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FAQs

Frequently Asked Questions

Answer

Bitcoin is an innovative internet protocol created by the pseudonymous Satoshi Nakamoto that enables value to be transferred over a coummunications channel. Transactions are made with no middlemen so anyone can transfer money in the word without using any centralized service like a bank, credit union, financial institution or paypal. It is essentially electronic cryptographed money. Bitcoin utilizes a mobile app or computer program to provide a personal bitcoin wallet enabling users to send and receive bitcoins.

The Bitcoin network is sharing a massive public ledger called the "block chain". This ledger contains every transaction ever processed which enables a user's computer to verify the validity of each transaction. The authenticity of each transaction is protected by digital signatures corresponding to the sending addresses therefore allowing all users to have full control over sending bitcoins.

Thus, there is no fraud, no chargebacks and no identifying information that could be compromised resulting in identity theft.

Answer

From a user perspective, Bitcoin is nothing more than a mobile app or computer program that provides a personal Bitcoin wallet and allows a user to send and receive bitcoins with them. This is how Bitcoin works for most users.

Behind the scenes, the Bitcoin network is sharing a public ledger called the "block chain". This ledger contains every transaction ever processed, allowing a user's computer to verify the validity of each transaction. The authenticity of each transaction is protected by digital signatures corresponding to the sending addresses, allowing all users to have full control over sending bitcoins from their own Bitcoin addresses. In addition, anyone can process transactions using the computing power of specialized hardware and earn a reward in bitcoins for this service. This is often called "mining".

Information obtained at bitcoin.org

Answer

The Bitcoin Program was established to promote an emerging cryptocurrency industry and provide many resources to both consumers and businesses.To truly appreciate "the bitcoin experience", one needs to become knowledgeable to the benefits of bitcoins and their use:

Benefits:

  • • No Transaction Costs or Fees
  • • No Taxes on Transactions
  • • Eliminates The Risk of Credit Card Fraud
  • • No Chargebacks
  • • Bitcoins Are Anti-Theft
  • • No ID, Passport or Proof of Address Needed
  • • Use of Bitcoins With Any Internet-accessible Device
  • • Enables The Use of Retail Purchases for Consumers
  • • Anti-Pilfering of Payment Information From Merchants
  • • No Banks or Financial Institutions Required or Needed
  • • International Wire Transfers Confirmed Within An Hour
Answer

Disadvantages:

  • Degree of acceptance - Many people are still unaware of Bitcoin. Every day, more businesses accept bitcoins because they want the advantages of doing so, but the list remains small and still needs to grow in order to benefit from network effects.
  • Volatility - The total value of bitcoins in circulation and the number of businesses using Bitcoin are still very small compared to what they could be. Therefore, relatively small events, trades, or business activities can significantly affect the price. In theory, this volatility will decrease as Bitcoin markets and the technology matures. Never before has the world seen a start-up currency, so it is truly difficult (and exciting) to imagine how it will play out.
  • Ongoing development - Bitcoin software is still in beta with many incomplete features in active development. New tools, features, and services are being developed to make Bitcoin more secure and accessible to the masses. Some of these are still not ready for everyone. Most Bitcoin businesses are new and still offer no insurance. In general, Bitcoin is still in the process of maturing.

Information obtained at bitcoin.org

Answer

When a user loses a wallet, it has the effect of removing money out of circulation. Lost bitcoins still remain in the block chain just like any other bitcoins. However, lost bitcoins remain dormant forever because there is no way for anybody to find the private key(s) that would allow them to be spent again. Because of the law of supply and demand, when fewer bitcoins are available, the ones that are left will be in higher demand and increase in value to compensate.

Information obtained at bitcoin.org

Answer

To the best of our knowledge, Bitcoin has not been made illegal by legislation in most jurisdictions. However, some jurisdictions (such as Argentina and Russia) severely restrict or ban foreign currencies. Other jurisdictions (such as Thailand) may limit the licensing of certain entities such as Bitcoin exchanges.

Regulators from various jurisdictions are taking steps to provide individuals and businesses with rules on how to integrate this new technology with the formal, regulated financial system. For example, the Financial Crimes Enforcement Network (FinCEN), a bureau in the United States Treasury Department, issued non-binding guidance on how it characterizes certain activities involving virtual currencies.

Information obtained at bitcoin.org

Answer

The Bitcoin technology - the protocol and the cryptography - has a strong security track record, and the Bitcoin network is probably the biggest distributed computing project in the world. Bitcoin's most common vulnerability is in user error. Bitcoin wallet files that store the necessary private keys can be accidentally deleted, lost or stolen. This is pretty similar to physical cash stored in a digital form. Fortunately, users can employ sound security practices to protect their money or use service providers that offer good levels of security and insurance against theft or loss.

Information obtained at bitcoin.org

For More Information, please visit Bitcoin.org