Bitcoins are completely virtual coins designed to be 'self-contained' for their value, with no need for banks to move and store the money.
Once you own bitcoins, they behave like physical gold coins: they possess value and trade just as if they were nuggets of gold in your pocket. You can use your bitcoins to purchase goods and services online, or you can tuck them away and hope that their value increases over the years.
Bitcoins are traded from one personal 'wallet' to another.
A wallet is a small personal database that you store on your computer drive, on your smartphone, on your tablet, or somewhere in the cloud.
For all intents, bitcoins are forgery-resistant. It is so computationally-intensive to create a bitcoin, it isn't financially worth it for counterfeiters to manipulate the system.
Once you own bitcoins, they behave like physical gold coins: they possess value and trade just as if they were nuggets of gold in your pocket. You can use your bitcoins to purchase goods and services online, or you can tuck them away and hope that their value increases over the years.
Bitcoins are traded from one personal 'wallet' to another.
A wallet is a small personal database that you store on your computer drive, on your smartphone, on your tablet, or somewhere in the cloud.
For all intents, bitcoins are forgery-resistant. It is so computationally-intensive to create a bitcoin, it isn't financially worth it for counterfeiters to manipulate the system.
How to acquire BitCoin
- As payment for goods or services.
- Purchase bitcoins at a Bitcoin exchange.
- Exchange bitcoins with someone near you.
- Earn bitcoins through competitive mining.
Legality
The legal status of bitcoin varies substantially from country to country and is still undefined or changing in many of them. While some countries have explicitly allowed its use and trade, others have banned or restricted it. Regulations and bans that apply to bitcoin probably extend to similar cryptocurrency systems.
Is Bitcoin Secure
The Bitcoin technology - the protocol and the cryptography - has a strong security track record, and the Bitcoin network is probably the biggest distributed computing project in the world. Bitcoin's most common vulnerability is in user error. Bitcoin wallet files that store the necessary private keys can be accidentally deleted, lost or stolen. This is pretty similar to physical cash stored in a digital form. Fortunately, users can employ sound security practices to protect their money or use service providers that offer good levels of security and insurance against theft or loss.
How to Convert Bitcoin to other currency
1. Direct trades: Websites that offer this type of selling structure include Coinbase and LocalBitcoins in the US, and BitBargain UK and Bittylicious in the UK.
On these sites, you will usually have to register as a seller. This involves verifying your identity, which we will discuss again later. Once you have registered, you can post an offer, signalling that you want to sell, and the website will alert you when a buyer wants to trade with you. From there, your interaction is solely with the buyer, but you use the website to complete your trade.
2. Exchange trades: The other way to sell bitcoins is to register with an online exchange. You will still have to verify your identity, but in this case you won’t have to do as much work when it comes to organizing the sale.
Exchanges act as an intermediary who holds everyone's funds. You place a ‘sell order’ (just as you would place a buy order), stating the volume (amount) and type of currency you wish to sell (eg bitcoin), and the price per unit you wish to sell for.
As soon as someone places a matching buy order, the exchange will complete the transaction. The currency will then be credited to your account. Below are few exchanges that support Bitcoin,
3. Peer-to-peer trading marketplaces
A new development in the bitcoin space is the advent of sites like Brawker and Purse, which set out to bring together two groups of people with specific and complementary needs.
The first group are individuals who want to be able to use bitcoin to buy goods from sites which do not yet directly accept digital currencies. The second comprises of others who would like to buy bitcoin with a credit or debit card. The marketplace brings together individuals with matching requirements to effectively sell bitcoin to one and provide discounted goods for the other.
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