Bitcoin FAQ

What is Bitcoin?

Bitcoin is a decentralized digital currency that enables peer-to-peer transactions without the need for a central authority or intermediary. Bitcoin was created by an unknown person or group of people using the pseudonym Satoshi Nakamoto, and it was introduced in a 2008 white paper titled "Bitcoin: A Peer-to-Peer Electronic Cash System."

How does Bitcoin work?

Bitcoin transactions are recorded on a public ledger called the blockchain, which is maintained by a network of nodes (computers) that validate and record transactions. New bitcoins are created through a process called Bitcoin mining, where powerful computers solve complex mathematical problems to add new blocks to the blockchain. Every four years the Bitcoin network has a process called Halving, which reduces the rewards miners get by 50% to keep the coin supply capped at 21 million.

What are the technical aspects of Bitcoin?

Bitcoin uses cryptographic techniques to secure transactions and control the creation of new units. The network is decentralized, meaning no single entity controls it, which is achieved through a distributed network of nodes. Bitcoin uses a proof-of-work (PoW) consensus mechanism to validate transactions and secure the network.

What are the advantages of Bitcoin?

Bitcoin offers several advantages, including decentralization, which makes it resistant to censorship and interference. Transactions are secured by cryptographic algorithms, providing high security. The public blockchain ensures transparency and traceability of all transactions. Additionally, Bitcoin transactions can have lower fees compared to traditional financial systems, especially for international transfers.

What are the disadvantages of Bitcoin?

Bitcoin's price can be highly volatile, posing a risk for investors and users. The network can face scalability issues, leading to slower transaction times and higher fees during peak periods. Regulatory uncertainty varies by country, and changes can impact its use and value. Moreover, Bitcoin mining consumes a significant amount of energy, raising environmental concerns.

How can I buy and store Bitcoin?

You can buy Bitcoin using our buy Bitcoin app. You can pay with PayPal, credit or debit cards. Bitcoin can be stored in various types of wallets, including hot wallets (online wallets connected to the internet) and cold wallets (offline wallets not connected to the internet, such as hardware wallets and paper wallets).

What are security tips for Bitcoin wallets?

Always use strong, unique passwords for your wallet to safeguard your Bitcoin. Enable two-factor authentication (2FA) whenever you can for an added layer of security. Remember, your private keys should never be shared with anyone, as they give access to your funds. For storing significant amounts of Bitcoin, consider using hardware wallets; they protect your assets from online threats by keeping your private keys offline.

What are common uses of Bitcoin?

Many people buy Bitcoin as a long-term investment, hoping its value will increase over time. Bitcoin can also be used to purchase goods and services from merchants that accept it. Additionally, it can be used for international money transfers, often with lower fees and faster processing times compared to traditional methods.

What are the risks associated with Bitcoin?

The value of Bitcoin can fluctuate widely, leading to potential market losses. While Bitcoin itself is secure, users must take precautions to protect their wallets and private keys from theft and hacking. Regulatory changes can impact the legality and use of Bitcoin in different regions.

How is Bitcoin different from traditional currencies?

Unlike traditional currencies, Bitcoin is not issued or controlled by any central authority. It has a fixed supply limit of 21 million coins, whereas traditional currencies can be printed in unlimited quantities. Bitcoin exists only in digital form and is not tied to any physical asset or commodity.