Bitcoin was one of the century’s most innovative ideas and has changed parts of the financial landscape forever. This digital currency paved the way for thousands more digital currencies, tokens, and coins and showed how not all money needed to be regulated or controlled by third parties.
The cryptocurrency world is exciting and fast-paced, but sometimes, it can also be a little confusing. Especially for newcomers. Although that's not to say that even the more experienced people in the community don’t need extra help understanding things from time to time.
We’ve gone through Bitcoin’s most important questions to help anyone in the community to better understand the world’s most popular crypto.
Who Developed Bitcoin?
The true identity of whoever developed Bitcoin back in 2018 is still unknown. While they used the name Satoshi Nakamoto in the white paper and following communications, no one knows if Nakamoto was a man, a woman, or even a group of people.
While many would have jumped at the chance of going down in history as being Bitcoin’s creator, and leaving a legacy known worldwide, Nakamoto chose to remain private.
Just over a year after Bitcoin officially launched in January 2019, Nakamoto emailed one of the developers and told them they would no longer be working on the project. Thus, adding to the open-source code throughout the years, maintenance and further developments have been done by hundreds of volunteers.
What Is the Blockchain?
The blockchain is the backbone of the Bitcoin network. In simple terms, it is a public ledger that keeps track of every transaction made in the network. All the transactions are verified and timestamped by miners and since it’s public, anyone can see the transactions.
What Is Double Spending?
Having miners all over the world constantly auditing and verifying Bitcoin transactions is essential to preventing anyone from trying to defraud or scam other investors. It stops anyone from being able to “double-spend” and was put in place by Satoshi Nakamoto, Bitcoin's founder, for this very reason.
Double spending is when a BTC owner spends the same bitcoin twice by tampering with the transaction record. As a digital currency, bitcoin has to potentially deal with fraud issues that paper money doesn’t experience.
For example, if you go to your local store to buy some groceries and hand the cashier a $50 bill, you cannot use that bill again. The store now has it and you’re not getting it back. You can’t pop next door and respend the money on something else.
However, double-spending means someone is trying to “re-spend” that money except they’re using digital currency to do it instead of a physical paper note.
A BTC owner could make a copy of their digital coin and send the copy to the recipient while keeping hold of the original. (Of course, counterfeiting money is sometimes an issue but it’s not the same as being able to spend the same note twice).
How Is the Blockchain Different from Banking Ledgers?
There are several reasons why Bitcoin is different from other banking ledgers and why people choose to use Bitcoin alongside their fiat currency. These include:
- Being able to be part of something so innovative and different
- Not having their money controlled by a third party or bank; Bitcoin can never be frozen like a bank account, Bitcoin can’t be taken out of your account like a bank account
- Easy way to send international payments with no banking checks
- If a vendor accepts Bitcoin, you can spend it without waiting for approval from the regulator that you can buy whatever is being sold
- Lower fees and quicker transaction times when using to send or buy internationally
- Bitcoin fees are quicker and lower fees for shop owners
- Chargebacks aren’t possible when paying or receiving Bitcoin which can prevent fraud and scams
What Can Bitcoin Do?
Below are some of Bitcoin’s top qualities and capabilities
- Digital currency
- Decentralized domain names
- Future markets
- Global identification and reputation application
- Initiate trusts, wills, and contracts
- Voting mechanism
There is nothing that the basic financial system can do that Bitcoin can’t. But Bitcoin is constantly in development and this digital currency along with thousands of others are constantly working to change the future of the world’s finances.
What Is Bitcoin Mining?
For new bitcoin to enter into circulation, they must be mined. Mining also enables new transactions to be confirmed by the network, as well as being a key part of the development and maintenance of the blockchain ledger.
The action of mining is carried out via means of the miner (you) using sophisticated and powerful hardware which can solve incredibly complicated math problems.
The first computer to solve the problem validates the block and collects the reward - the bitcoin.
This process then repeats itself over and over again
Roughly 900 bitcoin are currently mined each day, although this will become less as the years go by.
How Can You Buy Bitcoin?
