08-15-2014, 04:33 AM
FAQ’s About BTC:
What is Bitcoin?
Bitcoin is a decentralized digital currency which allows payments to be made over the internet. Several big companies already accept it, such as Expedia, Dell, and Overstock. (If you’re on gaming forums, then you may as well mention PlayerAuctions and Newegg).
Why do I want to use BTC?
Bitcoin allows for a cheap way to send money to others. If you need to send your friend $100, there will likely be fees and additional charges if you use Western Union or PayPal. Bitcoin eliminates these. Because of the lack of fees, Bitcoin is more attractive to merchants who must pay a great deal to credit card companies. This means that several merchants offer discounts or will do periodic sales for people who pay in bitcoin (Newegg just ended one a few weeks ago).
If someone buys illegal things from someone with BTC and then buys something from be with they illegally acquired funds, does that mean I will get in trouble?
The Bitcoin regulatory landscape is quickly changing, but there are currently no plans for anything along these lines. In this case, bitcoin and dollars are similar. Though both can be used for illegal activity, the person who holds the dollar bill or bitcoin that has in the past been used for illegal activity does not get in any trouble as he or she did nothing wrong.
Aren’t Bitcoins used for illegal online purchases? What effect will that have on me?
None. Much in the same way that illegal activities are conducted using dollars, Euros, and Yens, nothing will happen to your bitcoin if someone else does something illegal with their bitcoin.
How should I get started with Bitcoins? Wallets, online or offline and what not?
The first thing to do is choose a wallet and method of storage. You can store them locally on your computer. Electrum and the Bitcoin-Qt are popular choices. Keep in mind that if someone hacks into your computer they could potentially steal your bitcoin. If you store them in an online wallet, blockchain.info and CoinBase are among the most popular.
(CoinBase is our competitor as a payment processor, but Alex doesn’t seem to mind suggesting their wallet service).
Can you explain how I can profit from Bitcoins should I get involved?
Since the price of bitcoin is volatile, one could potentially make money by treating it as an asset and trading on it, buying when the price is low and selling when it’s high. The volatility has gone down in recent months as it gains in popularity, but there are still opportunities for this and there always will be as long as people can trade it for another currency. Currency markets operate around the world where people trade USD for Yen and earn money from it. Additionally, many in the bitcoin community insist that bitcoin is currently undervalued and claim that it will reach over $1000 within a year. Though their advice should be taken at one’s own discretion, it is worth remembering that the price hit a high of $1100 last November.
As a merchant, there is much to be gained from accepting bitcoin. You will not pay traditional fees or charge backs associated with credit cards. This means that each time someone buys something with bitcoin, you can either generate a higher profit, offer a discount, or a combination of both.
I heard Bitcoins are going to be regulated by governments, what does that mean? Will they no longer be anonymous purchases?
No one really knows what regulation will entail until it becomes official and enforced. The U.S. seems to want to regulate the market without stifling innovation. As for whether purchases will be anonymous, it is difficult to say, that I think that they will be. It should be noted that the anonymous feature of Bitcoin has been slightly misunderstood. Each Bitcoin transaction can be viewed on the blockchain, a public ledger. Because of this, every single transaction using bitcoin can be viewed and is verified. However, only the public addresses involved in the transaction are posted, so if one’s name is not associated with the address, it is anonymous.
Should I use a different address for every transaction?
If you want to maintain anonymity, you should use a new address each time. If you don’t, you expose yourself to the potential that someone can trace various transactions back to one source and deduce who you are. Additionally, anyone can see the balance of every address at blockchain.info. This means that someone could see that one address has a high balance, providing extra incentive to hack the source of the address and steal the funds.
What happens when I delete an address from my wallet, if someone sends BTC to that address for example?
It is discouraged to delete an address from a wallet as any bitcoin sent to that wallet will be lost. An alternative that is provided by many wallet providers is to simply archive the address.
What are things I should avoid when dealing with BTC?
Putting your bitcoin in disreputable services and companies.
Sharing your private keys
Losing access to your wallet (i.e. not backing up your local wallet, losing a paper wallet, forgetting the address of a brain wallet)
Will Bitcoins ever become unmineable?
Yes, there is a finite number of bitcoin (21 million). Once this number is reached, bitcoins will no longer be able to mined.
I was told it is too late to start mining Bitcoins where should I start to mine Bitcoin
Mining bitcoin involves a computer solving complex mathematical problems. Over time, the difficulty increases, which means that more computing power is required. Profitability depends on the price of bitcoin, the cost of electricity, and the hashrate of the mining device. Devices quickly become obsolete as the amount of power (and therefore electricity) increases each time the difficulty level increases. Mining rigs are also not cheap and can cost thousands of dollars, so this is an additional cost to keep in mind. If you want to start mining, you will need to do research about the best hardware for the amount you want to spend. For a full list of bitcoin mining profitability calculators, consult https://en.bitcoin.it/wiki/Profitability_Calculator
How can you make the price of BTC rise?
The price of bitcoin is dependent on how much value people believe it has. In general terms, the price would theoretically rise if more people used it for more transactions because everyone would assign it greater value.
Where did BTC come from?
Bitcoin was originally created by Satoshi Nakamoto, an anonymous computer programmer or group of programmers.
What are the dangers of using BTC?
Getting your account or computer hacked could result in the loss of your money. There are also no regulations currently in place for third party wallets or exchanges to be insured against bankruptcy by the FDIC or a similarly functioning body. There are also potential attacks on the Bitcoin network that could result in negative consequences. Malware exists that is used to steal bitcoin from people’s computers.
What are the securities of using BTC?
There are many cryptographic processes that allow the transactions to be secure. Much about the underlying security of Bitcoin is technical, though there is a good video by Khan Academy regarding Bitcoin’s security.
