Bitcoin FAQ

bitcoin faq

bitcoin faq

Who invented Bitcoin?

Bitcoin is a pseudonym of a group of anonymous people known as Satoshi Nakamoto credited with inventing Bitcoin. Nakamoto is the Chinese transliteration of the term that first appeared in 2010. Nakamoto is set to fade from the memory of the people once Bitcoin becomes popular, and no one will ever get to know the true identity or location of Nakamoto.  As Bitcoin is a complex and ingenious design, people think that Nakamoto is an organization rather than a small group made up of individuals. Although there is a lot of speculation about the identity of Nakamoto, it will probably remain an unsolved mystery.

What is the total number of Bitcoins in circulation? Who issues them?

The total number of Bitcoins in circulation exceeds 21 million, and the issue will be completed by 2140.  Bitcoin is generated by a global network, and is not issued by any organization, nor is it controlled by any individuals.

What is the current amount of Bitcoins in circulation? What is the daily addition of Bitcoins?

Currently there are eleven million Bitcoins in circulation, the daily addition of Bitcoins varies according to the ‘mining’, and the figures can be viewed in Blockchain stats.

Can Bitcoin be divided into a number of copies?

A Bitcoin can be split to become the 8th of 100.000,000, or 10 copies.

Bitcoin has several denominations that call for intense discussions:

1 BTC = 1 Bitcoin

0.01 BTC = 1 cBTC = 1 minute Bitcoin (also known as Bitcent)

0.001 BTC = 1 mBTC = 1 mm Bitcoin (also called mbit or millibit or bitmill)

0.000 001 BTC = 1 μBTC = 1 micro Bitcoin (also known as ubit or microbit)

One exception is “Satoshi”, which represents the smallest denomination Bitcoin

0.000 000 01 BTC = 1 Satoshi

The name commemorates Bitcoin inventor Satoshi Nakamoto.

 

Can my Bitcoin address be duplicated or used by others?

bitcoin wallet

bitcoin wallet

Once generated, your Bitcoin address cannot be duplicated or generated by anyone as it is a private Bitcoin address which is generated by the elliptic curve encryption algorithm. Bitcoin addresses total more than 128 to the power of 2, which equals more than the number of all the molecules in the universe. Hence, there it is impossible to generate or duplicate your Bitcoin address.

Do all Bitcoins look alike?  Can I print out a Bitcoin?

Bitcoin is digital currency, and is based on the global P2P network. Similar to the numbers on your online banking system, Bitcoin exists only on the global network. Your Bitcoin address is recorded along with the other Bitcoin addresses, and the address of the corresponding private key determines the ownership of your Bitcoin currency.  Hence, as it has the same physical attributes of the Bitcoin stored online, you can print out and keep your Bitcoin in private custody in your wallet through a program, and spend it as well just as you spend paper money.

Can ordinary computers be used to tap into, or access Bitcoins?

bitcoin mining

bitcoin mining

It is indeed possible to use an ordinary computer’s CPU to mine Bitcoins; however as Bitcoin mining is a vast industry, it is difficult to use PCs to mine Bitcoins. You need to buy specialized ASIC Bitcoin mining machines that are very expensive, or through Jiarubite Bitcoin currency that is mined through skillful miners. However, as the Bitcoin mining machine market is very sophisticated, new entrants need to exercise caution.

Why does my Bitcoin-qt wallet take a long time to download?

The Bitcoin-qt Nakamoto design is the original Bitcoin design and is a complex feature, and the entire data block needs to be downloaded for it to work properly, these functions are not used by new entrants. For people who do not have the time or patience to download the content of the dozens of data blocks, the best alternative is to use the SPV, which is based on the principle of Multibit and Electrum purse, or Blockchain.info online wallet.

How do people lose their brain Bitcoin wallets?

bitcoin wallet lost

bitcoin wallet lost

P2P BUCKS recommends new entrants who do not understand the principles of brain wallet to avoid using the brain wallet service. The reason for loss is attributed to the usage of a weak password that can be easily cracked.  For more information on how to use the brain wallet read: “Bitcoin-based teaching:  How much do you know about brain wallet password”.

Why do some people lose Bitcoins after using Bitcoin-qt?

Most players do not understand the intricacies of the change mechanism in Bitcoin-qt. When you use Bitcoin-qt to make a transaction, soon after Bitcoins are sent, a new address is automatically generated in order to save the rest of the Bitcoins in the account. This new address is not in the old back-up wallet; hence you need to create a back-up in Wallet.dat before making the transaction. In case you do not do that, the new address cannot be restored. Hence, Bitcoin-qt users need to remember to create a back-up while making any transaction. In order to protect their interests, new users are advised to use Blockchain.info online wallet first and then import a back-up to their local Bitcoin-qt or Multibit software wallet for daily transactions using Blcokchain.info.

Can Bitcoin addresses or bank accounts be frozen by regulators?

As Bitcoin is based on P2P network for any dealings in the currency, there is no organization or individual that has any control over the ownership of the issued Bitcoin. Hence, no one can freeze any Bitcoin address. In other words, the Bitcoins are in absolute control of the users, however in case of theft by hackers, no one will be able to help the users recover their Bitcoins.

