What is bitcoin?

So what is bitcoin? Bitcoin is a decentralized digital currency that is created electronically though the process of “mining”. Since there is only a certain amount of bitcoins that can be created through this process many have adopted this currency in order to protect themselves against inflation and probable demise of the fiat currencies. Bitcoin is “mined” by using your computers computational power by solving complex mathematical problems and processing transactions.

Where do I keep bitcoins? Bitcoins are a 100% digital currency. They can be kept either in an digital wallet on your computer or online using one of the services that provides bitcoin wallets. Generally, it is safer to keep your bitcoins on your own computer. If the web wallet you are using gets hacked, your bitcoins might be stolen, but if you are storing bitcoins on your computer and delete your digital wallet or throw out your harddrive, your bitcoins will be gone as well.

How do I “mine” bitcoins? Bitcoins can be mined by running a program such as GUIMiner or cpuminer on your computer. The program will use your computers resources to process transactions. Generally, the better your computer the faster you will be able to mine but some computer hardware is much more efficient at it. Mining is now becoming more and more competitive so if you are just starting out with bitcoin it is best to just buy some. Just mining one bitcoin on a fairly powerful desktop computer will take more than a month and use up a lot of electricity. If you are serious about bitcoin mining you can read up more on it on bitcointalk forums.

How do I buy/sell with bitcoin? Once you have some currency in your digital wallet you can purchase items online or in person by sending bitcoins to the person’s bitcoin address. It would look something like this: 1HHwows5n3aU2YywVacte91vEDgMVHA2hz – a mashup of random letters and numbers. Alternatively, you can receive the currency by letting them send the bitcoins to your own address. There are no transaction fees when sending bitcoin and once your send them, you cant get them back, just like cash.

Where can I get bitcoins? If you are just starting out with digital currency, you are better off buying them with “real world” money than trying to mine them since mining will take a very long time as pointed out above. You can exchange your dollars/yen/euros into bitcoins by using one of the digital currency exchanges such as mtgox, cavirtex (Canada), coinbase (US) or any other reputable exchange. Some of these exchanges allow you to take out money only if you are located in certain countries so find a reputable exchange that serves your area and use it.

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