Bitcoin is electronic money which can be securely exchanged over the internet. Just as no single agency controls the internet, there’s no central authority in charge of Bitcoin. Any individual, group or business can use Bitcoin as freely as they access the internet.
Sending bitcoins is a lot like sending an email. Instead of messages, money can be rapidly sent to any registered address. Like email, no special knowledge is required. Basic computer or smartphone skills are all it takes to use Bitcoin. And as long as you keep your passwords safe, nobody else can access your bitcoins.
Bitcoin is called many things: peer-to-peer currency (as it runs on a network protocol where users connect only to other users), digital cash (as it’s directly transferred to your trading partner), private money (as it’s issued and verified by network users) and cryptocurrency (as it’s secured by cryptography).
Bitcoin enables any two people, anywhere in the world, to rapidly and directly exchange funds. The only information necessary to a transfer is the receiver’s “address,” which is like their email address or bank account number.
Addresses may be created for free, instantly, and without submitting any personal information. All that’s needed is free Bitcoin wallet software, which is compatible with all major operating systems and devices.
Bitcoin differs from regular money in that no central authority is involved in its issuance or control. Rather, new bitcoins are steadily issued to the individuals or companies known as “miners,” to compensate them for verifying and recording all Bitcoin transactions.
As no government or corporation controls Bitcoin, a user’s holdings cannot be frozen or confiscated. As no central bank is involved, inflation won’t be a factor as Bitcoin’s issuance is capped at 21 million (whereas fiat money may be issued in unlimited quantities).
Unlike gold, Bitcoin is purely electronic and so much easier and cheaper to transport and store.
Just like any other currency, Bitcoin’s value rises and falls over time. The market is still deciding the value of this new form of money, so Bitcoin’s price is famous for large moves in either direction.
At the time of writing, bitcoins (a lower case “b” is used to refer to the currency, an upper case “B” for Bitcoin the network) are worth several hundred dollars each. Price has exceeded a thousand dollars in the past. Check a real-time price feed for the exact current price.
Bitcoin is available 24 hours a day, 7 days a week and 365 days a year. The system hasn’t had any significant downtime since its launch in January, 2009.
Bitcoin works anywhere there’s an internet connection. Borders and economic sanctions don’t affect Bitcoin.
Bitcoin allows for the transfer of tiny or huge sums and everything in between. The minimum spendable unit is one satoshi, or 0.00000001 of a Bitcoin. Besides the number of bitcoins the sender controls, there’s no limit to how many bitcoins may be sent.
Fees are really cheap no matter how far or how many bitcoins you send. A flat fee of under 10 cents (US) ensures your transaction is processed as a top priority.
Just about anything and everything. Major companies like Dell, Microsoft and Overstock accept Bitcoin, as do small companies, as well as individual retailers and service providers. Bitcoin’s suitability to online purchases makes it an increasingly popular choice for ecommerce.
Nobody knows for sure. Bitcoin’s creator used the pseudonym “Satoshi Nakamoto” to announce and discuss his invention. By disguising his identity, the creator protected himself from criminals or any group which might pressure him to change Bitcoin to their liking. Satoshi suddenly disappeared in 2011, leaving the project in the hands of other developers. If Satoshi returns, even he would need the community’s agreement before he could alter Bitcoin.
The Bitcoin code is open-source, which means it’s available for inspection by anyone with the requisite programming skills. Bitcoin represents a tempting multi-billion dollar prize to hackers but this prize remains unclaimed. It can therefore be concluded that Bitcoin is much safer than credit cards, PayPal and other traditional money transfer services (which are frequently hacked or defrauded for much smaller amounts). As an added bonus, Bitcoin doesn’t collect your personal information, so it can’t fall into the wrong hands.
The lead developers can’t change Bitcoin’s code without consensus from the community. A super-majority of users and miners either accepts a change or it doesn’t make it into Bitcoin’s code.
There are very few nations which outright ban Bitcoin. It’s entirely unregulated in many countries. Those nations which do regulate it generally use a light touch. Consult this list for further details.
No. Firstly, Bitcoin makes no get-rich-quick promises. Investors who buy and hold Bitcoin do so only because they believe the technology holds great future potential. It’s unnecessary to invest in Bitcoin in order to use it though. Users may use Bitcoin only to send money and then instantly convert it back to the national currency of their choice.
While it’s true that certain individuals and companies within Bitcoin have proven dishonest, you can’t blame money for how it gets used. Bitcoin is perfectly safe for anyone who practices good wallet security and avoids scammers.
This website exists to help you find the most convenient option for your location and preferred method of payment. Click your country for specific local recommendations or choose a payment service to find sellers who accept it. Our unique exchange finder allows you to search by both country and payment method.
There are 3 standard ways to get Bitcoin:
Buy directly from Bitcoin holders, aided by services like LocalBitcoins.
