Bitcoin specific Questions & Answers

Some questions and Answers about Bitcoin 
choosing crypto
So what exactly is Bitcoin? 
Bitcoin was launched in 2009 by a person with the name of Satoshi Nakamoto. Bitcoin then formed (probably) the worlds first “cryptocurrency.”

Bitcoin is based on an "almost" hack free secure technology, known as blockchain. Bitcoin is not a phsical coin or currency, but exists as ledger entries on a decentralized network of computers, that has no central authority or Government intervention. Bitcoin offers an extremely secure way to transfer digital money. It is often reffered to as peer to peer, as it cuts out the middle man/woman. The effect of this means there are less people to interfere and control and much reduced costs per transaction.

How would I buy Bitcoin?
Bitcoin can be purchased using almost any traditional "Fiat" currencies such as Dollars, Euros, Pounds, Yen. Suprisingly to some people, Bitcoin can even be purchased using other altcoins, such as Ethereum or Litecoin. There are now a great many online exchanges where you can buy and sell Bitcoin. 

How can I be sure that my funds are secure when I buy and sell Bitcoin?
Be mindful that the trustworthiness of some exchanges can vary. Look for popular exchanges that are regulated. In the United States and the United Kingdom, Coinbase and its subsidiary GDAX are considered trustworthy options. 

How would I go about investing in Bitcoin?
Many buyers of Bitcoin and other cryptocurrencies, see these as an increasing asset similar to gold. Some even follow a similar long term hoarding appreciation strategy. That remains to be seen. For anyone that does wish to do this, it is recommended that they place their funds in something known as a Crypto wallet, of which there are many types. This is considered to be far more secure than any online facility.

Some established online brokers do offer Cryptocurrency investors the opportunity to buy futures contracts on Bitcoin. This enables investment without actually owning the underlying assets.

What is a quick Bitcoin definition?
BTC - This is the first digital currency, which is entirely electronic in use use and its distribution.

Why is Bitcoin called a decentralised, peer-to-peer network?
This means that is not controlled by any one person, entity or institution.

How many Bitcoins are there, or will there be?
There will only ever be 21 million Bitcoins created, by design.

Who created the Bitcoin?
Bitcoin was created by a person called Satoshi Nakamoto in 2009

Is Satoshi Nakamoto his, or her, real name?
Probably not, nobody knows, or nobody has yet come forward to either claim the responsibility of inventing Bitcoin, or to prove they know who did. There has been much speculation about this subject for many years. "Satoshi Nakamoto" is thought to own around a million bitcoins and is currently worth almost 4 Billion USD of this currency. If and when these BTC are ever redeemed, this will be a huge event on the Blockchain. Satoshi left the development of BTC to others in 2010.

Who took over from Satoshi?
There were a few key people, but the main person to become lead developer and continue the decentralization process, was named by Satoshi Nakamoto as Gavin Andresen.

Is Bitcoin a currency or Software?
It is both, but its very creation is based on open source software, meaning anyone can access its creation, usage and implementation. A true peoples currency.

What is the main advantage of Bitcoin?
Most agree that the biggest achievement of BTC is the independent status that is holds from governments, financial institutions and banks. It is truly independent and tamper proof - It is designed within today electronic security protocols to be impervious to interference by anyone. In particular nobody can interfere with any Bitcoin transactions, impose transaction fees or seize anyone's BTC balance. Coupled with this iron clad security, is the almost contravening transparency that every single BTC transaction is recorded and is viewable by anyone in the world, on a public ledger called the Blockchain.

What is a bitcoin wallet?
A Bitcoin, or Cryptocurrency wallet is dedicated software on your computer where you can safely store your Bitcoins or Altcoins. The good thing about this method is that it is offline and you have a much better chance of protecting your Crypto currency savings from hackers. But do make sure your computer is backed up, in case anything goes irreversibly wrong with your computer, or it gets lost or stolen. In this case, your bitcoins could be lost forever. There are also other kinds of wallets, including USB drives and you can even have a hard paper wallet and lock it in a safe!

