Peerhub’s Simple Guide to Bitcoin

[1] What is Bitcoin?

Bitcoin is a digital payment technology introduced in 2008. Digital assets (“bitcoins”) are units of value that people create with computers. It’s a gradual process. People and organizations with powerful computers compete to “mine” a limited number of bitcoins every day on a predictable schedule. They’ll stop when the maximum limit of 21 million bitcoins has been created, a project that’s expected to take well over a hundred years. Bitcoins are securely transferred for the exchange of goods and services from one person to another with digital devices like phones and computers. Unlike credit cards, there are essentially no transaction costs with bitcoin. And transactions are secured by advanced technology so they can be made safely.

[2] Where do you keep bitcoins?

A “digital” wallet is software that records how many bitcoins you have, keeps track of your transactions and is secured by a password you specify. It’s essential to remember your password. If you lose it, you won’t be able to use your bitcoins!

Three places to create and keep a wallet are:

  1. Coinbase 
  2. Circle 
  3. Blockchain  

Like banks, Coinbase and Circle hold your bitcoins in an account for you for safekeeping. At Blockchain you have direct control of your bitcoins; you don’t go through a bank or company to use it.

[3] How do you use Bitcoins?

Each digital wallet has a unique address that’s 34 to 36 characters long. To send bitcoins, you log into your wallet using your phone or computer. You then enter the amount you want to send and the wallet address of the person or company you want to send your bitcoins to. If you want to receive bitcoins, you provide your unique wallet address to someone who’s paying you for something. After they send bitcoins to your wallet address, you’ll be able to see them in your wallet.

It’s also possible to send and receive bitcoins by email with some wallet providers.

[4] How do you get or earn bitcoins?

Here are several ways to get bitcoins:

  1. You can create a wallet at Coinbase or Circle and link it to your bank account or credit card. You can then purchase bitcoins with just a few clicks.
  2. You can buy bitcoins in person from someone who has them. To find people who are selling bitcoin in your area, you might use Local Bitcoins. When you meet a seller, you pay them cash to send bitcoins to your wallet address.
  3. You can also trade goods or services for bitcoin. If you have something to sell, like a used electronic device, jewelry you made by hand, or some other product, you can list it in the Peerhub Marketplace.  You can also advertise a service in the Peerhub community forums and be paid with bitcoin.

[5] Where can you buy things with bitcoin?

Examples of places that accept bitcoin include:

Overstock, Dell, Gyft, Newegg, Tiger’s Direct, Expedia

You’ll find a list of bitcoin merchants at Bitpay’s directory. You can also shop with bitcoin for products in the Peerhub Store. It has thousands of products in a variety of categories, including health supplements, books, children’s toys, clothes, cell phone accessories, and much more. The Peerhub Marketplace is like Craigslist or Ebay, but at Peerhub you can buy and sell products and services with either bitcoin or dollars.

[6] Why should I use bitcoin instead of US dollars?

  • Bitcoins have the potential to increase in value over time as more people use them.
  • Bitcoins can’t be created at will by governments or central banks.
  • You don’t have to worry about your bitcoin being frozen in a bank account.
  • You don’t lose on banking or transfer fees when you pay people in other parts of the world with bitcoin.
  • You can very easily exchange bitcoin for products and services with people around the world.
  • If you’re a merchant, you don’t have to pay nearly 3% in credit card transaction fees or deal with charge-backs.

[7] Useful reminders:

  • Bitcoin prices may be volatile and there is speculative risk with this relatively new technology,  so don’t get more than you’re comfortable holding. Think of bitcoins as a way to diversify your assets, along with things like gold, commodities, company stocks, or real estate.
  • Be careful, be responsible, and treat bitcoin like cash. Keep your passwords strong and secure, but make sure you remember them so you don’t lose access to your bitcoins.
  • Don’t trust just anyone when buying, selling, or using bitcoins. Make sure the person or organization you’re dealing with is reputable and trustworthy.

[8] Bitcoin Trivia

  • Satoshi Nakamoto is the pseudonym of the mysterious inventor of bitcoin.
  • The world’s first bitcoin purchase was in 2010 for two pizzas. The buyer paid 10,000 bitcoins.
  • The price of a bitcoin in 2010 was as low as four cents. In October, 2013, it hit $1200.
  • Kristoffer Koch’s investment of $27 for 5,000 bitcoin in 2009 became worth millions of dollars less than four years later.
  • The processing power of the bitcoin mining network is greater than the top 500 supercomputers combined.

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