Bitcoin is the first decentralized digital currency. It is sometimes referred to as a virtual currency or cryptocurrency. Bitcoins are held in a digital wallet and can be sent over the Internet to anyone with a Bitcoin address. Fees for Bitcoin transactions are relatively low compared to traditional methods of transferring money over the Internet.
The total number of Bitcoins (abbreviated BTC or, less frequently, XBT) that will be issued is capped at 21 million and the number of new Bitcoins created each year is automatically halved over time until Bitcoin issuance eventually halts completely. As of July 2014, there were more than 13 million bitcoins in existence. -
There are several ways to acquire Bitcoins:
- As payment for goods or services. Somebody sends you a payment that is transferred to your Bitcoin wallet.
- Purchase Bitcoins at a Bitcoin exchange. There are exchanges all over the world where you can buy bitcoins with cash, check, wire transfer, Western Union, credit/debit card or various other methods.
- Exchange Bitcoins with someone near you. Websites facilitate the buying and selling of Bitcoins. After registering and receiving a Bitcoin wallet, you can purchase Bitcoins online with online banking or cash deposits, or you can meet a local seller for face-to-face cash purchases. After the seller receives your payment, the Bitcoins are released and instantly become available in a digital wallet specific to that website. You can then send your Bitcoins to any possible Bitcoin address.
- Earn Bitcoins through competitive mining. Mining is the process of running a verification process in order to validate transactions and provide the required security for the public ledger of the Bitcoin network. Miners are compensated for their efforts and for contributing the needed computational power in the form of newly issued Bitcoins. The more computing power you contribute, the greater your share. Specific hardware and software are required for Bitcoin mining.
Bitcoin is a complex product and is not without risks. Users should use caution and educate themselves before using Bitcoin for any transactions.
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