Bitcoin, started in 2009, is taking the world by storm. From just a few dollars for one coin, the price has skyrocketed to $1,000. This has spawned a host of questions., What is it? Who Owns It? How Do I Buy and Sell? How Do I Use Them to Buy Merchandise or Services?
What is it?
Bitcoin is described as a peer to peer crypto currency. The transactions are between two parties. There is no bank or middleman. These transactions can done electronically or in the case of physical transfer through a Bitcoin buy or sell on the OTC or on an Exchange. The Bitcoin itself is made of solid brass 1.125 inches (28.6 gr.). It is a bit larger than a quarter but smaller than a half dollar. There is a public ledger called “Blockchain” that lists all the transactions. The amount issued will not exceed 21 million.
Who owns them?
Bitcoin is an “open source” program, meaning that it is open at all times with all transactions made public. You are protected by your private key. The only information that shows up is the amount of the transaction, with no names or key numbers. With an “open source” technology, NO ONE owns it. It is open to developers much the same way Linux is used.
How Do I Buy and Sell Bitcoins?
There are two ways to do this. The most convenient way to use Bitcoin is as electronic currency. All you need is your Smartphone. You can go to Bit Bills and download and install Bitcoin onto your Smartphone. You can use Windows, Mac or Linux. This will automatically create your WALLET on your Smartphone. The last command on your Wallet will create your “Private Key.“ It will stay open for 120 seconds for you to copy it. Developers of Bitcoin have established a mathematical relationship for the address and private key. Your Private Key is your proof of ownership. It must be protected at all times.
Next, you can go to an ATM that accepts Bitcoin, scan your Wallet, put your cash into the ATM and your Bitcoin balance will appear on your Wallet.
How do I Use Bitcoin to Buy Merchandise or Services?
To use your Bitcoin currency, you would then find businesses that accept Bitcoin, You can make electronic transfers with your Smartphone similar to the transactions on Paypal, except that there is NO MIDDLEMAN. The transaction is strictly between you and the business owner. A very small transaction fee can be charged but is much less than Paypal or any other electronic transfer. That transaction is now public on your “Block Chain” but without any personal information. It simply states the amount of the transaction.
How Do I Buy or Sell Physical Bitcoins?
To buy or sell a Bitcoin you would go to Bitcoin OTC. Here again, this is an “open exchange.” At present Bitcoin prices are quoted in 7 different currencies around the world. Buyers or sellers post there bids and offers on the exchange in their currency of choice. There are no “market makers” as we often refer to brokers who act as middlemen in OTC transactions. Each transaction is between you and the buyer or seller. The terms, method of payment and delivery are agreed upon by the parties. The transaction is based upon “trust” however, you still should be diligent and choose a reputable party. Using Bitcoin OTC is complex process and involves some knowledge of open source codes.
A much easier way to buy or sell Bitcoins is to use an exchange such as Mt.Cox. It claims to be the only multi currency platform that let’s you trade Bitcoins in your own currency. It also claims to be secure and reliable. You can even download the App on your Smarphone.
Whether Bitcoin will survive or whether other electronic currencies will spring up to compete with Bitcoin is also an “open question.”