Methods of Owning Bitcoins
If you’re looking to get in on the ground floor of a new currency, then look no further than Bitcoin.
Bitcoin is a virtual currency with no central bank or controlling organisation, with transactions that are verified by network nodes rather than third-party ers. It uses peer-to-peer technology with all transactions cryptographically verified, stored, and processed within its own secure network. Bitcoin Up can also provide you with complete details about bitcoin trading.
Bitcoins are created at a predictable rate until 21 million have been reached in roughly 20 years’ time, with about 10 minutes for each transaction. Based on a total current whole number of coins in existence (16,952,325 as of 1/4/15), those bitcoins represent approximately $92 billion USD at prevailing market exchange rates as of that date, with an approximate $287 million traded daily.
The Bitcoin network is decentralised, with every transaction processed on the Blockchain; no central server or authority is needed to make transactions. The Blockchain is a public ledger of all Bitcoin transactions that have ever taken place, which can be accessed at any time by anyone who is part of the Bitcoin network.
The transfers are completely transparent because they use publicly known cryptographic algorithms for security, but are very difficult to hack into due to their sheer volume. Once bitcoins have been transferred from one address to another, that transaction cannot be reversed without the consent of the receiver. If you don’t trust someone enough to give them your credit card number how can you trust them enough to send them thousands of dollars? Bitcoins do not suffer from the same problems as credit cards or other electronic payment systems, so you can rest easy knowing that your transaction is safe and secure.
The massive amounts of computational power required to crack BTCs even with very large pools would take longer than the age of the universe according to current estimates.
Bitcoin Exchanges are websites where users come together to buy and sell bitcoins using their local currency. Each exchange has a different interface, and some offer additional tools such as graphs, news feeds, online wallets (similar to PayPal accounts), Bitcoin Debit Cards (VISA powered), and more; sometimes allowing for conversion between local currencies. The most well-known exchanges at this time are Coinbase (USA), Bitstamp (Slovenia), BTC-e (Bulgaria), and Kraken (USA). It is important to note that Coinbase holds the private keys of all accounts, meaning it has full control over your funds at any given time.
So how does one go about buying bitcoins?
There are several options available:
The first step is to open a Bitcoin wallet; an application that allows you to send and receive bitcoins. A Bitcoin wallet can be stored anywhere as long as you have a computer or mobile device with access to the internet so it is very convenient for daily use. Many wallets provide two-factor authentication features such as Yubikey authentication if security is a concern beyond the initial username/password login layer. Different types of wallets include online web applications, desktop applications, mobile applications, hardware devices (such as the Trezor), and paper wallets; many of which provide varying degrees of security.
Once you’ve opened your account it’s time to purchase some bitcoins.
There are several options available:
The most common way is therefore via an exchange – like Coinsquare (Canada) or Kraken (USA). Exchanges act like a stock market for Bitcoin; where users make bids and offer on the price they want to buy/sell bitcoins at.
Exchanges typically require buyers to sign up for accounts with their personal information which remains private until transactions are processed. Some exchanges like Coinmama (Israel) allow for purchases without needing an account however fees can be higher or you may need to provide your ID for an exchange.
Coinbase, Kraken, BitStamp, and BTC-e are the most widely used exchanges globally at this time.
Mobile applications are becoming more popular because they allow users to take out their wallets on the go or make transactions while on other trusted networks without exposing their private keys. Coinbase was the first company to launch a mobile bitcoin app in 2013 while Mycelium was one of the later entrants with its iOS version in 2015. The benefit of mobile apps is clear – it makes spending bitcoins easier than ever before.
Some wallets offer features that others do not so it’s important to choose carefully if security is your number one priority. Of course, convenience comes at a cost so you will need to find a wallet that is right for your needs.