Bitcoin 101: A Guide on Using Bitcoins
Aug 4, 2017   •   8List
8List.ph is published by ID8, Inc.
Aug 4, 2017   •   8List
Everything now is digital and can be accessed easily through computers and gadgets. With the birth of the internet comes with it rapid advancement in all things digital.
One such advancement is the formation of digital currency, or virtual currency (VC), which can be used as an exchange for goods and services through internet. Amazing, right? There are a lot of VC that are introduced nowadays, and let’s start with the first one, which is the Bitcoin.
Bitcoin is a type of cryptocurrency; basically an exchange between two networks, and regulation of transfer of funds, acting like a bank itself. It was found by an anonymous user, who goes by the username of Satoshi Nakamoto in 2009, but there’s no confirmed identity of the person behind the username up to now.
Bitcoin is available in selected establishment or networks; it can be used to pay bills, exchange of goods and services, buy online, and it can be converted into cash.
Bitcoins may be really convenient, but sadly there are only 21 million Bitcoins at most. Bitcoins come from “miners” who solve mathematical equation from past transactions; whoever gets the answer first would receive a Bitcoin reward. Transactions made by the users are all recorded in a block called “blockchain”. Through blockchains, miners encrypt codes that results to “hash”. The value of the hash function that is produced will be guessed by the miners, and the first one who guessed the right input, will have the reward. Note that millions of miners will have to compete for the right value.
Just imagine Bitcoins as gold, and the miners are the ones who get them. In the real world, money is printed and these are used in transactions. In that other world, the Bitcoin is solved by miners—and their reward adds to the value of these virtual currencies.
Everyone can be a miner! Well, that is if a person has software for solving mathematical equation for hash functions, and loves math too much (which in reality, very few actually do). One must have knowledge of cryptography, and the more miners there are, the more secured Bitcoin there will be.
It is easy as digital money transfers! Bitcoin can be accessed through apps—mobile and computer–with the use of internet, and it can transfer Bitcoins through peer-to-peer transaction. Like a bank, you must also have an account which serves as your identity in using Bitcoins.
A person with an account can send or receive Bitcoins without any transactions fees or any third parties that will manage transactions. Bitcoins are secured in a virtual wallet stored in a person’s computer or cloud. All transfers a person has made is recorded.
As mentioned above, it can be shared by parties without having to go to the bank or other such institutions. Second, a person can purchase almost anything with Bitcoin—some are even using it for illegal purposes (oopsy!). It is a paperless transaction and privacy is protected. These are secured by miners: they check the transaction first before actually confirming it. The money that is stored in Bitcoin wallet can be converted into real cash.
Of course, not everything is perfect. The value of the Bitcoin is turbulent—it can go up or fall rapidly at any given time. And as with everything in the virtual world, it can be prone to hacking. Once a transaction has been hacked, what’s gone is gone forever. It is not regulated, and as most transactions are done anonymously, there’s really no way to be assured of its security.
Yaaaas, Bitcoin is quite popular mostly in Asia—and of course, the Philippines! Bitcoins are used in the country for online transaction and transfer of remittances from abroad. Interested in having one? Visit buybitcoin (https://www.buybitcoin.ph/) or coins (https://coins.ph/) to have an account and start buying and selling Bitcoins
The Bangko Sentral ng Pilipinas (BSP) has acknowledge the existence of Bitcoins, and they aim to regulate the money transactions: these must only be used for payments and remittances. This is to ensure consumer protection and financial stability in the country. Also, you know, money laundering and combating the financing of terrorism. It must be noted that the BSP does not endorse the use of virtual currency (but at least, users are protected!).
You can go to the local banks that allow purchases of Bitcoins. They can be found here.
Remember that Bitcoins is a relatively new way of doing transactions. Its future is largely dependent on people’s acceptance of it as a means of doing business. As with everything else on the virtual world, proceed cautiously.
What do you think of Bitcoins? Share with us your thoughts below!
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