Welcome to the /r/Bitcoin Sticky FAQ
You've probably been hearing a lot about Bitcoin recently and are wondering what's the big deal? Most of your questions should be answered by the resources below but if you have additional questions feel free to ask them in the comments.
The following videos are a good starting point for understanding how bitcoin works and a little about its long term potential:
- Video 1: What Is Bitcoin & Why Should You Care?
- Video 2: The real value of bitcoin and crypto currency technology
- Video 3: Bitcoin Is Independent Money
- Video 4: Bitcoin 101 – Balaji Srinivasan
Key properties of bitcoin
- Limited Supply (there will only ever be 21,000,000 bitcoins created and they are issued in a predictable fashion, you can view the inflation schedule here after which it will be truly deflationary as coins are lost over time)
- Open source (Bitcoin code is fully auditable. You can read the source code yourself here)
- Accountable (the public ledger is transparent, all transactions are seen by everyone)
- Decentralized (Bitcoin is globally distributed across thousands of nodes with no single point of failure and as such can't be shut down similar to how Bittorrent works)
- Permissionless (No one can prevent you from interacting with the bitcoin network of your own free will)
- Censorship resistant (No one can censor, alter or block transactions that they disagree with, see Operation Chokepoint)
- Push system (there are no chargebacks in bitcoin because only the person who owns the address where the bitcoins reside has the authority to move them)
- Low fee (transactions cost a few cents, most wallets calculate this automatically but you can view current fees here).
- Borderless (no country can stop it from going in/out, even in areas currently unserved by traditional banking as the ledger is globally distributed. This makes it a truly global payment platform )
- Trustless (Bitcoin solved the Byzantine's Generals Problem which means nobody needs to trust anybody for it to work)
- Pseudonymous (no need to expose personal information when purchasing with cash or transacting)
- Secure (encrypted cryptographically and can’t be confiscated with proper key management such as hardware wallets)
- Nearly instant (from a few seconds to a few minutes depending on need for confirmations)
- Peer-to-peer (no intermediaries with a cut, no need for trusted third parties)
Portable (easier to carry/move than cash, gold and silver. Can even be transported by simply remembering a string of words for wallet recovery)
Scalable (each bitcoin is divisible down to 8 decimals allowing it to grow in value while still accommodating micro-transactions)
Designed to fit all the fundamental properties of money better than gold or fiat
Additional Bitcoin statistics can be found here. Developer resources can be found here and here. Peer-reviewed research papers can be found here. Scaling resources here, and of course the whitepaper that started it all :
Where can I buy bitcoins?
You can buy or sell any amount of bitcoin and there are several easy methods to purchase bitcoin with cash, credit card or bank transfer. Some of the more popular resources are below, additionally BuyBitcoinWorldwide.com is a very helpful site for beginners.
Bank Transfer / Credit card options
- Bitit (cash options as well)
- Bitsquare P2P decentralized exchange (no third party intermediary)
Note: Bitcoins are valued at whatever market price people are willing to pay for them in balancing act of supply vs demand. Unlike traditional markets, bitcoin markets operate 24 hours per day, 365 days per year. Preev.com is a useful site that that shows how much various denominations of bitcoin are worth in different currencies. Alternatively you can just Google "1 bitcoin in (your local currency)".
Securing your bitcoins
With bitcoin you can "be your own bank" and personally secure your bitcoins OR you can use third party companies aka "bitcoin banks" which will hold the bitcoins for you.
If you prefer to "be your own bank" and have direct control over your coins without having to use a trusted third party, there are many software wallet options here. Some popular mobile and desktop options are below and most are cross platform.
If you want easy and secure storage without having to learn computer security best practices, then a hardware wallet such as the Trezor or Ledger is recommended. A more advanced option is to secure them yourself using paper wallets generated offline.
If you prefer to let bitcoin banks manage your coins, try Coinbase or Xapo but be aware you may not be in control of your private keys in which case you would have to ask permission to access your funds and be exposed to third party risk.
