A lot has been prattled about Bitcoin. But I had an urge to know about it in simpler terms. First of all Bitcoin and bitcoin itself has a difference. The capital “B” signifies the company while bitcoin means its currency. For example, Mr. ABC paid 10 bitcoins to make a purchase. It is a virtual currency using cryptography to control the creation and transfer of money. And bitcoin is not similar to hard currency that is controlled by any government or other regulators. It is a peer to peer payment system introduced by Pseudonymous developer Mr.Satoshi Nakamoto.
To talk more about its features, bitcoins can be used to make payment for purchases online. So one may ask how is it different from paying it through credit card or cash. The hassles of cash is already known and the fees charged for card payment gives an edge for bitcoins particularly for sellers as it has no such strings attached. Every transaction is logged and bitcoin transfer is done immediately. This log is termed as “blockchain” and all those who participate in these transactions and also who monitor the blockchain are termed as “miners”.
Then now comes a million dollar question, how are these bitcoins priced as it is not controlled by any regulatory bodies. This digital currency price is based on its demand and supply. It is highly volatile and that gives another opportunity for miners to trade on its price just like Stock trading and Forex trading. One bitcoin is now priced close to $600 and collecting bitcoins are also kept just a click away. It asks us to create a wallet and keep a public address different from one’s private address to conceal identity.
In last 5 years this new invention has gained much popularity. But it has its own mayhem too. In 2011 it facilitated in creating black market for illegal products forcing government to impose restrictions. China has barred financial institutions from accepting bitcoins as a mode of payment. And in this era of hacking Bitcoin has to go through a rough patch before unleashing its potential and create a stable marketplace around the world.
Awesome....Can you also please teach step by step how to trade using Bitcoins...I cannot understand it even after going through the procedures many times..Thank you :)
ReplyDeleteThanks. The easiest but slowest way to obtain bitcoins is through mining. This is just about decryption of blocks using your computer. There are various software available at http://bitcoin.org/en/download. But it turned out to be too pricey these days. So some try clubbing together and by creating a pool. Some of the popular pools can be found at https://en.bitcoin.it/wiki/Comparison_of_mining_pools.
ReplyDeleteBut to penetrate the market immediately, best is to go through popular exchanges like Mt.Gox. Here one has to just sign up with an email address and then confirm the real address along with a government photo id proof. This exchange has all major currencies starting from USD. One can convert fiat currency to bitcoins and vice versa. Like any other trading platform this one also charges a fee ranging from 0.60% to 0.25% per trade. Trader can store his bitcoins in a bitcoin wallet. It is nothing but a website or program where you can sign up for free and get a wallet. After getting your wallet, you just have to create your public address that is 34-36 characters long. This is where you can look at your transactions too. Again due to security threats it is advised not to put all eggs in one basket in this case your wallet.For example, the sheep marketplace stole around $220 million worth bitcoins, here is the news report from business insider http://www.businessinsider.com/220-million-sheep-marketplace-bitcoin-theft-chase-2013-12
And finally bitcoins are taxable not only when converted to fiat currency but also when traded for tangible or intangible assets.
Hope this helps.
Wow..thank you :) I hope to try it out again and succeed with this additional information :)
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