Get the code
A Beginner’s Guide to Bitcoins
Although Bitcoins have been around since 2009, the hype and fascination over the unregulated virtual currency has increased rapidly. There are currently 11 million Bitcoins in existence, but no more will be made once 22 million have been created. Confused about the Bitcoin? Let’s take a closer look at the cryptocurrency.
SECTION 1: Bitcoins at a Glance
The Bitcoin (BTC) is a virtual currency, created by a slow computer process called “mining.” The international currency is not regulated by banks and can be used to purchase goods from anywhere in the world. It also trades like a stock or material currency.
<<CALLOUT>> As of May 2013, each Bitcoin is worth about £80.73, or $140.
• 11 million — Number of Bitcoins now in existence
• 22 million — Maximum number of Bitcoins that will be mined
• £1.06 billion* — Value of all Bitcoins currently in circulation
*Rate at $1.6 billion at time of conversion.
The Bitcoin’s creator, under the pseudonym Satoshi Nakamoto, is widely unknown to the public. Few in the world know the developer’s actual identity, and only a handful of users have talked with him. As of April 2011, Nakamoto said he has “moved on to other things” and has vanished from the Internet.
Here are just some of the regularly used terms in the Bitcoin universe.
Bitcoin Client - Software that receives and sends Bitcoins.
Wallet - Most often referring to a file that stores Bitcoin addresses and the private keys needed to use them.
Bitcoin Address – An alphanumeric identifier (e.g.: 13ignD31FysQbaBBVJUzffcQoFxxEuEcbE) representing a payment destination, similar to e-mail, required to send someone Bitcoins.
Private Key - A hidden secret number related to an address, which permits access to send Bitcoins. If the key is lost, the currency in the wallet is gone forever.
Bitcoin Network - The network of computers through which Bitcoin transactions are broadcasted. It also helps maintain the blockchain.
Blockchain - A public list of all transactions ever sent. This allows everyone to know which Bitcoins belong to whom.
Bitcoin Protocol – This means that every node in the network is required to download a copy of every Bitcoin transaction.
Miner - Someone who helps create blocks added to the blockchain. If a valid block is created, the miner receives 50 new Bitcoins from the Bitcoin protocol. This is the process through which all Bitcoins come into existence.
SECTION 2: Buying Bitcoins
It’s not as easy as it sounds. Because Bitcoin transactions are completely anonymous, you must use specific methods to pay for one—which tends to get tricky.
The most widely used way to pay for Bitcoins, this method requires you to provide an exchange with your bank account information and transfer money into a Bitcoin account.
Cash-payment services, like Moneygram, compensate an intermediary at a specific deposit spot. The service then turns the cash to credit and deposits it into a Bitcoin exchange account.
<<CALLOUT>> Every 10 minutes, 50 more Bitcoins are available in the network. This pace won’t continue forever, though. The rate of production will slow to 25 more Bitcoins every 10 minutes for the next 4 years, before reducing to 12.5 every 10 minutes.
While many online retailers already accept Bitcoins, some major companies still plan to adopt the new currency.
Those companies include:
• Western Union
<<CALLOUT>> RISKY BUSINESS. On 10 April, the value of Bitcoins fell by 60%, from a short high of $265, to less than $100.
SECTION 3: Where You’ll Find Bitcoins (Top Cities)
SECTION 4: Top Bitcoin Twitter Accounts
• @BitcoinByte is the Twitter account for banking industry veteran Michael Parsons, who runs the blog Bitcoin Bytes.
• @BitcoinEconomy posts stats on the Bitcoin economy from BitcoinWatch.com.
• @BitcoinMagazine is the account for Bitcoin Magazine, known as “the world’s first magazine dedicated to the cryptocurrency.”
What to do With Your Bitcoins
• Save them by leaving them on the exchange.
• Sell them.
• Convert them to cash by selling them on the exchange.
• Transfer them to a wallet service or your own computer.
• Spend them.
SOURCES: BBC, New York Magazine, TheBitcoinTrader.com
For Reference Only:
Your bio is currently empty. Now is a great time to fill in your profile.
This profile is private.
This profile is only shared with friends.
This profile is under review.
We were unable to request friendship with this user.
We were unable to request friendship with this user. Are you logged in?
Your friendship request has been sent to this user.
We were unable to terminate friendship with this user.
We were unable to terminate friendship with this user. Are you logged in?
You are no longer friends with this user.
We were unable to ignore this user.
We were unable to ignore this user. Are you logged in?
This user is now ignored.
We were unable to stop ignoring this user.
We were unable to stop ignoring this user. Are you logged in?
This user is no longer ignored.
We encountered a problem recommending this user.
You have recommended this user.
Please limit your comment length to less than 2000 characters.
What Do You Think?
Thanks for submitting your comment. It will appear after editor approval.
We were unable to post your comment to Twitter.
We were unable to post your comment to Facebook.
We were unable to post your comment to LinkedIn.
We restrict rapid posting of multiple comments for quality reasons. You have already posted a comment within the last several seconds. Please try again later.
We limit the number of comments, reviews, and postings an individual user can submit over a given period for quality reasons. You have currently reached that limit. Please try resubmitting your comment again later.
We are unable to add your comment at this time.
We are unable to add your comment. Are you logged in?
We will not add your comment until you remove the following words: .
We're sorry, but the comment you are replying to has been removed from the site.
Please let us know what you think.
Please shorten your comment to characters.
characters left character left characters must be removed character must be removed
To leave a comment, you need to sign up.
Write a reply
We're sorry. We were unable to report abuse at this time.
We limit the number of reactions an individual user can submit over a given period for quality reasons. You have currently reached that limit. Please try resubmitting your abuse report again later.
Comment is too long. Enter 500 characters or less.
You may send this to 5 e-mail addresses. Please separate each address with a space.
We're sorry, but the item you are sending has been removed from the site.
We're sorry. We were unable to send the email at this time.
Please specify a recipient.
You can only send messages to 5 addresses at a time.
The address "" is not valid.
Please specify a subject.
Score vote upvotes up vote downvotes down
How much do you spend each month on those little bits and bobs? Our UK living cost calculator can help you find out.
Try our budget calculator
© Copyright 2008 - 2014 Confused.com. All rights reserved.
3rd Floor, Greyfriars House, Greyfriars Road,
Confused.com is a trading name of Inspop.com Limited and is authorised and regulated by the Financial Conduct Authority