Understand the Bitcoin basics

Bitcoin is an alternative currency system that acts as a form of digital money. Bitcoins are used both as an investment and as a payment method for goods and services, and are touted as a means of doing so without involving third-party providers. Despite the increasing popularity, most companies still do not accept bitcoins and their usefulness as an investment is both questionable and potentially risky. Before you start buying which ones, it’s important to understand what a bitcoin is and what its pros and cons are. [1]

Understand the Bitcoin basics. Bitcoin is a fully virtual currency that allows consumers to exchange money for free without the use of third parties (such as a bank, credit card company or other financial institution). Bitcoins are not regulated or controlled by a central authority such as the Federal Reserve, and all Bitcoin transactions take place in an online marketplace where users are anonymous and largely unobserved. [2]
Bitcoin allows you to change money instantly with anyone in the world without having to create a merchant account or use a bank or other financial institution.
There are no names required to transfer funds. D. H. There is little risk of identity theft.
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Learn more about bitcoin mining. To understand bitcoin, it is important to understand bitcoin mining. This is the process of how bitcoins are generated. While mining is complex, the basic idea is that every time a Bitcoin transaction is made between two people, this transaction you can make a lot of money with Bitcoin is logged digitally by computers in a transaction log that describes the details of the transaction. These are z. B. the time and who owns how many bitcoins. [3]
These transactions are then shared publicly in the so-called “blockchain”. In this all transactions are specified and who owns the bitcoins.
Bitcoin miners are people with computers who constantly check the blockchain to make sure it is correct and up-to-date. They are the people who confirm transactions, and in return they are paid in bitcoins, which increases the stock.
Since the Bitcoin is not overseen by a central authority, the mining ensures that the one who transfers the bitcoins has enough, that the agreed sum is transferred and that the balance is then correct for the persons involved in the transaction. [4 ]
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Familiarize yourself with the legal issues surrounding Bitcoin. Recently, the Federal Office responsible for the fight against money laundering has issued new guidelines for virtual currencies. The updated policies regulate Bitcoin exchange, but leave the rest of the Bitcoin economy alone for the moment.
The Bitcoin network is not regulated by the government, and because of the fact that money can be exchanged anonymously, has found a loyal following among those involved in illegal activities such as drug trafficking and gambling. [5]
The federal police can finally come to the conclusion that the Bitcoin is a tool for money laundering, and looking for ways to adjust this. A complete cessation of bitcoin would be a challenge, but strong federal regulation could push the system underground. This would check out for more then lower the value of bitcoins as a legitimate currency.
The pros and cons of using bitcoins
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Become aware of the benefits of Bitcoin. Key benefits of Bitcoin include low fees, protection against identity theft, protection against payment fraud, and immediate payment. [6]
Low Fees: Unlike traditional financial systems, where the system itself (such as PayPal or a bank) is paid for a fee, the Bitcoin bypasses this whole system. The Bitcoin network is obtained from miners who are paid with new bitcoins.
Identity theft protection: Using Bitcoins does not require a name or any other personal information, just an ID for your digital wallet (send and receive bitcoins). Unlike a credit card, where the merchant has full access to your identity and line of credit, Bitcoin users operate completely anonymously.
Protection against payment fraud: Because the Bitcoin is digital, it can not be forged, which protects against payment fraud. In addition, the transactions can not be reversed, as z. B. in the chargeback on a credit card