As Bitcoin is hosted on several platforms online is the service safe?

This is the advice from P2P Bucks: Do not leave large quantities of Bitcoins in anyone’s control for a long time. Most online platforms are not safe; as several unfortunate incidents have taken place giving long-term custody of your Bitcoins to others is quite unsafe. In the Bitcoin world the most important safety rule is to have a private key for your Bitcoin.

Are there any suggestions for the safe use of Bitcoins?

bitcoin safe

bitcoin safe

It is advisable to use a separate secure computer to store your Bitcoins. This is especially so, for people who own large quantities of Bitcoins. In your computer configuration, it is advisable to use Mac operating system or Linux system, which is equipped with a host that does not recommend the use of Windows system to store a bit of local currency.

Moreover, if you are using a Blockchain online wallet or Bitcoin-qt local, ensure that a back-up is created for the private key, which can be used for recovering the Bitcoins in case of any unfortunate disastrous event.  However, Bitcoin is one of the safest assets in the world, provided it is used properly. Proper usage helps protect your property against infringement.

Non-technical issues:

Some people say that Bitcoin is just meaningless trash, comment?

This is not true, and is uttered by people who do not understand the concept of Bitcoin. We know from the previous descriptions that a Bitcoin network exists, and Bitcoin is dependent on this network. This Bitcoin network has protocol value, which is reflected in the global payments taking place 24/7. These anonymous transactions are never frozen by the network, and the Bitcoin prices in the market reflect their true value.

Is Bitcoin a pyramid or Ponzi scheme?

MLM or multi-level marketing is a system that is controlled by a centralized organization for the purpose of selling and buying goods or services. It may include investment or other such business activities that ask the participants to pay a fee, or purchase goods and services. MLM distribution is essentially a pyramid structure. Whereas Bitcoin is not controlled by any centralized organization and existing users are not paid any dividends or bonuses for recommending others to buy Bitcoin. All Bitcoin users function voluntarily and are independent, and Bitcoin is not a pyramid structure.

In a Ponzi scheme, the founder promises the investors high profits, whereas Bitcoin does not give any such guarantee. Bitcoin has no central entity, and only one individual has established Bitcoin economy. A Ponzi scheme is started with zero investment, with the profits being paid by the people joining the scheme, whereas at Bitcoin it is a win-win situation.  Bitcoin is a fast, cheap and stable, and depends on the P2P benefits. Although people who first bought Bitcoin stand to make more profit, it does not mean this is a Ponzi scheme.

Can I make big money through Bitcoins?

Bitcoin is a digital currency based on the global network, there is no mechanism to master or control Bitcoin, and therefore no one can guarantee that trading in Bitcoin can help make money. With Bitcoin as a form of currency, high risk and high-yields co-exist, and one needs to have a detailed plan while investing in Bitcoin, and good control over the investment ratio.

Is there nothing to protect the value of Bitcoin?

Bitcoin’s value lies in the user’s confidence. Bitcoin is a credit currency, real-time, and now functions as a global currency and is considered as credit money. Currently, the currency in circulation in the world is regulated as credit money. Credit money is in circulation and is regulated by credit tools provided by banks. Its actual value may be far less than its monetary value; however with alternative currency it is quite different. It is not linked to any precious metals and is not backed by any precious metals. In the 1930s, during the worldwide economic crisis there was panic that led to economic chaos. This led to major capitalist countries switching from gold and silver standard to paper currency that was issued by the State, which could no longer be converted to metallic money. Almost all the countries in the world switched to this form of currency.

Bitcoin is not regulated by any centralized authority or agency and depends entirely on the algorithm to protect it against fluctuation. Hence, Bitcoin credit is inherent to the algorithm mechanism present in Bitcoin. This algorithm is dependent on the people using the currency and will remain stable as long as the users have confidence in Bitcoin.

Will Bitcoin be used for illegal acts?

The anonymity associated with Bitcoin can make it conducive for drug trafficking, smuggling or money laundering purposes or other such criminal acts. However, even before the advent of Bitcoin, the paper currency was also used for such illegal purposes; hence Bitcoin alone cannot be held responsible for such acts.

Will Bitcoin be affected if the trading websites or related services are disabled?

Bitcoin is a global network built on to the center of the monetary system. The Nakamoto Bitcoin design is under serious consideration for regulation. Due to the characteristics of Bitcoin any ban would impact the Bitcoin exchange or services can only for a short term, it may not be disabled permanently.

Is there any threat of Bitcoin being replaced by similar digital currency?

There are other such forms of currency that are already in existence that are based on the Bitcoin model.  Ones such as Wright currency, PPCOIN, primes coins, feathers, coins, and so on. However, as Bitcoin is established with several billion dollars worth Bitcoins already in circulation, it is not that easy to displace Bitcoin. Moreover, Bitcoin is already accepted globally, while the others are yet to make their presence felt in a global level.

Where can I find businesses that accept Bitcoin?

With more and more people recognizing and accepting Bitcoin, more businesses are accepting Bitcoin. Click here to gain access to global businesses that accept Bitcoin.

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