Sell goods or provide services for Bitcoin.
Bitcoin as an advanced payment system and computing network is undeniably complex but, fortunately, using Bitcoin is fairly simple. Just like you don’t need to understand how credit card processing works to use one, you can safely use Bitcoin without in-depth technical knowledge. That being said, the more you learn about Bitcoin, the easier it is to trust it with your hard-earned money.
All that’s needed to receive payments is a Bitcoin wallet and an address. There’s a wide selection of Bitcoin wallets available for free download, suitable for all major devices and operating systems. After installing the wallet, generating or selecting a receiving address is the first step to receiving payments.
Addresses may be securely shared, with anyone and everyone. An address can be communicated as either a 34 character strings beginning with a 1 or 3, as in 1SAWZzCfWMGPqJUGA1thfrKiRMkP5c8Vh, or as a QR code of that same address:
Once payment is made, your wallet will initially report an incoming payment as pending or unconfirmed. The payment should receive its first confirmation within half an hour. As it receives further confirmations over time, it’s increasingly safe to assume that payment has been properly made and settled.
Paying someone in Bitcoin is straight-forward. Simply enter their address or QR code into your wallet and transmit the money. Note that all Bitcoin payments are irreversible, so ensure that you send the correct amount to the correct address.
If you’d like to show a particular transaction to someone, find its 64 character Transaction ID within the wallet. Next, enter this string into any blockchain explorer site; Blockchain.info or Blocktrail.com are popular choices. That URL may then be safely shared, as in this link which shows 40.0 BTC received by the above-mentioned address on the 27th of November, 2015.
Keep in mind that anyone exploring the Transaction ID or your address will discover the total amount of bitcoins sent to that receiving address, all payments made from the address and its current balance. It’s therefore better for privacy reasons to share a fresh address for each new transaction. Note that no personally identifying information is associated with an address within the Bitcoin network but that such information may be determined through other means. For example, if on Facebook you request payment or donations to a certain address, your name will become linked to that particular address.
Somewhat counter-intuitively, software wallets don’t contain bitcoins as physical wallets hold coins or notes. Ownership of all bitcoins is instead recorded in the shared public ledger known as the blockchain. What a wallet holds is the private key which allows spending bitcoins from its associated addresses. Thus, the balance and transactional history of an address is public information but the ability to send bitcoins from that address is restricted to whoever owns its private key. Whenever you run your Bitcoin wallet, it connects to the network to check the balance of all addresses it’s keyed to - and the total is your Bitcoin balance!
Unlike a bank account, your Bitcoin balance can never go below zero.
A wallet’s owner is entirely responsible for its security. The most important point is to back up your private key, without which the wallet’s bitcoins cannot be spent. Many wallets will allow you to protect this private key with a password, which is recommended.
If you accumulate a significant amount of bitcoins, it’s really essential that you backup your wallet in a secure way. Consult our guide for further information on wallet security, as well as your specific wallet’s documentation for detailed instructions on password protection and backup creation.
Even the highest level of wallet security would be useless if the Bitcoin network wasn’t secure. Fortunately, security is an area in which Bitcoin excels. By some estimates, nearly half a million dollars is spent daily to verify and record Bitcoin transactions. This sum covers electricity costs alone and not the initial investment in computing hardware, which is sufficient to make Bitcoin the world’s most powerful decentralised supercomputer.
The greatest vulnerability in Bitcoin remains the inexperienced user. The greatest protection against scammers, hackers and accidental loss is education.
The process is best understood by breaking it down into steps, starting from a simple payment:
Step 1 - Spending
When you pay bitcoins to an address, your wallet accesses its private key (and requests a password, if set) to authorize the transaction.
Step 2 - Announcement
Your wallet then announces the transaction to all other wallet users (termed nodes) with which it’s connected. Nodes check to ensure the transaction is valid according to Bitcoin’s rules. For example, the rules state that a wallet can’t spend coins it doesn’t own or spend the same coins more than once.
Step 3 - Propagation
If valid, nodes then broadcast the transaction to their connected nodes and so on, until the whole network becomes aware of the payment.
Step 4 - Miners Process the Transaction
The transaction information soon reaches a special kind of node called a miner. Miners are special nodes which record transactions. Miners bundle all the new transactions they hear about into so-called blocks. Miners race against each other to solve a mathematical problem which allows them to solve the current block.
Step 5 - Transaction Enters the Blockchain
The first miner to solve the block receives a Bitcoin reward and gets to record the block into the Bitcoin blockchain. The blockchain is an ever-lengthening series of blocks which, in its entirety, describes every single Bitcoin transaction ever made.
The blockchain can thus be compared to a shared public ledger and each block a page in that ledger. To continue the analogy, miners are like competing accountants who get paid for being first to complete an accurate ledger page.