What is Bitcoin?
Bitcoin is a decentralized digital currency which allows payments to be made over the internet. Several big companies already accept it, such as Expedia, Dell, and Overstock. (If you’re on gaming forums, then you may as well mention PlayerAuctions and Newegg).
Why do I want to use BTC?
Bitcoin allows for a cheap way to send money to others. If you need to send your friend $100, there will likely be fees and additional charges if you use Western Union or PayPal. Bitcoin eliminates these. Because of the lack of fees, Bitcoin is more attractive to merchants who must pay a great deal to credit card companies. This means that several merchants offer discounts or will do periodic sales for people who pay in bitcoin (Newegg just ended one a few weeks ago).
If someone buys illegal things from someone with BTC and then buys something from be with they illegally acquired funds, does that mean I will get in trouble?
The Bitcoin regulatory landscape is quickly changing, but there are currently no plans for anything along these lines. In this case, bitcoin and dollars are similar. Though both can be used for illegal activity, the person who holds the dollar bill or bitcoin that has in the past been used for illegal activity does not get in any trouble as he or she did nothing wrong.
Aren’t Bitcoins used for illegal online purchases? What effect will that have on me?
None. Much in the same way that illegal activities are conducted using dollars, Euros, and Yens, nothing will happen to your bitcoin if someone else does something illegal with their bitcoin.
How should I get started with Bitcoins? Wallets, online or offline and what not?
The first thing to do is choose a wallet and method of storage. You can store them locally on your computer. Electrum and the Bitcoin-Qt are popular choices. Keep in mind that if someone hacks into your computer they could potentially steal your bitcoin. If you store them in an online wallet, blockchain.info and CoinBase are among the most popular.
(CoinBase is our competitor as a payment processor, but Alex doesn’t seem to mind suggesting their wallet service).
Can you explain how I can profit from Bitcoins should I get involved?
Since the price of bitcoin is volatile, one could potentially make money by treating it as an asset and trading on it, buying when the price is low and selling when it’s high. The volatility has gone down in recent months as it gains in popularity, but there are still opportunities for this and there always will be as long as people can trade it for another currency. Currency markets operate around the world where people trade USD for Yen and earn money from it. Additionally, many in the bitcoin community insist that bitcoin is currently undervalued and claim that it will reach over $1000 within a year. Though their advice should be taken at one’s own discretion, it is worth remembering that the price hit a high of $1100 last November.
As a merchant, there is much to be gained from accepting bitcoin. You will not pay traditional fees or charge backs associated with credit cards. This means that each time someone buys something with bitcoin, you can either generate a higher profit, offer a discount, or a combination of both.
I heard Bitcoins are going to be regulated by governments, what does that mean? Will they no longer be anonymous purchases?
No one really knows what regulation will entail until it becomes official and enforced. The U.S. seems to want to regulate the market without stifling innovation. As for whether purchases will be anonymous, it is difficult to say, that I think that they will be. It should be noted that the anonymous feature of Bitcoin has been slightly misunderstood. Each Bitcoin transaction can be viewed on the blockchain, a public ledger. Because of this, every single transaction using bitcoin can be viewed and is verified. However, only the public addresses involved in the transaction are posted, so if one’s name is not associated with the address, it is anonymous.
Should I use a different address for every transaction?
If you want to maintain anonymity, you should use a new address each time. If you don’t, you expose yourself to the potential that someone can trace various transactions back to one source and deduce who you are. Additionally, anyone can see the balance of every address at blockchain.info. This means that someone could see that one address has a high balance, providing extra incentive to hack the source of the address and steal the funds.
What happens when I delete an address from my wallet, if someone sends BTC to that address for example?
It is discouraged to delete an address from a wallet as any bitcoin sent to that wallet will be lost. An alternative that is provided by many wallet providers is to simply archive the address.
What are things I should avoid when dealing with BTC?
Putting your bitcoin in disreputable services and companies.
Sharing your private keys
Losing access to your wallet (i.e. not backing up your local wallet, losing a paper wallet, forgetting the address of a brain wallet)
Will Bitcoins ever become unmineable?
Yes, there is a finite number of bitcoin (21 million). Once this number is reached, bitcoins will no longer be able to mined.
I was told it is too late to start mining Bitcoins where should I start to mine Bitcoin
Mining bitcoin involves a computer solving complex mathematical problems. Over time, the difficulty increases, which means that more computing power is required. Profitability depends on the price of bitcoin, the cost of electricity, and the hashrate of the mining device. Devices quickly become obsolete as the amount of power (and therefore electricity) increases each time the difficulty level increases. Mining rigs are also not cheap and can cost thousands of dollars, so this is an additional cost to keep in mind. If you want to start mining, you will need to do research about the best hardware for the amount you want to spend. For a full list of bitcoin mining profitability calculators, consult https://en.bitcoin.it/wiki/Profitability_Calculator
How can you make the price of BTC rise?
The price of bitcoin is dependent on how much value people believe it has. In general terms, the price would theoretically rise if more people used it for more transactions because everyone would assign it greater value.
Where did BTC come from?
Bitcoin was originally created by Satoshi Nakamoto, an anonymous computer programmer or group of programmers.
What are the dangers of using BTC?
Getting your account or computer hacked could result in the loss of your money. There are also no regulations currently in place for third party wallets or exchanges to be insured against bankruptcy by the FDIC or a similarly functioning body. There are also potential attacks on the Bitcoin network that could result in negative consequences. Malware exists that is used to steal bitcoin from people’s computers.
What are the securities of using BTC?
There are many cryptographic processes that allow the transactions to be secure. Much about the underlying security of Bitcoin is technical, though there is a good video by Khan Academy regarding Bitcoin’s security.
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