Bitcoins - Should You Use Them?
Bitcoin commenced in 2009 as a private enterprise. Not like the traditional currencies we usually have like Dollar, Euros and Sterling, no central monetary authority can control bitcoins. Rather, it is constructed by p2p network of the users’ computers. This operates as much the same with a video chat software known as Skype.
Bitcoin is regarded as the basic and an essential unit of value. But it can subdivided further into satoshies. A satoshi is equivalent to one hundred millionth in each bitcoin (one bitcoin divided further into eight decimal places).
These bitcoins and satoshies may be moved from one web user to another for the purpose of virtually paying for goods or services with no cost at all. This enables you to do transfers internationally without dealing with exchange rates as well as burdensome bank charges. Bitcoin can also be purchased and sold using traditional cash at some special exchanges.
A wallet is really necessary when you plan to start using bitcoins. It is a distinctive piece of software that helps you keep, send and receive BTC. We have three kinds of wallets namely, mobile wallets, web wallets and software wallets.
Mobile wallets are the ones installed in your tablet or smartphone which enables you to utilize bitcoin in a day to day transaction upon going to supermarkets or shops via scanning the QR or quick response code. Web wallets are primarily located on the internet or World Wide Web and are commonly formed as cloud storage. Software wallets basically are just the ones installed on your personal computer and they allow you to have a full control of your wallet.
Paying through bitcoins can be very simple. You can do this through your computer wallet or smartphone wallet by just typing in the address of the receiver, the amount you need to pay and finally by hitting send. Smartphones can obtain as well the address of the receiver via QR code scanning or having two phones bearing NFC also known as near-field-communication technology which is a communication form that is just close to each other.
Receiving payments is easier as well. What you have to do just to give your bitcoin address to the payer.
Protecting your wallet
Just like a typical wallet, a bitcoin wallet can also bear a lot of cash. To do away with the risk of losing it, one should see to it that only small bitcoin amounts are kept in your smartphone or computer and make sure to store the rest of it in a much safer storage or environment like an offline wallet. For instances where your wallet was encrypted, a back-up offline may enable you to regain your wallet, if your smartphone or computer may be stolen.
Wallet encryption can allow you to assign a password which may be necessary for you to type in before your funds can be taken out. But, to recover a bitcoin password would be very impossible if you have lost it already. That is the reason why you have to be perfectly sure that you know and remember very well your password. If you have a significant bitcoin value, you can just keep your password inside a vault in a bank or wherever you usually store important documents.
So that you can be surely secured as possible, one can store backup offline in various locations using different forms of media like CDs or USB flash drives.
Since bitcoin operates on software you have downloaded to your smartphone or computer (laptop or PC), you need to regularly update the software so that you can keep your transactions and wallets safe.
Bitcoins can have a lot of important advantages:
- 1. You are able to send and receive unlimited money amounts quickly anytime and anywhere around the world
- 2. Its process will not cost you any amount or maybe only a small amount of fees.
- 3. Bitcoin transactions cannot be reversed in order to protect sellers from false chargebacks that have increased nowadays with credit cards.
- 4. You can have your payments done without having to divulge personal information which gives a secured protection against personal identity theft.
- 5. The process of payment and receipt is absolutely transparent, predictable and neutral.
In contrast, bitcoin usage has a lot of disadvantages as well:
- 1. They are not accepted universally yet therefore it can’t be utilized everywhere.
- 2. It has a volatile value since the total number of bitcoin circulating is just small therefore even small transactions can relatively affect its price significantly.
Do you really have to use bitcoins?
The simpliest answer would be NO, maybe not in a large-scale way yet.
Bitcoins are just exchangeable assets with portability, scarcity, durability and divisibility, just like the conventional currency’s (Dollars, Pounds, Euros, etc.) characteristics. They all have a value therefore they can readily be exchanged with other currencies at exchanges.
Within that, lies a dangerous situation. There are moments when the bitcoin value can fluctuate immensely by 50% in just one day. Therefore, because of their value it’s really not advisable for people who are faint-hearted. What I’m trying to say is that one should not own money in bitcoin form more than they can afford to give up.
For wallets with only tiny amounts of bitcoin inside, it could be utilized for minor daily transactions which can aid you to be familiarized with the digital currencies. As the circulated bitcoin amounts increases, their value with regards to other currencies should be stabilized first and then you can begin to use them for bigger transactions.