Bitcoin FAQ: Common Questions About Bitcoin

What is Bitcoin?

Bitcoin is a cryptocurrency. This just means that it’s an encrypted piece of information that’s stored on a huge digital ledger. This ledger keeps track of all Bitcoins in existence, and users have keys that “unlock” their owned Bitcoins for trading. This digital ledger, also known as a blockchain, is decentralized. This means that there are many copies of it around the world, and you can download a copy, too. There is no central bank or single administrator. Instead, whenever a Bitcoin is mined, traded, or otherwise used, the peer-to-peer network passes this information to all other nodes on the network and the ledger is updated.

How much is Bitcoin worth?

The price of Bitcoin, or BTC fluctuates depending on market forces. Historically, it has ranged from a few cents to $20,000. Bitcoin investors speculate that it could reach $100,000 or more. You do not need to own an entire Bitcoin. You can instead own a fraction of a Bitcoin, measured in Satoshis. One Satoshi is equal to 0.00000001 BTC. You can see the real-time Bitcoin price here.

How does Bitcoin work?

You can buy, trade, or mine Bitcoin. Most people buy Bitcoin on cryptocurrency trading platforms like Gemini, Coindesk, and Binance. Usually, you’ll buy a fraction of a Bitcoin measured in Satoshis, rather than an entire Bitcoin. Every copy of the blockchain on the Bitcoin peer-to-peer network is updated so that every Bitcoin in existence is tracked to an individual digital wallet. Today, Bitcoin mining requires a lot of computing power. This uses a lot of energy and is only cost-effective in geographic regions where energy is cheap. Usually, people use application-specific integrated circuits, or ASIC miners to generate new Bitcoins. This is a powerful computer that runs a program to solve complicated problems to generate new Bitcoins. It’s called mining because of the parallel between solving problems to hope to generate new Bitcoin, and digging in the dirt hoping to find gold. You know that the assets exist and you’re just hoping that you are mining in the right place.

How to get Bitcoins

Most people buy Bitcoin on cryptocurrency trading platforms like Coinbase, Gemini, and Binance. You can also buy a Bitcoin ASIC to mine new Bitcoins by solving complicated math problems. However, this takes a lot of energy and is only cost-effective in regions where energy is cheap.

How does Bitcoin mining work?

Most people don’t know how to mine Bitcoins. Instead, they just buy them on cryptocurrency trading platforms. However, if you do want to mine Bitcoin, then you’ll want to buy an ASIC. This is an application-specific integrated circuit. Put simply, it’s a computer that’s designed to do one thing: solve complicated math problems to generate new Bitcoins. As you generate new blocks of data, then blockchain is updated and you own the newly minted Bitcoins, stored in your digital wallet.

How to invest in Bitcoin

First, you need to know where to buy Bitcoin. The most common networks include Gemini, Coinbase, and Binance. There, you can buy and sell Bitcoins, along with other cryptocurrencies. You can learn how to invest in Bitcoin by starting with our Beginner’s Guide to Bitcoin Trading.

How to use Bitcoin

First, you need a Bitcoin wallet. You can choose between a hardware and software wallet. Each has their pros and cons. From there, you can either trade your Bitcoin on a cryptocurrency trading platform, or you can spend it. There are not a lot of websites or stores in the United States that accept Bitcoin, but this may change. Bitcoin is used everywhere in places like Venezuela where the currency has been completely devalued. In some places, you can find Bitcoin ATMs too, where you can exchange your Bitcoin for fiat currency like USD.

Who created Bitcoin?

People credit Satoshi Nakamoto for creating Bitcoin. However, this person or organization is unknown to most people in society. Some people have speculated that it could have been a government program. Others speculate that it’s an individual, or a network of people.

How many Bitcoins are there?

There is a hard limit of 21 million Bitcoins. Currently, there are approximately 18.4 million Bitcoins that have been mined. Estimates suggest that 20% of all Bitcoins have been lost forever.

How to get free Bitcoin

Most free Bitcoin offers are scams. You can earn free tokens for ICOs however, through airdrops. This happens when you agree to install digital wallets that accept their coins. Be careful, however. There are many scams.

Why is Bitcoin going up?

Bitcoin goes up and down depending on market forces. Sometimes news about shifts in the world economy moves Bitcoin prices up or down. At other times, hype among traders and FOMO (Fear of Missing Out) drives price increases. Prices can also shift when Bitcoin whales make large trades. Last, there are patterns in price movement that signal major price movements. Technical traders will watch these patterns for buy and sell signals.

How to make money with Bitcoin

You can HODL (hold) your Bitcoin and sell it when prices go up. Or, you can day-trade your BTC. Usually people will buy the dip. They’ll buy Bitcoin when the price is low, and then they’ll sell it when the price goes up. Keep in mind that Bitcoin transactions on trading platforms can be expensive, so you must factor in the costs.

How to pay with Bitcoin

The first step is to set up a Bitcoin wallet. You can then generate codes to pay for things. Some websites accept Bitcoin transactions, where you can cut and paste a long string of text generated by your Bitcoin wallet to finalize a transaction. You may also pay for things in shops, or with individuals using your Bitcoin wallet. If you’ve got a wallet app, then you can often generate a QR code that the payment recipient can scan to accept your funds.

Is Bitcoin a good investment?

An investment of any kind is a risk, and it depends on the skill of the trader.