and be exposed to third party risk.
Note: For increased security, use Two Factor Authentication (2FA) everywhere it is offered, including email!
2FA requires a second confirmation code to access your account, usually from a text message or app, making it much harder for thieves to gain access. Google Authenticator and Authy are the two most popular 2FA services, download links are below. Make sure you create backups of your 2FA codes.
Where can I spend Bitcoins?
As of now you can buy mobile and DTH charges via the Indian Bitcoin exchange app. You can buy Amazon Gift Cards via BitPay. While it’s completely legal to buy and sell Bitcoin in India, the tax implications are currently under ministerial watch and a confirmed status is most likely to come in public domain as soon as July. Secondly, on the merchant side there is a clear lack of knowledge and awareness of its usage.
If you are a merchant interested in accepting in Bitcoin as a payment method, there are several options available:
- Mycelium Gear (direct to your wallet)
- Blockonomics (direct to your wallet)
Can I mine bitcoin?
Mining bitcoins can be a fun learning experience, but be aware that you will most likely operate at a loss. Newcomers are often advised to stay away from mining unless they are only interested in it as a hobby similar to folding at home. If you want to learn more about mining you can read more here.
If you want to contribute to the bitcoin network by hosting the blockchain and propagating transactions you can run a full node using this setup guide. Bitseed is an easy option for getting set up. You can view the global node distribution here.
Bitcoin Wiser does not advise mining to beginners and amateurs as its very a complicated process to understand and at the same time is a highly cost intensive job.
Just like any other form of money, you can also earn bitcoins by being paid to do a job. Best suited for coders, designers, etc.
|Bitwage, XBTfreelancer, Cryptogrind, Bitlancerr, Coinality, Bitgigs, Rein Project||Freelancing|
|OpenBazaar, Purse.io, Bitify, 21 Market||Marketplaces|
|Watchmybit, Streamium.io, OTika.tv, XOtika.tv NSFW||Video Streaming|
|Bitasker, BitforTip, WillPayCoin||Tasks|
|Supload.com, SatoshiBox, JoyStream, File Army||File/Image Sharing|
|CoinAd, A-ads, Coinzilla.io||Advertising|
One Bitcoin is quite large (more than a lakh of rupees now) so people often deal in smaller units. The most common subunits are listed below:
|millibitcoin||mBTC||1,000 per bitcoin||SI unit for milli i.e. millilitre (mL) or millimetre (mm)|
|microbitcoin||μBTC||1,000,000 per bitcoin||SI unit for micro i.e microlitre (μL) or micrometre (μm)|
|bit||bit||1,000,000 per bitcoin||Colloquial “slang” term for microbitcoin|
|satoshi||sat||100,000,000 per bitcoin||Smallest unit in bitcoin, named after the inventor|
Still have questions?
Feel free to ask in the comments below or stick around for our regular dose on Bitcoin Wiser.
Welcome to the Bitcoin community and the new decentralized economy!
(Acknowledgements: many thanks to all the fellow subredditors who have contributed for the above details as sticky notes across many forums)