Decentralized Digital Currency
What is Bitcoin?
Bitcoin is a network of computers around the world, working together to verify transactions between people. It is possible to send value using Bitcoin to someone on the other side of the planet in seconds. It solves the problem of “double spending” between two parties. If a digital version of value is transmitted via email to someone else, what would stop that person from making a copy and devaluing the transaction? This is called “double spending” and it has been a struggle for big online finance companies like credit card providers and online payment processors. Bitcoin solves this problem by using a distributed network to approve transactions and ensure accuracy and reliability based on math. Its pretty fascinating stuff. Check out the creator of Bitcoin, Satoshi Nakomato’s original white paper here. And here is an audio version as well on youtube.
Bitcoins can be obtained in a few different ways.
- Mining for Bitcoins is how all Bitcoins came to exist
- Exchanging cash for Bitcoins in Person or Online
- Selling a good or service for Bitcoin
Mining for Bitcoins
The network of computers around the world that verify transactions work hard to do so. As time goes on, it gets even harder and requires more powerful computers. Mining is the result of these computers taking resources to verify transactions. These computers are rewarded with Bitcoins. In the beginning it was simple to mine for Bitcoins using any average PC, today it requires more expensive hardware and more use of electricity. It is pretty much unprofitable for the average user. There are plenty of miners out there still working hard to produce Bitcoins. Check out the wiki on Bitcoin Mining here.
Exchanging Bitcoins for cash person to person
There are multiple exchanges online that buy and sell Bitcoins. None of which are based in the US. Due to various money transmitter laws and regulations, the US is not the best place to start an actual Exchange. A person to person transaction is perfectly ok. Localbitcoins.com is a website that brings buyers and sellers together to work out a deal to buy Bitcoins. You can setup an in person meeting to buy Bitcoins with Cash, or buy them online by making a bank deposit or working out another form of payment online. The preferred way is cash in person at a public place. Buyers should do there due diligence and research who they are buying from and be prepared with the buying process beforehand.
Accepting Bitcoins as payment for goods or services
It can be as easy as selling an old cell phone online for Bitcoins or starting a whole business accepting Bitcoin as payment. The best way to get Bitcoins is to increase the economy around Bitcoin. Bitcoin grows the more people actually use it. Coinmap.org is an online map that shows all the local business in your area that accept Bitcoin as payment. The map grows by day, so check back often to see new people accepting digital currency in your area. It is still very early in the world of Bitcoin, a business that solely accepts Bitcoins and only uses Bitcoins is pretty rare. Most business will use a company like Coinbase or Bitpay to instantly convert Bitcoins to USD. This makes the incentive for a business to accept Bitcoin even greater, without having to worry about fluctuations of value. Price volatility is a concern in the early stages of Bitcoin, but if it can be converted instantly, it reduces the risk involved.
If your business is interested in accepting Bitcoin and would like to learn more, call us at 757-391-4418.