You all heard about it before but how many of you actually know what a bitcoin is, how it works and how to use it in your everyday transactions? Today we decided to tackle this topic and give you a better idea of the system.
What is Bitcoin?The first person to give the definition of bitcoin is its inventor, Satoshi Nakamoto, and he described it as “A Peer-to-Peer Electronic Cash System”. This definition is considered to be the most precise. The idea behind it is to represent a new payment system and digital money that is powered by its users (so there is no middleman or government authority in the process). There are many terms used to describe bitcoin like cryptocurrency, digital cash, cash for the Internet, a network of international payments…
“The idea behind it is to represent a new payment system and digital money that is powered by its users.”
Why is Bitcoin important?In order to settle transactions with Bitcoin, the users don’t need central servers. In other words, all transactions are based on a peer-to-peer (P2P) system that takes around 10 minutes to be processed. These transactions are recorded on ‘blockchains’ and secured by ‘miners’ and ‘nodes’around the world (these terms will be described later in the text).
If you thought Bitcoins can be mined and created indefinitely, this is not the case. In fact, the protocol has a strict limitation of 21 million bitcoins that can be created, estimates say that this number will be reached in the year 2140. This turns Bitcoin into a deflationary currency and gives it a big advantage- no government institution or central bank can make more Bitcoins when they need extra money, thus influencing inflation rates. Besides these advantages, Bitcoin represents an innovation in the economic school of thought and represents a true technology experiment.
“The protocol has a strict limitation of 21 million bitcoins that can be created, estimates say that this number will be reached in the year 2140.”
Bitcoin Terms You Should KnowBlockchain – a protocol or structure that holds the system in place. Blockchain records every transaction ever made that are verified by miners. All transactions are completely transparent.
Block– In order to describe what a block is, we’ll quickly take you through a process of what happens with the blockchain. So, when a miner uses a computer to compete with other computers and solve mathematical puzzles, they receive some Bitcoins but also “add a ‘block’ of completed transactions to the blockchain for future viewing and verifiability.” This added block goes in the chain and the cycle repeats.
Miners – specialized computers who solve algorithmic equations or hash functions and are rewarded with Bitcoins. They add new ones into the network but also confirm transactions, thus securing the network.
“All transactions are completely transparent.”
Double-spending – the act when the same bitcoin is used twice. As we mentioned, the limit on Bitcoins is 21 million and the transactions are strictly controlled by miners. So, if a user tried to duplicate the transaction it would not go through and would be characterized as a counterfeit.
Full node – one more layer of security in the Bitcoin system. Nodes reduce double spending and work without a reward. They are “maintained by individuals, groups, and organizations all around the world and broadcast all the messages within the protocol.”
How Can You Buy And Sell Bitcoins?There are many places where you can buy Bitcoin. You can do it in an online exchange or on brokerage services. Some of them allow you to use credit cards, some to use Paypal. According to Bitcoin.com, you can also purchase them locally “using LocalBitcoins, and from Bitcoin Teller Machines which are similar to cash ATMs that you find worldwide.” Also, they offer a list of recommended online exchanges and broker services. As for selling Bitcoins, they can be sold online or locally, just like with buying.
Where To Spend Your Bitcoins?Even though some big companies and merchants still don’t accept cryptocurrencies as a payment option (like Amazon, Wal-Mart, and Alibaba) there are many that do. According to 99Bitcoins, here is the list of relevant companies, stores, and shops that accept Bitcoin for paying. The list is updated as a new store changes its policy and welcomes Bitcoin.
- WordPress – An online company that allows users to create free blogs
- Overstock – A company that sells big ticket items at lower prices due to overstocking
- Subway – Fast food chain
- Microsoft – Users can buy content with Bitcoin on Xbox and Windows store
- Reddit – You can buy premium features there with bitcoins
- Virgin Galactic – Richard Branson company that includes Virgin Mobile and Virgin Airline
- OkCupid – Online dating site
- Namecheap – Domain name register
- CheapAir – Travel booking site for airline tickets, car rentals, hotels
- Expedia – Online travel booking agency
- Gyft – Gift Cards
- Newegg – Online electronics retailer
- Wikipedia – The Free Encyclopedia
- Steam – Desktop gaming platform
- Alza – Largest Czech online retailer
- The Internet Archive – Web documentation company
- Bitcoin.Travel – A travel site that provides accommodation, apartments, attractions, bars, and beauty salons around the world
- Pembury Tavern – A pub in London, England
- Old Fitzroy – A pub in Sydney, Australia
- The Pink Cow – A diner in Tokyo, Japan
- The Pirate Bay – BitTorrent directories
- Zynga – Mobile gaming
- 4Chan – For premium services
- EZTV – Torrents TV shows provider
- Mega.co.nz – The new venture started by the former owner of MegaUpload
- Lumfile – Free cloud base file server – pay for premium services
- Etsy Vendors – 93 of them
- PizzaForCoins – Service that allows you to pay for pizza with bitcoins (including Domino’s Pizza)
- Whole Foods – Organic food store (by purchasing gift card from Gyft)
- Bitcoincoffee – Buy your favorite coffee online
- Grass Hill Alpacas – A local farm in Haydenville, MA
- Jeffersons Store – A streetwear clothing store in Bergenfield, N.J
- Helen’s Pizza – Jersey City, N.J., you can get a slice of pizza for 0.00339 bitcoin by pointing your phone at a sign next to the cash register
- A Class Limousine – Pick you up and drop you off at Newark (N.J.) Airport
- Seoclerks – SEO services
- Mint – Mint pulls all your financial accounts into one place.
