Top 10 Most Common Bitcoin Questions Asked
Bitcoin is one of the most trending topics people are talking about these days, however, not everyone knows what it actually is or what does it do. So this is a guide on the top 10 most common Bitcoin questions we get asked and some common answers.
1. What is Bitcoin?
Bitcoin is a digital currency created in 2009. It was designed to be peer-to-peer so that you can transfer a Bitcoin to someone else without using a bank. This is also known as a decentralized currency that is controlled by you.
2. Who created Bitcoin?
Bitcoin was created by someone called Satoshi Nakamoto. It all started when he published a paper called A Peer-to-Peer Electronic Cash System in May 2008, the content explained in detail how digital currency would work. A year after, Bitcoin was created and is the very first cryptocurrency.
3. How do you use Bitcoins?
Bitcoins can be used like paper money and they are similar, except Bitcoin is digital, not paper (think of it like transferring money using internet banking). Most people are investing in Bitcoins as they are predicting an increase in value. While some people just use it for transferring money globally without using a bank.
4. How do I buy Bitcoin?
There are lots of different ways you can buy Bitcoins in Australia. The most popular way is through online exchanges where you can deposit AUD from your bank account and then purchase BTC. It is also possible to purchase Bitcoin in person through an Australian Bitcoin and crypto over-the-counter trading desk (OTC), which is a popular option for large investors and SMSF accounts.
5. What is Bitcoin Mining?
Bitcoin mining is basically mining for new Bitcoin and so you can use them as cryptocurrency. The way the process of mining works is that transactions are being validated and established then you will get rewarded. However, mining requires a really powerful computer or processor and it can also use up a lot of electricity as well. Although with mining, it allows the user to process transactions, securing the network, and lets everyone in the system linked together. It is similar to a data centre except for the fact no has control of the network as it is fully decentralized.
6. How much is a Bitcoin worth?
As of August 29th 2018, one Bitcoin is worth an estimated $9.600 (AUD). However, back in 2009-2011, one Bitcoin was worth less than $1 (AUD). Then in 2013 it was less than $100 (AUD). With Bitcoin, the price is controlled by supply and demand which means that when more people demand for Bitcoin, the price will also increase. While if the no one demands for Bitcoin then the price will decrease. Sounds simple enough.
7. How many Bitcoins are in the world?
Bitcoin has a maximum supply limit of 21 million which means that only 21 million can ever be mined. Currently, an estimated of 17 million have been made so nearly 80% of the maximum supply. This implies that there around 4 million Bitcoins that are not in circulation right now and can still be mined. It can however be forked which essentially doubles the number of coins available - the most popular example being Bitcoin Cash.
8. What are the benefits of Bitcoin?
The benefits of Bitcoins are that the transactions for Bitcoin are cheaper than the normal currency transactions. Normal transactions can become pricy, mainly where huge amounts of money are involved. Another benefit is that cryptocurrency payments are seen to be safer and more secure payment method by many people. There may also be less chance of identity theft as you do not need to use credit cards.
9. How many people use Bitcoin?
Knowing the precise number of Bitcoin users is hard to deduce, due to the fact there is not actual official central records of the users. On the other hand, we can determine the number predicted based on the number of digital wallet users. On September 2017, it was reported that there were around 20 million active Bitcoin wallet users. This being said, it means there will be a constant increase in the amount of people joining the Bitcoin community.
10. What are the disadvantages of Bitcoin?
Even though there are loads of advantages of Bitcoins, there still a number of disadvantages. One of them is that the fact that Bitcoin is not globally accepted as a form of currency in some countries, as some of them even banned digital currency transactions. While, a few do accept like Japan, they have even fully legalized Bitcoins. Another disadvantage, is the fact that Bitcoin are exposed to substantial instabilities in price, as some day will be good and then some days will be bad. Making that loaf of bread cheap one day and expensive the next.