WhatBitcoin is digital currency of the future because it is independent of the central authorities; transfers are carried out quickly and with minimal costs, irrespective of the value of transaction. It can be sent over the internet and without intermediaries to other people around the world since bitcoin is a global currency. Executed transactions are irreversible. Total number of bitcoins in circulation is limited and defined in advance. In 2140 the mining of new bitcoins is to be stopped. By then a little less than 21 million bitcoins will be mined. Bitcoin is an open source "peer-to -peer" network, which uses cryptographic signatures for transactions between users, therefore it is seen as a decentralized digital cryptographic currency. Bitcoin users communicate with each other on the basis of Bitcoin protocol, open code software system based on mathematical rules. After several years of optimization the Bitcoin protocol came to life for the first time on 3 January 2009. The author has remained anonymous, his pseudonym is "Satoshi Nakamoto".
WhyBecause it is a completely decentralized currency that is not controlled by any institution. Because Bitcoin system allows for easy, quick and favorable trade among people all over the world, because the system of the Bitcoin network replaces all the expensive infrastructure of financial institutions; transactions are carried out extremely fast and with low, almost negligible cost (both in the case of microtransactions as well as of large sums anywhere in the world for less than a cent). The amount of bitcoins in circulation was limited in advance, so unlike other world currencies it is not subject to systematic devaluation.
HowYour bitcoins are stored in a digital bitcoin wallet, which works much like online banking. When we receive or transfer bitcoins, the transaction gets digital signature. It is certified in a very short time and permanently stored in the network. However, if we want to have bitcoins stored as a long term investment, they can be completely secured by downloading them from the Internet in the so-called paper wallet, which can be safely stored (eg. safe).
AdvantagesBenefits of Bitcoin encompass different categories. To put it simply, bitcoin is a digital currency system which allows quick and favorable exchange between people around the world. The most important advantages are:
Bitcoin network is not controlled by any central authority
Bitcoin address is very easy to create
users can hold more bitcoin addresses which are not linked to names, addresses or other personal information, however, it guarantees …
… complete transparency
all transactions are public and forever stored in the network in the so-called blockchain. If bitcoin address is publicly known, everyone can see how many bitcoins are stored in a specific address
fees for transactions are minimal
banks can charge EUR 15 , - or more for international transactions, bitcoin does not. The transfer price is negligible, whether it is a microtransaction or a transaction of larger amount
bitcoins can be sent anywhere in the world within a few seconds!
when the bitcoin transaction is carried out, it can no longer be canceled. In the event of errors the recipient must arbitrarily make a new transaction and sent back the received bitcoins.
Bitcoin wallet does not keep your bitcoins but your private keys and your public addresses. The private key is required to prove ownership and to sign outgoing transactions, the public address is required to receive bitcoins and check the status. There are several different types of wallets, designed for a variety of devices:
online wallet acts as a service on the network,
mobile wallet is installed on the owner's mobile device,
software wallet is installed on the owner’s personal computer.While storing wallets measures to protect against misappropriation or disclosure must be met. Money remains entirely under the control of the owner, its storing is the individual's responsibility. You can also use the so-called paper wallet, which allows to completely avoid the retention on the computer, and thus on the web. The latter is one of the so-called "cold wallets", which are the safest.
List and review of all wallets:
The most common online wallets:
WhyBitcoin wallet is needed for storing, receiving and transferring bitcoins. The wallet stores all transactions and protected digital private keys for access to the bitcoin address and to carry out the transactions.
HowDepending on your preferences and knowledge select the type of wallet you want to use (mobile, web, paper or software).
Create your wallet represented by your private key and public key (wallet address – represented by QR code or sequence of letters and numbers, for example 1JSGFyR4iweYM73Ub7mrx2pVEMi4HySL1Y.
Your private key must be safely stored or protected, depending on the type of the wallet (password, encryption, 2FA, safe), since you only need it to send bitcoins. On mobile devices, the access to the wallet should be protected using two factor authentication code – provided by Google Authenticator.