You can choose one of the following options if you want to buy Bitcoin:
- Crypto Trading Exchange
- Credit Card
- Bitcoin ATMs
- Peer-to-Peer Bitcoin Exchange
You can read about each option in more detail with steps by clicking here.
How Can You Sell Bitcoin?
Below are the ways you can sell your Bitcoin if you need to.
- Cryptocurrency Exchange
- Bitcoin Debit Cards
- Peer-to-Peer Bitcoin Exchange
- Bitcoin ATMs
You can read about each option in more detail with steps by clicking here.
Why Trust Bitcoin?
Much of the appeal of Bitcoin comes from how safe and trusted it is. Since Bitcoin is decentralized and open-source, anyone can access the source code whenever they want.
The system is completely protected by peer-reviewed cryptographic algorithms, and no third party can control users’ assets like a bank can. Even if individual users on the network can’t be trusted, the network is so secure that it doesn’t matter.
Is Bitcoin Anonymous?
While you can keep much of your personal information and activities secret when using Bitcoin, it’s not 100% anonymous.
Bitcoin can best be described as pseudonymous rather than anonymous.
There are a few reasons why this is the case, you can read more about the anonymity of Bitcoin here.
What Happens If I Lose Any of My Bitcoin?
There will be two reasons why you may lose your Bitcoin:
- You have lost your private keys (seed)
- Your wallet has been hacked and the Bitcoin has been stolen
Unfortunately, your Bitcoin is lost forever if you lose your private keys. Each wallet comes with a unique seed and there is no way to retrieve it once it’s lost. It’s not like a password online where you can request an email with a reminder.
However, some wallets, especially more modern wallets do have key backups that you can build before transferring any Bitcoin into it. This allows you to make a new private key so that you can restore your private key on a new wallet if it’s ever lost.
For the second scenario, if your wallet is ever hacked, again, it’s likely that you’ll never see your Bitcoin again.
If your wallet is hacked on an exchange, then the exchange may refund your Bitcoin if they are deemed at fault but this isn’t guaranteed.
Hacking is pretty rare though, so you shouldn't worry too much about this happening.
Who Is the Bitcoin Network Controlled By?
One of the key selling points of Bitcoin and a big factor in its success is that no one person controls the network. Rather, it is controlled by all the users on the network.
Developers can make improvements or fix issues in the software but they can’t force large changes or redevelop the network.
For the network to run and operate as it should, there has to be a consensus among all the users which means it's in the best interests of all users and developers to safeguard this consensus.
What Is a Bitcoin Wallet?
Your Bitcoin wallet is essentially a digital version of the wallet you have in your back pocket - it’s just there to store your crypto instead.
However, for added security, unlike a physical wallet, a Bitcoin wallet comes with a private key AKA seed. This private key is needed anytime you want to carry out any type of transaction such as making a purchase or exchanging your crypto for another type.
The private key is like your unique signature and you cannot access your wallet or make transactions without it.
Additionally, it is also there to ensure a third party cannot spend or steal your wallet content.
How Does a Bitcoin Wallet Work?
All Bitcoin transactions are conducted through a wallet via a blockchain (shared public ledger). The transfers are simple and work as a bank transaction, for example, you send a set amount from your wallet to a chosen destination wallet.
Most transactions done through wallets is one party sending BTC to another party in exchange for goods or services. Every wallet will validate the transactions using its private data to sign for the exchange. This will also create a proof of the transaction.
There are no limits to how much Bitcoin you can store in a wallet.
However, just like with a bank account, it’s best not to keep all your crypto in one place.
Therefore, many people opt to have several wallets in use at once and spread their crypto across each option.
Why Does the Price of Bitcoin Move So Much?
There isn’t just one reason for the rapid or seemingly extreme fluctuations. However, it is a combination of the following:
- Supply and Demand
- Influences from the News
- Actions of Investors
- Limited Age
You can read an in-depth article going through each point in more detail by clicking here. Once you understand the reasons for Bitcoin’s volatility, it becomes less scary to invest in.