How does the Bitcoin "system" work?
Incredibly every single Bitcoin transaction that has ever taken place on the network has been recorded and also the same for all future transactions. All parties on the Blockchain can see all transactions. This total transparency and the inability for any party to change any part of any record ensures integrity.

Each Bitcoin user has a public and a private encryption key. They use their public key as their account number to receive Bitcoin funds and their private key to send funds.  
All transactions are validated and added to the blockchain ledger.This is done by miners, through a process called “mining,”. This is how new Bitcoins are brought into circulation. (See following question)

How many Bitcoins are out there and how many to come?
Around 17 million Bitcoins have been mined so far. The Bitcoin system was designed so that there will only ever be 21 million coins that can be mined, total. ever mined. The prediction is that these will all be mined by 2047.

The current rate of new Bitcoin creation is 12.5 BTC every ten minutes. This reduces by half every 4 years.

What is the value of a Bitcoin?
This is difficult to answer on this page as the values does fluctuate greatly. Bitcoin is far more volatile than most well known stable traditional currencies. On January 23, 2018 one bitcoin was worth $11,000. In December 2017, Bitcoin was worth nearly $20,000.

In July it is now worth around 6000 USD and considered to be close to its average production cost to mine. Some think that this figure is a case of market forces valuing something for its true worth.

What is "Bitcoin Cash"?
The actual term "Bitcoin Cash" refers to a different Cryptocurrency than Bitcoin. Bitcoin cash is the result of something known as a “hard fork". This was acheived when the blockchain was split into two distinct new ledgers. The mechanism of the Blockchain ensured that both ledgers preserved all previous transactions made beforehand.

One of the new chains created maintains the original Bitcoin protocol and code, while the second chain forks off to implement the new Bitcoin cash code, which adds additional features and functionality. This fork was implemented to increase the number of transactions that can fit inside a block, with the aim of reducing transaction fees and confirmation times. Although Bitcoin Cash may have some relationship and tracking with the Bitcoin value, this is mainly due to it's history and they are each seperate crypto currencies.

Is Bitcoin Legal?
Bitcoin is legal in most of the Worlds developed countries. There are a few countries that have banned the use of Bitcoins, so make sure that you check the legal status of Bitcoin in your country before you buy it.

I heard that some bad guys use Bitcoin, should I avoid it?
At one time, back in the early days, Bitcoin had a bad reputation for online criminals, drug dealers and scammers, who used it for their illegal funding activities. We can never stop criminals from using any banking infrastructure, whether it be with a traditional or a cryptocurrency account. However things have changed with Bitcoin and most of the other altcoins. Many well-known companies, including dell and Microsoft, are now accepting payments in Bitcoin. There are even Bitcoin ATMs cropping up in high streets in many major cities. Also, in some parts of the USA, the IRS tax authority will even accept your Income Tax payments in Bitcoin. That must surely be a measure of the change in the image of Bitcoin and a recognition of its future.

Can people see who I am when I Buy Bitcoins or am I anonymous?
You are not anonymous in the strictest sense. For Bitcoin to function in the secure way that everyone requires, all Bitcoin transactions on the blockchain are public, but the real identity of the owner of the bitcoin address making the transaction, is not known. A good way that I was told recently, is to think of Bitcoin as "pseudonymous".

What is the Tax situation with Bitcoin?
So we save the best until last - well, maybe not. This is certainly not tax advice, but I can tell you this much. Most countries will always want you to pay some tax on any income, however gotten. If you make gains in your Cryptocurrency trading activities, you need to check exactly what your tax liabilities will be.

It is a very strange phenomena that some governments may not particularly like Bitcoin, or its perceived threat to their good old banking institutions; but rest assured, they will put that to one side when they see the potential amounts involved and they will soon want their cut, bless 'em!