- Fancy – Discover amazing stuff, collect the things you love, buy it all in one place
- Bloomberg – Online newspaper
- Humblebundle – Indie game site
- BigFishGames – Games for iPhone, Android, Windows
- Suntimes – Chicago based online newspaper
- San Jose Earthquakes – San Jose California Professional Soccer Team (MLS)
- Crowdtilt – The fastest and easiest way to pool funds with family and friends
- Lumfile – Server company that offers free cloud-based servers
- Museum of the Coastal Bend – 2200 East Red River Street, Victoria, Texas 77901, USA
- Gap, GameStop, and JC Penney – with the use of eGifter
- Fight for the Future – Leading organization finding for Internet freedom
- i-Pmart – A Malaysian online mobile phone and electronic parts retailer
- Ccurryupnow – A total of 12 restaurants on the list of restaurants accept bitcoins in San Francisco Bay Area
- Dish Network – An American direct-broadcast satellite service provider
- The Libertarian Party – United States political party
- Yacht-base – Croatian yacht charter company
- Euro Pacific – A major precious metal dealer
- CEX – The trade-in chain has a shop in Glasgow, Scotland that accepts bitcoin
- Straub Auto Repairs – 477 Warburton Ave, Hastings-on-Hudson, NY 10706
- PSP Mollie – Dutch Payment Service
- Intuit – an American software company that develops financial and tax preparation software
- ShopJoy – An Australian online retailer that sells novelty and unique gifts
- Lv – Las Vegas high-speed internet services
- ExpressVPN – High speed, ultra-secure VPN network
- Grooveshark – Online music streaming service based in the United States
- Braintree – Payments processor
- MIT Coop Store – Massachusetts Institute of Technology student bookstore
- SimplePay – Nigeria’s most popular web and mobile-based wallet service
- SFU bookstore – Simon Fraser University in Vancouver, Canada
- State Republican Party
- Mspinc – Respiratory medical equipment supplies store
- Shopify – An online store that allows anyone to sell their products
- Famsa – Mexico’s biggest retailer
- Naughty America – Adult entertainment provider
- Mexico’s Universidad de las Américas Puebla – A major university in Mexico
- LOT Polish Airlines – A worldwide airline based in Poland
- MovieTickets – Online movie ticket exchange/retailer
- Dream Lover – Online relationship service
- Lionsgate Films – The production studio
- Rakutan – A Japanese e-commerce giant
- Badoo – Online dating network
- RE/MAX London – UK-based franchisee of the global real estate network
- T-Mobile Poland – T-Mobile’s Poland-based mobile phone top-up company
- Stripe – San Francisco-based payments company
- WebJet – Online travel agency
- Green Man Gaming – Popular digital game reseller
- Save the Children – Global charity organization
- NCR Silver – Point of sales systems
- One Shot Hotels – Spanish hotel chain
- Coupa Café in Palo Alto
- PureVPN – VPN provider
- That’s my face – Action figures creation
- Foodler – North American restaurant delivery company
- Amagi Metals – Precious metal furnisher
How To Buy Things On Amazon With Bitcoin
In the list above you can see that some of the biggest e-commerce stores opened their businesses to Bitcoin payment system. Even though Amazon is not one of them, there are still ways you can buy things with Bitcoin. As Forbes reports, by using eGifter.com you can purchase 200+ digital gift cards in Bitcoins and later use those gift cards on Amazon. “These big retailers will have to accept Bitcoin over time, but it’s going to be a process years in the making,”, explained the eGifter CEO, Tyler Roye.
Another tool that can be of use is Purse.io. You can use it to shop for any item by Amazon and save 5%. Also, you can name your 10-33% discount on an Amazon Wish List and get matched with Amazon gift card earners in order to purchase orders with Bitcoin.
Latest Bitcoin NewsChina bans Bitcoin use. – China took one step closer to banning Bitcoin from the country. This decision was made early this September by the Chinese central bank, in order to reduce the country’s financial risks.
The price of bitcoin has a 91% correlation with Google searches for bitcoin. – As reported by Business Insider and researched by SEMRush. The study that used 120 million US keyword searches showed that the price of bitcoin in US dollars fluctuated in correlation with the number of searches. The conclusion- as Bitcoin becomes more expensive, people search more about it online. SEMRush also concluded that Bitcoin searches have gone up 450% since April 2017.
Japan is now the largest Bitcoin exchange market, overpassing the US. According to Futurism, the US is no longer the world’s largest Bitcoin market, with Japan taking approximately half of the Bitcoin market.
Five Russian Universities started teaching about cryptocurrencies. For five Universities in Russia, this year is the first academic year in which you can learn about cryptocurrencies, Bitcoin, and blockchain technology.
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