Can I Trade Bitcoin Without an Exchange?
There are several reasons why someone might want to trade their BTC for other cryptos or fiat currency. One of the main reasons is security.
Two of the largest Bitcoin exchanges in the world, Bitfinex, and Mt. Gox were hacked in the past.
These hacks cost customers thousands of BTC and millions of dollars. Money and crypto that was never recovered and never reimbursed by the companies as they both went bankrupt after these huge failures.
And it’s not just the large companies that get hacked, smaller or lesser-known exchanges have been hacked in the past and will undoubtedly be hacked in the future. While it’s not easy breaking into the security systems of these types of businesses, it’s not impossible.
Another reason why some people prefer to deal away from exchanges is the privacy aspect. Exchanges, like banks, have a KYC (know-your-customer) requirement in place during sign-up. You cannot set up an account with an exchange unless you put in your personal information and verify it using some form of photo I.D.
But if part of the attraction of crypto is anonymity, then why would people want to hand their private information over to a company?
Especially when you don’t know where that information ends up.
However, dealing and trading BTC and other cryptocurrencies without using an exchange can fall under the category of money laundering. So, while certain services exist to facilitate trade without an exchange such as classified ads, Telegram chats, and special apps, the risk of getting caught is not worth it for most people.
Not to mention the personal risk you run. Carrying large sums of cash, doing deals in person with people you don’t know, or letting strangers know you have a wallet full of BTC puts you in danger.
Your safety is by far the most important thing and you should never write off exchanges due to the small risks they carry in comparison to off-platform trading.
What Can You Buy With Bitcoin?
While this list is not exhaustive and companies are adding cryptocurrency as a payment option all the time, some of the most well-known places to spend Bitcoin include the following:
1. Service Providers
A few companies that offer services are eager to expand their client base and are therefore accepting Bitcoin as payment. The companies currently allowing this around the world are:
- AT&T - mobile network provider
- Reddit - social media platform/forum website
- Namecheap - domain supplier and web hosting option
- NordVPN - Maltese VPN company used over the world
- ExpressVPN - another VPN option used globally
- Twitch - live stream platform
- Dish Network - satellite service in America
- Bloomberg - option to subscribe to this news outlet
- Vultr - web hosting service
- WordPress - service where anyone can create a blog or website
- ProtonMail - end-to-end encrypted email service
2. Travel Companies
The list of travel companies is relatively small.
However, this may expand in the future especially when the travel industry becomes more stable. If you want to book your dream vacation but only have BTC to spend, then check out these companies that can help:
- Expedia - currently only accept BTC for hotel bookings through them but they have stated they are looking to include flights shortly
- AirBaltic - the world’s first airline to accept crypto for flights all over the world
- Virgin Galactic - billionaire Richard Branson’s space company will accept Bitcoin for their space flights… if that’s your idea of a dreamy vacation
Unfortunately, because most food places are franchises, it depends on the location as to whether BTC will be accepted as payment or not.
For example, just because Subway in one city in the world uses it, that doesn’t mean all Subways do. These are the current options depending on location:
- Burger King
- Whole Foods
4. Online Stores
One of the advantages of paying with Bitcoin online is that it’s incredibly convenient. Paying using your BTC account is far quicker and easier than filling out forms with your credit card numbers and billing address.
As of now, these online stores will take your Bitcoin from you in exchange for their goods:
- Shopify - this eCommerce platform allows users to pay their subscription fees using crypto
- Home Depot - the biggest home improvement store in the U.S
- Microsoft - add money to your Microsoft account
- Overstock - this online seller has been one of the first to use Bitcoin payments for their goods
- Newegg - an electronic store that has all the parts you need
- Gift Cards - while most online stores still don’t accept Bitcoin as payment, some are willing to sell gift cards bought using Bitcoin. You can’t buy physical products from them but you can buy gift cards for yourself or as gifts which can then be used as you would a regular gift card. Both large stores and small businesses use this option occasionally so check with your favorite shops if they are running this option.
