How does Bitcoin and Cryptocurrency work? First steps and most important to know…

What is it and how does Bitcoin work?

Bitcoin is a cryptocurrency or virtual currency.

It is a self-regulated payment unit without physical reference or endorsement of a country, which preserves the (semi)anonymity of its owners and whose transactions are carried out through the Internet using codes encrypted and confirmed in multiple ways by the network members themselves bitcoin (through the so-called blockchain technology, in practice an accounting book or shared record of the activity).

The knowledge of a code makes you the owner of that asset (cryptocurrency). It is a completely digital currency.

One of the most controversial aspects is the process of creating bitcoins, which has come to be called mining. In practice, it has become controlled by a few hands, most organized groups based in Asia.

What is the price of a bitcoin?

The price of Bitcoins is known through internet portals specialized in the trade of this virtual currency.

There is a quote in real time, as a result of the movements of demand and supply that are recorded by the members of the system.

Given that in the case of Bitcoin their number is limited in time (to 21 million), experts defend that their price will also tend to increase if the number of users continues to increase. This also means that it´s a deflationary currency (increase value with time) in opposition to the FIAT money like Dollar that is a deflationary currency (lost value with time)

The proponents of bitcoin defend that it is not a pyramid because no one is promised profitability and there is no single issuer that benefits. But as in any investment, there is no guarantee that the value of bitcoin will not change.

How to get bitcoin?

Bitcoins can be obtained as payment for services or goods. They can also be purchased or exchanged on websites that specialize in the sale and exchange of this currency. One of the most popular websites for obtaining bitcoins is Coinbase, in which you can buy bitcoins using dollars and other currencies. This site can also be used to sell bitcoins.

Another alternative to obtain bitcoins is through what is known as bitcoin mining. According to Bitcoin.org, this modality consists of solving mathematical problems in exchange for bitcoin. Mining is fundamental since miners use their computers to approve bitcoin transactions and keep the bitcoin network secure. Anyone can become a miner but must have specialized software and hardware. The miners are a group of people who are dedicated to process transactions and in exchange for this work they receive bitcoin. During mining new bitcoin is created.

Where to use bitcoin?

Once you have Bitcoin, you can use it to buy on the Internet or you can store it in your wallet.

A wallet is a database that you can store on your phone, computer or tablet.

There are several mobile applications that you can download and use as a purse, but experts advise using a wallet that is not online to avoid being hacked. Some of the applications for making payments using bitcoin are BitPay and Bitcoin Checkout.

The number of companies and services that accept this currency as a form of payment has been growing in recent years. For example, Microsoft allows you to buy mobile applications, games and digital content for Windows and Xbox with bitcoins. Dell, Expedia and WordPress also accept this digital currency.

How much is Bitcoin?

As we have indicated, the value of Bitcoin is based on supply and demand and is calculated using an algorithm that measures the number of transactions and transactions with Bitcoin in real time.

Currently the price of Bitcoin is located, euro up or down, around 4000 euros (to February 23, 2019), although this value is not much less stable since Bitcoin is listed as the most unstable currency in the foreign exchange market.

For example, analyzing the period between August 2017 and August 2018, reached a ceiling value of 20.000 dollars in December 2017.

In fact, its value has increased by 600% in the last three months of 2017. Details by which many experts think we are facing a tremendous bubble full of speculators that, sooner or later, will eventually explode.

Is Bitcoin Legal or True money?

The legality of Bitcoin is simple to summarize “Bitcoin is legal in that place that accept it as a means of payment in a transaction”, as easy and simple.

Being out of control of any institution there is a legal vacuum on it.

In addition, when dealing with anonymous and encrypted transactions between two users, they are free of any commission or tax, such as VAT.

What is that Dark Side of Bitcoin?

Some media groups claim that decentralization and the semi-anonymity have made Bitcoin the preferred means of payment for fraudulent transactions such as the sale of drugs or money laundering.

It is also the “official” means of payment for the Internet’s low funds.

This has made government institutions such as the US economic crime brigade (FinCEN) have stopped doing “blind eye” and want to implement regulatory measures for operations with Bitcoins.

The truth is that it´s proven that bitcoin is not a currency commonly used by organized crime because although anonymous it is highly traceable and is not practical for money laundering operations or similar criminal actions.

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