What is Bitcoin ? and How to use Bitcoin for a Transaction – The advance of technology has pushed all aspects and elements to use it. It is no exception for the financial system.
The implementation of digital currency in our daily basis, make it even easier than ever. We do not have to use the psychic money for doing online or even offline transaction.
Eventually, there are a lot of services and innovation that accommodate this need. Cryptocurrency is one of the digital assets.
There is some example of these cryptocurrencies like Bitcoin, Dogecoin, Omni, Primecoin and many others. However, let’s talk about the most popular cryptocurrency. We will learn about Bitcoin and how to use bitcoin for a transaction.
What is Bitcoin ? and How to use Bitcoin for a Transaction
What is Bitcoin
Bitcoin is one of cryptocurrency which is basically a digital asset. Think of your money, but it is digitally and for that, you need a wallet to keep your Bitcoin. Same as the physical money that we already know. The founder of Bitcoin was with the initial Satoshi Nakamoto.
As the digital asset, Bitcoin has the same function as the real money. We can use it for buying things online and offline. We can buy games, software, electronics, and whatever you want to buy. However, there aren’t so many vendors who accept Bitcoin for the transaction.
But why do people use it?. Many people use Bitcoin for the long-term investment. Like gold, the worth of this digital currency could raise or even decrease.
Price Index of Bitcoin
As the December of 2017, the value of Bitcoin is at its highest point at $19.400.
Could you imagine how much will you get if you bought it in 2012 while it’s only $6? As the price goes skyrocketing, let’s take a look at this price index.
This is the list of price index per January and December each year. You can check it yourself at Coindesk.
- 2012 (January ) – $6.36
- 2013 (January ) – $14.12
- 2014 (January ) – $892.32
- 2015 (January ) – $230.80
- 2016 (January ) – $432.08
- 2017 (January ) – $835.72 – 2017 (December) – $19.400
As you might see, the price of Bitcoin is rising although some time decreasing. However, in 2017 Bitcoin shows his fang by skyrocketing from $800 to over $19.000. This is why most people want to start mining the Bitcoin.
The Advantages of Bitcoin
People are starting to plunge in into the cryptocurrency business for some reasons. The Bitcoin has the reason.
- Decentralized. It means there aren’t any single party or institution which regulate because everyone is participating in the process.
- Easy to buy. You can buy Bitcoin with easy steps.
- Fast. You can use Bitcoin for transferring money really fast without limitation of amount.
- The value is increasing. You might’ve read the price index. Well, it is not actually true, who knows in the future it could decrease to only a few pennies.
How to Use Bitcoin for a Transaction
After knowing the basic about the cryptocurrency. Let’s talk about how to use bitcoin for a transaction. When making a transaction with Bitcoin, we send the transaction to the miner network. It keeps our data safe during the transaction and no one could use your wallet.
What can you do with Bitcoin
Now you want to use the Bitcoin for the transaction. What transaction can you use?. Well, basically you there are three transactions that you can do with Bitcoin.
- First, you can use it as payments for various merchants, just like the conventional money. For the example, Steam allows the user to use Bitcoin for buying the games. However, Steam disable this feature due to the fluctuate.
- Second, you can transfer your Bitcoin to another user. If you have Bitcoin wallet and want to send it, you could do that in just a minutes. Also, you can receive the Bitcoin from another user through your Bitcoin address and wallet.
- Third, you can buy Bitcoin and use it as a long-term investment just like gold. You can buy it while its cheap and sell it when the price is increasing.
Getting BTC by Mining Bitcoin
Bitcoin mining is not as good as its name. You might think of gold mining or something. But, it is totally different.
When there is a transaction of BTC from party to another party, maintainers will scramble to validate transactions and solve complex mathematical problems. They who successfully do the first validation will get a small amount of BTC.
The system creates Bitcoin directly for these miners, not taken from existing Bitcoin. This is what adds to the amount of Bitcoin in the market and called mining. Although it sounds simple, however, the miners have to solve complicated mathematics.
So that the miners need a hardware for mining the BTC. Furthermore, the hardware must be powerful enough to be able to gather more BTC. If you plan to mine bitcoin, you will need Application-specific integrated circuit chips (ASICs). That is the hardware for mining the BTC with the big amount of electricity.
The price ASICs start from hundreds of dollars to thousand dollars per piece. One piece of the ASICs will not make you rich. the serious miners usually have more than hundreds ASICs just for mining the BTC.
The Risk of Using Bitcoin for Transaction
Every system has the risk that needs to be borne. Using or buying Bitcoin has its own risk. If you are ready to start a business using Bitcoin, here are some of the risks.
- Fluctuate, Bitcoin is not a stable currency. It means it can increase in just an hour or even decrease.
- Hacking Potential, just like the other digital currency. It happens when the trader transfers the bitcoin to another account.
- Not all merchants accept it. Just very small group of merchants who accept bitcoin for the transactions. In some country, the government bans the use of Bitcoin due to the connection with the negative effect.
- The wallet isn’t safe as you might think. The wallet keeps the bitcoin, and the computer keeps the wallet. When the computer is corrupt or has a virus. As a result, it might break your wallet with the Bitcoin inside.
That is all that you need to know about how to use bitcoin for a transaction. Be careful if you are planning to buy or using the Bitcoin as it might decrease in the future.