What is Bitcoin?
A little odd, and a little complicated, but once you know the basics it is fairly easy to understand for simple uses. In the most basic possible terms – Bitcoin is digital payment system and what is known as a cryptocurrency.
What is cryptocurrency? This is a digital asset which uses codes and mathematics to both secure the transactions using this currency and control the creation of additional units. Like with standard digital currency this can be separated into fractions of the base unit.
What does this mean for the average user? We could think of it as a type of currency which can be generated by the user freely (though it usually won't be these day's, see below) and is scarce enough to have value as a type of indirect cash. When Bitcoins are generated or used in a transaction they are measured against the international network of code, which helps to ensure that there are no cheats or duplicates, so that the coins remain valid. This is different from systems such as Paypal in that Bitcoins check against each-other, rather than a centralised network.
Creation of Bitcoin
We don't actually know who was the originally creator of Bitcoin. Commonly a man known as Satoshi Nakamoto of Japan is thought of as the originator, but we have little information detailing who this man actually is, or if that is in fact his real name. Once Satoshi released the source code, essentially the building blocks for the code, it was adopted by more and more people.
In the early days of Bitcoin is was easily possible for a user to generate their own coins. This is because there are a realistically limited quantity of coin codes codes which can be calculated, and at the beginning only a few of these codes had been generated. This meant that early adopters set up what is known as Bitcoin miners. These were essentially computers which had been programmed to crunch the code, and come up with the code for additional coins, then add this information into the database. As time went on the more basic codes were covered, so the computers have had to apply more time and power into mining the same amount of coins.
Over time it effectively because untenable for single computers to uncover coins, so larger operations were adopted. Commonly this came in the form of multiple linked computers which were dedicated to mining. Less common was the user of nastier tricks in order to generate money.
As time went on and the cost of mining coins increased it became increasing expensive to mine Bitcoins, so other solutions were found. Bitcoin farms, huge groups of purpose built computers, were put into play by some operators. Others went for what is called bot-nets.
A botnet, in our case, is a system of computers linked the internet which have been employed to mine coins. What is the difference between this and farming? Well, in the case of botnets those who generate the coins are unaware they are doing so.
This was achieved by infecting computers with virus-like programs which would run without the users knowledge or consent. These would run in the background, taking a portion of computer resources and dedicating them to Bitcoin mining. By using only part of a computer's full power they could effectively remain hidden. The fact that these programs often had no other ill effect means that the slight slowdown was either unnoticed, or written off as an ageing computer or some other issue. The fact that these were also not as harmful as other programs meant they weren't targeted by anti-virus programs at anywhere near the same rate as nastier programs.
How did they sneak these into people's computers? There are a few ways in which this type of infection became easier. The first is by adding them to those annoying toolbar like programs which are often advertised to browsers and come with more useful programs. While more advanced users avoid installing these, average users might not. The second way, which proved to be very useful, was the inclusion of these programs through BitTorrent downloads. For those unaware – BitTorrent is a type of file-sharing which has effectively taken the place of earlier efforts such as Napster or Kazaa. Torrents offer a greater level of anonymity and are harder to shutdown, so they became a defacto form of software and media piracy for those interested.
While not commonly inserted into movies or music, computer programs became prime targets. Illegal game and program downloads would sometimes come with these botnet programs installed. This meant that particularly popular programs could be illegally downloaded and infect tens of thousands of people easily, and without their knowledge. Over time people have become more aware of this method, so anti-virus and malware programs have now largely adapted and now search out this software.
Reliability of Bitcoin
So, what does all of this mean for Bitcoin, and where does it stand today in terms of usability? The idea behind Bitcoin is that is had a set rarity, in that we have reached a point where only enormous operations can realistically generate further coins (more on this in a moment), so now the price should stabilise, right? Well, no, not really.
Let's put it this way – a single Bitcoin was originally worth somewhere around 30c US. From here is has jumped and dropped, bubbled and burst more than once. Without any sort of market regulation the currency has been left at the mercy of the free market, and she has not been reliable. At the time of writing this article 1 Bitcoin equals around $2400 US. Yikes.
How to use Bitcoin
Step 1: Acquiring Bitcoins
We'll stick to the most user friendly methods here.
- There are number of ways in which a newcomer can acquire Bitcoins. The first is by simply purchasing them from Bitcoin traders such as Coinbase and Xapo.
- Purchase from a real person. If somebody you know owns Bitcoins then you might be able to work out a deal with them. This is obviously not feasible for everyone. You can use the Local Bitcoin website to try to find a dealer near you.
- Withdraw from a Bitcoin ATM. There are places all over the world which allow users to convert their money into Bitcoins via ATMs. These are quite rare and usually charge around a 6% trade fee. To see if there are any of these around you try checking the Coin ATM Radar website.
Step 2: Set up a Bitcoin Wallet
What use is money without a way to store it? Bitcoins can be stored online via various websites, on your mobile devices and on hardware devices, for a start. There are other methods but these are often cumbersome of difficult, so we will focus on the more basic methods.
- Web Wallets store you bitcoins, as you might have guessed, online. This means that access to them requires an active internet connection. The most popular of these web wallet systems is Blockchain.
- Mobile Wallets allow the user with them, on their mobile devices. These tend to be a little bit more hack-proof than desktop computers, and allow the user to have the Bitcoins on them at near all times. There are a number of programs here, we recommend Jaxx or BitPay.
- Hardware Wallets are small devices that act as your Bitcoin wallet. These are similar to Flashpen like devices, with additional storage and security measures. Probably the safest method, though they can be a little expensive. We recommend Trezor or Ledger.
Step 3: Create a Bitcoin address
The wallet which is created for you will create a public address, this is what is used as a sort of email address which is used for the sake of sharing Bitcoins. This will be displayed as what appears to be a random mess of letters and numbers.
Step 4: Verify it's working
By sending a small amount of Bitcoins to your public address you should be able to check that all is working well. Confirmation will usually take less than 20 minutes.
Step 5: You're good to go!
Now that you know the basics you can use your Bitcoins with those places which accept their use. Need a list of casino's which accept Bitcoins? See below…
Where can Bitcoins be used?
Need some direct links to online casinos which use BitCoin? Check out our links below. Just be sure to pay close attention, as some of these don't have the licenses they should. This is common with BitCoin casinos, but the user should still stay aware.
The Future of Bitcoin
So, where does the future lie in Bitcoins? That is a very good question, and not one which I am fully equipped to answer. There are those economists, much better educated on finance than myself, who swear Bitcoin is the way of the future. There are others who claim that Bitcoin is a total waste of time, and is so volatile that it should not be trusted. What it really comes down to is time-frame. If you are going to be using them for a short period of time then you should be absolutely fine using Bitcoins. Storage over long times mean that your Bitcoins might appreciate, or lose their value, we just don't know.
Remember, if you have Bitcoins: Keep an eye on their value, and be ready to cash out if you need to.