Bitcoin is the most popular digital currency for people to invest, sell, exchange or buy goods and services. Created by computers by a competitive and decentralized process called “mining”, the Bitcoin system does not require a central authority like a bank or government. It is called a cryptocurrency because transactions between Bitcoin owners are secured using cryptography, an advanced encryption algorithm that prevents fraud.
In this article, you will learn how Bitcoin works, how to buy it, and how to accept Bitcoin as payment for your business.
How Bitcoin works?
Here is how Bitcoin differs from traditional governmental currencies:
1. Decentralized system
The Bitcoin system rests upon a decentralized organization, the blockchain. This way, transactions don’t need to be approved by one institution in order to be processed but by all the people participating in the system. All transactions are recorded in this completely public system, so anyone can verify the details of any transaction.
2. A limited number of Bitcoin
Traditional currencies, which we call fiat (dollars, euros, yen, etc.) have an unlimited supply. Central banks create more or less regarding the value they want to give to the currency. Bitcoin faces a limited supply, managed by the algorithm itself and capped at a maximum of 21 million BTC.
What makes Bitcoin so attractive as well is the semi-anonymity it confers. Banking information and identity are very valuable information, many people want to protect themselves by using a system where they can be anonymous.
Since there is no central authority in the Bitcoin system, users do not need to identify themselves when transacting. In some cases, to respect the legislation, some transactions require verifying the parties’ identity. With Bitcoin, the algorithm protocol will check and confirm that the sender has the necessary amount and authority to send them. Any Bitcoin owner involved in a transaction is identified by their public wallet address (where they keep the Bitcoin) which can be tracked. Since the network is open to anyone, a particular transaction is visible to all. This makes Bitcoin not an ideal currency for criminals, terrorists or money-launderers.
4. Chargeback protected
Bitcoin transactions are chargeback protected. They can not be disputed or reversed. Once recorded on the blockchain, a transaction can’t be modified. This is one of the most important elements that ensures fraud isn’t possible.
Benefits of Bitcoin
1. Safe and secure way of holding money
Thanks to cryptography, Bitcoin is secure. Nobody can use yours, steal them or make a payment on your behalf. Of course, there are some requirements to protect your secret wallet’s private key to avoid any kind of fraud. As a distributed system, if a confirmed transaction is modified, it has to be modified on all computers participating in the system, which is, today, nearly impossible. If it is not, the system will identify an issue, find where it comes from and eliminate the false transaction record.
Blockchain is the safest way to store any asset.
2. Bitcoin is universal
Bitcoin doesn’t sleep. You can transact with anyone, anywhere at any time. Whatever the wallet, providers or software; you still are able to exchange or sell anyone Bitcoin. All you need is their Bitcoin wallet address.
3. Borderless and affordable transactions
Whether you want to send Bitcoin to your neighbor or someone on the other side of the planet, the transaction time and fees remain the same, very low. You do not need to wait for an institution like a bank to process the payment, and you won’t be surprised with additional fees. Moreover, there is no limited transaction amount. Fees do not change regarding the amount you send. This makes Bitcoin highly advantageous for important transactions.
4. Identity protected
With Bitcoin, there is nothing to steal from you during a transaction. Each payment link is single-use only. If someone captures the payment link or the public address to your wallet, it will not be useful.
How to buy Bitcoin, how to use Bitcoin, what to do with Bitcoin
Anyone can use Bitcoin without any technical knowledge. Managing a wallet is within anybody’s reach with a user-friendly interface. These “wallets” are a set of a public key and a private key.
- A private key is a large string of numbers and letters that allows Bitcoin to be sent.
- A public key is another large number, but this one enables Bitcoin to be received.
- An address is a hashed version of the public key, it is reduced for security, as it is the one displayed on the blockchain.
Where to buy Bitcoin
You can buy Bitcoin on an exchange website or directly from marketplaces with other cryptocurrencies, like Binance or Kraken via your credit card or bank transfers. Some platforms can also help find people who are willing to sell Bitcoin for cash. In some countries, there are also ATMs where you will be able to buy Bitcoin like you would buy soda from a vending machine.
How to use Bitcoin
You can do anything you want with Bitcoin. Buy other cryptocurrencies, buy goods or services, donate to charities, keep them as an investment. Whatever you want to do.
Accept Bitcoin as a merchant
There are more than 200 million Bitcoin owners, though still a small quantity of merchants accept Bitcoin as a payment method. Learn how Bitcoin can be an asset to your store in our post 10 reasons why you should add bitcoin payment to your website
Accepting Bitcoin is very simple and easy for any business. Easy solutions exist for you to accept Bitcoin payments within minutes and get your first Bitcoin sale. With TripleA you can start with a developer-friendly API, plugins for e-commerce platforms or a very simple invoicing system.
Why you should accept crypto? Simple setup, low fees, no chargeback, and fiat currency withdrawal. It is a no-brainer.
*Article updated on April 2021