5. Schools and Universities
If you want to go to university but don’t have enough spare cash then use some of your Bitcoin and head to one of these Unis listed below:
- The University of Nicosia - Cypriot private university that accepts tuition fees in Bitcoin. It is also the first university in the world to provide a Master’s in Blockchain and Digital Currency program
- European School of Management and Technology (ESMT) - German university for international and national students
- The King’s College - arts college in NYC
- Curtin University - university in Perth, Australia
- Treehouse - online school for anyone
6. Luxury Goods
If your Bitcoin career has been particularly successful, then why not splash the cash and treat yourself to one of the luxury options below:
- Denison Yacht Sales - yachts
- Prestige Time - watches
- Prestige Cars Kent - cars
- BitCars - cars
- AutoCoinCars - cars
- Bithome - real estate agency based in Switzerland
7. Video Games
While physical copies of video games are still sold, much of the gaming world is moving online. Since so much of it is exclusively online nowadays, it’s no surprise that some video game companies are happy to use Bitcoin as a method of payment. Check out what your options are below:
- Xbox - the world’s largest console seller lets you pay for online games, add-ons, and subscriptions with Bitcoin
- Big Fish Games - Seattle-based gaming company that sells games for everyone around the world
- Humble Bundle - not only can you buy their online games using BTC but they also donate part of their profits to charity
Speaking of charity. If you find yourself, now and then, in a giving mood and want to help various charities around the world, you can do so with your Bitcoin.
While the list would, of course, be better if it were bigger, there are still a few options for you to consider the next time your crypto is having a good run.
- The Giving Block - this charity describes itself as the #1 crypto donation solution, which provides an ecosystem for nonprofits and charities to fundraise Bitcoin and other cryptos. Donate your crypto and support countless charities of your choice
- Wikimedia Foundation - multilingual educational content is incredibly important for tens of millions of kids and adults globally. Supporting charities that provide education and educational resources has a major impact on many people
- Wikileaks - we know from past news stories and supposed scandals that Wikileaks can bring to light secret data, classified documents, and news that citizens should be aware of. Wikileaks helps anonymous sources tell the world the things they should know
9. Online Indexes
To further help you discover all the places you can now spend Bitcoin, there are a few sites below that have put together online indexes. We cannot list them all, so instead, head to their websites and scroll the lists:
- Where to Spend Bitcoins U.K - a U.K directory that lists all the pubs, shops, and retailers who will happily accept your BTC
- useBitcoins - check out this site’s list that has more than 5000 businesses
- Coinmap - a simple, easy-to-read map of the world’s companies that take Bitcoin as payment
- Spendabit - this search engine will find the places you can buy your chosen items with crypto
What Is a Bitcoin Address?
An address is your identifier. It’s a string of 27-34 numbers and letters and is unique to you and your wallet. This is like your bank account number if you will.
While wallets and the network are incredibly safe, some people opt to have a new wallet and unique address for each transaction rather than use the same one over and over again.
This method also helps with your privacy since people cannot track your transactions on the ledger as easily. But this method is also not convenient.
How Do Bitcoin Transactions Work?
Bitcoin transactions work much like bank transactions. The transaction takes place from one account to another. If you are the sender/buyer, for example, you need to input the receiver’s address from your wallet, the amount, and your private key - this is a security step to stop anyone from being able to hack your wallet and empty your account.
Once the transaction is confirmed on the network, it will go through and that’s the end. The whole process shouldn't take more than ten minutes.
Is Bitcoin Illegal?
As of January 2022, Egypt, Iraq, Qatar, Oman, Morocco, Algeria, Tunisia, Bangladesh, and China have all banned cryptocurrency. In other countries, there are extra restrictions of rules such as in Argentina or Thailand.
Nonetheless, this still leaves the vast majority of countries in the world where Bitcoin and altcoins are not illegal.
As Bitcoin and other crypto become more popular and more businesses start accepting it as payment, countries are talking more about the rules they wish to put in place or how they can better track crypto activities. But there is nothing to report as of the time of writing.
As A Merchant, How Can I Accept Bitcoin?
