Have you ever tried to explain what is bitcoin to your parents or grandparents? Trying to explain the basics and even then, they are still confused? Then keep reading
Grandma, this is bitcoin
Bitcoin is currency, just like euro €, dollar $, pound £, Yen ¥. But Bitcoin is decentralized, its digital money. You can send money without using a bank for it. At the moment you must use a bank for a transfer, its impossible to not use. Bitcoin is changing this, you can send from a $1 to a $1 000 000 (or more) without even telling the bank. Nobody will now from who to whom those money are send, only if you reveal it.
One more example: When you wait for your monthly pay from work to be in your bank account, well bitcoin is removing the need of using a bank. Don’t forget even though banks always says that your money are yours they are not. They are property of the bank. If economy collapse your money are gone you cant get them back. With bitcoin and all other cryptocurrencies even after economy collapse they will lose value but your crypto will BE your crypto. It will stay in your cryptocurrency wallet
Bitcoin – Similarities and differences to conventional money
It’s backed up by:
- Money – Products, services and economy of the issuing country
- Bitcoin – Products, services and a sound of consensus of users
Its governed by:
- Money – Central Banks
- Bitcoin – Mathematics and distributed computing
International transfer takes
- Money – Several days
- Bitcoin a few minutes ( Some cryptocurrencies are offering transfer in a couple of seconds)
International transfer cost
- Money – Up to £10 or 2-3% of a transaction
- Bitcoin – 0 up to $0.01
Once you have paid
- Money – chargeback is possible
- Bitcoin – No chargebacks
Ways of getting Bitcoin
– Buy it from online exchange
– Mine it – buy a mining computer and sacrifices one of your rooms for your mining hardware
Storage for bitcoins
You have two types of wallets
Hot & Cold (For easy and understandable explanation about the cryptocurrency wallets click here)
You can have cryptocurrency wallet on your computer, mobile phone or under your mattress sounds complicated? Check the Hot & Cold wallets article.
The positive news about having a bitcoin wallet? There is no bank involved.
What your bitcoin wallet contains?
Address & Private keys
Just like you bank account number but better.They can hold 1 or multiple addresses. During a transaction the address is visible to all users in the network.
The private key is generated for each address. You are the only one who knows the code.
Spending your bitcoins
- More than 20,000 stores and growing (according to 2018 information)
- Bitcoin exchange
- Swap your bitcoins for cash or the opposite
You haven’t seen physical change accepting bitcoins?
Location – Bulgaria 2018
Your transaction is processed by a network of ‘miners’ (People with mining computers) that verify your transaction.
Your transaction is encrypted = turned into an alphanumerical code.Then is included in a block with other transactions of the past 10 minutes.
Everybody sees your transaction and address in the block chain but not you private key, Bitcoin balance or personal data. This ensures that no Bitcoin is spent twice, no Bitcoin is hijacked and no personal data is exposed.
The transaction process is handled by thousands of miners for verification. They record every transaction in the blockchain.
Once a block is ‘mined’, miners reap a reward of 25 Bitcoins and sometimes a transaction fee. You can join the miners to earn your share of the mining reward and fees.
Easy questions – Easy answers
Is this real?
– Yes, real as your money in the bank account. but Bitcoin’s acceptance is far from universal yet
Can I buy veggies or milk with bitcoin?
– Not at a local groceries store yet. Soon
Is it safe?
– Its safer than credit and debit cards. It doesn’t evolve personal data. Your wallet is store in your computer or online wallet. It’s up to you to keep them safe.
Source: bitcoin.org, Bitcoinfees.com, Buyphysicalbitcoins.com, Casascius.com, Coindesk.com, Pinterest.com, Titanbtc.com, Books.google.com