We all know the topic of bitcoin can be a bit confusing at times. Keeping track of the latest news, happenings, and changes is not easy. To help counter that we’ve created this page to continuously update you with all the commonly asked questions relating to Bitcoin.
Why Bitcoin is the future ?
It has many advantages over fiat currency. Bitcoin is completely decentralized; it is controlled by its users rather than governments or banks. It, therefore, gives its users financial freedom which makes it so popular. Also, it is impossible to counterfeit, thus its value is not affected by fake currencies in the market. Its transactions are fast, secure and anonymous.
How Bitcoin works?
BTC is based on Blockchain technology, it is purely virtual. It can only be digitally transferred and does not have a physical representation. It is also decentralized, thus not controlled by any central authority. Lastly, its creation entails the solving of complex math questions it is called mining.
How Bitcoin mining works?
Bitcoin mining is done by solving a very complex math computation using a very powerful computer. Many miners attempt this computation from different parts of the world. The first miner to arrive at the correct answer earns a reward in form of BTC; they also create a new coin which upon verification by each person in the network is added to the Blockchain.
How Bitcoin ATM works?
BTC ATMs enable you to buy and sell BTC in exchange for fiat currency. For a purchase, you specify the address to which you want the BTC sent and the amount of fiat money to be paid. Selling, on the other hand, entails specifying the amount of BTC you are selling and the address you are selling it to; fiat money is dispensed to your account after the transaction is complete.
How Bitcoin transactions work?
For every transaction involving Bitcoin, there are two addresses involved; the sender’s address (transaction input) and the receiver’s address (transaction output). Both addresses are recorded permanently on the Blockchain. Therefore, all transactions are traceable making the system transparent. You can slice Bitcoin into smaller portions called Satoshis for smaller transactions. Also, there is a small transaction fee charged for each exchange.
How do Bitcoin wallets work?
Each Bitcoin wallet operates virtually, and it has two special keys the public address and the private key. The public address is similar to an account number; it is where the funds are stored. The private key, on the other hand, is the password you use to access and operate your cryptocurrency. Wallets use cryptography to carry out the summations of your balance.
How Bitcoin was created?
The first Bitcoin specification proof of concept was published in 2009 by Satoshi Nakamoto. Since then many developers have been working to improve it. The Bitcoin protocol and software are published openly and any developer around the world can review the code or make their modification of the Bitcoin software.
Are Bitcoin transactions anonymous?
Bitcoin transactions are pseudonymous rather than anonymous. Each user has a public address that could theoretically be traced back to an IP address or exchange account using proper network analysis. However, your private and public keys and your address are completely protected, you are the only one that knows them and accesses them unless you share them with someone else.
Are Bitcoin wallets safe?
Bitcoin wallets are generally safe but not bulletproof, there are a few possible bumps along the road. Such bumps include catching a malware, a Trojan accessing your files and using your information to steal from you, or digital exchange making off with your money and lastly, losing your phone or laptop along with your wallet. However, you can avoid this by using cold storage options that do not necessarily require an internet connection.
Are Bitcoin profits taxable?
The short answer is yes; Bitcoin profits are taxable. Bitcoin is both an asset and an asset so it attracts different taxes depending on the circumstance. When you are using Bitcoin as payment for a small transaction, you incur either personal or business income tax. Similarly, when you pay fiat money either to mine or buy Bitcoin, you attract capital gains tax and the like.