Setting up to accept Bitcoin as a payment method is very simple. You just need to set it up using a service like Bitpay or just using your wallet address.
People can then send BTC to you or tap their payment using contactless through a Point-Of-Sale (POS) device that your store has or by using their phone.
Are Fees Involved?
Unfortunately, yes there are. This is called a Miner’s Fee and is standard for everyone to pay. For the miners to verify and secure all transactions on the network and thus have strong security, the fees must be paid.
However, these fees are lower than both credit card fees and Paypal fees that you would otherwise have to pay.
What Does Unconfirmed Transaction Mean?
Confirmation of a transaction on the network takes, on average, ten minutes. However, during peak times or extra busy periods, the average time is longer, sometimes by more than an hour.
During this time, the transaction will show as unconfirmed. If a transaction fails to confirm after 72 hours, the funds will be sent back to the original sender’s wallet.
Is Bitcoin the Official Currency In Any Country?
As of August 2022, Bitcoin is currently an official currency in only two countries. Ecuador and the Central African Republic.
Given how many countries there are, this may seem like slow progress. However, just a few years ago, no one could have imagined BTC being made official in any country, so slow progress is better than no progress.
In addition to these two countries using Bitcoin, back in March 2022, Satoshi Island was announced.
Satoshi Island is a 32 million-square-foot private island in Vanuatu in the south Pacific. This private island is set to become a crypto investor’s paradise after the Prime Minister of Vanuatu has agreed to allow the island to become the world’s first island that uses solely cryptocurrencies.
Will We Ever Find Out Who Satoshi Nakamoto Is?
The answer to this question is that it is highly unlikely. After all this time of staunchly remaining anonymous, there seems to be no reason why Nakamoto would ever reveal their true identity now or in the future.
However, over the years, there has been a great amount of speculation about who it might be. The top contenders so far have been:
1. Dorian Nakamoto
Dorian Nakamoto, full name Dorian Satoshi Nakamoto is a Japanese-American engineer living in California. In March of 2014, Leah McGrath Goodman, incorrectly named Nakamoto as the founder of Bitcoin in a Newsweek article.
However, after further investigation, the 64-year-old was eventually ruled out with Nakamoto saying he had never even heard of Bitcoin.
2. Nick Szabo
Szabo is a legal scholar and computer scientist. Like Hal Finney, he was active in the cyberpunk scene and became involved with and interested in unregulated digital currency.
Back in 2005, he wrote a blog post in which he talked about a future digital currency called Bitgold which would be unregulated and not reliant on third parties.
He has repeatedly denied he is Nakamoto and has previously commented that he is used to journalists ending up with his name during their investigations.
3. Hal Finney
Just a few blocks away from Dorian Nakamoto, lived Hal Finney. Quite the coincidence, but it seems just a coincidence nonetheless. Although it has been suggested that perhaps Finney got the inspiration for the pseudonym from his neighbor’s name.
Finney was big on the developer scene and had a huge part to play in the initial development of Bitcoin.
Finney was also the first person to receive Bitcoin from Satoshi in January 2009. Despite all these factors, Finney regularly denied being the founder of Bitcoin.
Unfortunately, Finney passed away in 2014, so if he was the only and only Nakamoto, it’s unlikely we’ll ever know.
4. Craig Wright
Wright is an Australian Businessman and has a slightly more colorful life than the other contenders. Wired and Gizmodo both released articles saying Wright was possibly the real Satoshi Nakamoto. However, after deeper investigations, investigators concluded that Wright had created this elaborate hoax.
Furthermore, in December 2021, the estate of the late David Kleiman (a former colleague of Wright), brought a civil claim against Wright.
The claim stated that Wright and Kleiman co-created Bitcoin and Kleiman’s estate was entitled to half of Wright’s roughly 1.1 million Bitcoin - with an estimated value of more than $50 billion.
However, the jury voted against Kleiman and Wright did not have to split his assets.
If the jury had not ruled in Wright’s favor, then Wright would have needed to use the Satoshi wallets to carry out the transactions.
This, of course, would have been proof that Wright was Nakamoto.
While there is no proof that Wright is Nakamoto, and his claims have been discredited by many, Wright still insists he is the creator of Bitcoin.
How Can I Set Up a Paper Wallet?
Just as it sounds, a paper wallet is a piece of paper on which your public key and private key are printed. Some paper wallets have a scannable code created by an app that then shows you your keys rather than having them directly on the paper.
A paper wallet is there to store your crypto offline. When you print out your keys, your currency remains but the keys are removed from the network.
However, keep in mind that once they have been removed from the network and your account you’ll not be able to get them back if you lose your piece of paper.
To obtain a paper wallet, you’ll need to use a paper wallet generator app, one that is legit and frequently used by others. You should also ensure your device has the latest antivirus and malware detector as a backup.
Finally, disconnect from the internet while using the app and generating the code.
Once you have generated your barcode or QR code, you can just print it out and keep it safe, under lock and key, and somewhere fireproof until you need it. To use the paper wallet, simply scan the code using your phone’s built-in scanner.
How Does The Blockchain Work?
The blockchain is there to record all newly minted Bitcoins. The blockchain will effectively release a new Bitcoin each time a miner finds a new one.
Once the block on the network is confirmed, the block is released and the transaction is recorded publicly on the ledger.
What Is a Full Node?
Full nodes are devices, like computers that contain a full copy of the transaction history of the blockchain. 7 nodes (servers/computers), all connected, running a blockchain together. The nodes are monitored by volunteers who ensure everything is working correctly. These nodes also add another layer of security to the network.
Can I Make Money Mining Bitcoin?
Yes… and no. The days when anyone could make money mining Bitcoin with a desktop computer or GPU cards are unfortunately long gone.
The network's total computing power to mine BTC has increased beyond what anyone could have guessed. While there are mining machines more than capable of running the hashrate needed to mine, the landscape is different from how it was a decade ago.
However, due to the increased cost of mining rigs, electricity, and even storage costs, many people now choose to mine as part of a syndicate.
Mining as part of a syndicate is a safe and affordable way to get involved in and invest in Bitcoin without the massive upfront or continuous costs.
Why Joining a Mining Pool Is the Answer for Miners
A mining pool is a group of people who collectively agree to pool their resources and share the profits.
For example, have you ever split the cost of a bunch of lottery tickets with work colleagues or friends with the agreement that if one of the tickets wins you all share the prize?
While you might have to share the prize, there is more chance of you winning in the first place. After all, it’s far better to share $1 million, than it is to keep 100% of nothing.
Well, a mining pool works in the same way. The miners will collectively use their resources to create more mining power. The more mining power you have, the higher the chance is that you will generate a block on the blockchain and therefore, receive the reward.
One of the best parts of joining a mining pool is that you don’t have to match other investors. The reward is divided relative to how much power each member contributed.
This means you don’t have to be stinking rich or own a ton of resources in the first place. You simply take out proportional to what you put in.
You should also bear in mind that the mining pool will have an owner who will, rightfully, charge each member a fee for joining.
The amount will vary from owner to owner, but it’s unlikely to ever be an unaffordable amount since the owner also benefits from having as many members as possible.
Expand Your Bitcoin Horizons with Mining Syndicate
If you would like any more information about starting or expanding your Bitcoin horizon; reach out to us at Mining Syndicate. Our mission is simple: Strengthen the Bitcoin network by enabling small-scale miners to affordably purchase and reliably host miners.
As a small miner, Chris became frustrated by the lack of hosting options available for miners with under 100 units. As luck would have it, he found a 2.5MW mining facility for sale right down the road, and thus, Mining Syndicate was born. Facilities #2 and #3 are in use and #4 and #5 are in the works,
Why is Mining Syndicate so successful? Because we have a team of people who are just like you, eager to be a part of the future of mining. If you would like more information about how you can be a part of Mining Syndicate, how our facility works, or the products we sell, you can reach out to us here.
Join our mining pool and see how your future can change!