Note: For increased security, use Two Factor Authentication (2FA) everywhere it is offered, including email!
2FA requires a second confirmation code to access your account, usually from a text message or app, making it much harder for thieves to gain access. Google Authenticator and Authy are the two most popular 2FA services, download links are below. Make sure you create backups of your 2FA codes.
Where can I spend bitcoins?
|Steam, HumbleBundle, GreenmanGaming, and Coinplay.io||For when you need to get your game on|
|Microsoft||Xbox games, phone apps and software|
|Spendabit, The Bitcoin Shop, Overstock, Rakuten, DuoSearch and BazaarBay||Retail shopping with millions of results|
|ShakePay||Generate one time use Visa cards in seconds|
|Gyft||Gift cards for hundreds of retailers including Amazon, Target, Walmart, Starbucks, Whole Foods, CVS, Lowes, Home Depot, iTunes, Best Buy, Sears, Kohls, eBay, GameStop, etc.|
|NewEgg, TigerDirect and Dell||For all your electronic needs|
|Cashila, Bitwa.la, Coinbills, Piixpay, Bitbill.eu, Bylls, Coins.ph, Bitrefill, Pey.de, LRoS, Wagepoint, Hyphen.to||Bill payment|
|Foodler and Takeaway||Takeout delivered to your door!|
|Expedia, Cheapair, Lot, Destinia, BTCTrip, Abitsky, SkyTours, Fluege the Travel category on Gyft and 9flats||For when you need to get away|
|Cryptostorm, Mullvad, and PIA||VPN services|
|Namecheap||For new domain name registration|
|Stampnik and GetUSPS||Discounted USPS Priority, Express, First-Class mail postage|
|Reddit Gold||Premium membership which can be gifted to others|
There are several benefits to accepting bitcoin as a payment option if you are a merchant;
- 1-3% savings over credit cards or PayPal.
- No chargebacks (final settlement in 10 minutes as opposed to 3+ months).
- Accept business from a global customer base.
- Increased privacy.
- Convert 100% of the sale to the currency of your choice for deposit to your account, or choose to keep a percentage of the sale in bitcoin if you wish to begin accumulating it.
If you are interested in accepting bitcoin as a payment method, there are several options available;
- Mycelium Gear (direct to your wallet)
- Blockonomics (direct to your wallet)
Can I mine bitcoin?
Mining bitcoins can be a fun learning experience, but be aware that you will most likely operate at a loss. Newcomers are often advised to stay away from mining unless they are only interested in it as a hobby similar to folding at home. If you want to learn more about mining you can read more here. Still have mining questions? The crew at /r/BitcoinMining would be happy to help you out.
Just like any other form of money, you can also earn bitcoins by being paid to do a job.
You can also earn bitcoins by participating as a market maker to allow users to perform CoinJoin transactions with your bitcoins for a small fee (requires you to already have some bitcoins)
The following is a short list of ongoing projects that might be worth taking a look at if you are interested in current development in the bitcoin space.
|Lightning Network, Amiko Pay, and Strawpay||Payment channels for network scaling|
|Blockstream and Drivechain||Sidechains|
|21, Inc.||Open source library for the machine payable web|
|ShapeShift.io||Trade between bitcoins and altcoins easily|
|Open Transactions, Counterparty, Omni, Open Assets, Symbiont and Chain||Financial asset platforms|
|Hivemind and Augur||Prediction markets|
|Mediachain||Decentralized media library|
|Tierion and Factom||Records & Titles on the blockchain|
|BitMarkets, DropZone, Beaver and Open Bazaar||Decentralized markets|
|Samourai and Dark Wallet – abandoned||Privacy-enhancing wallets|
|JoinMarket||CoinJoin implementation (Increase privacy and/or Earn interest on bitcoin holdings)|
|Coinffeine and Bitsquare||Decentralized bitcoin exchanges|
|Keybase and Bitrated||Identity & Reputation management|
|Bitmesh and Telehash||Mesh networking|
|JoyStream||BitTorrent client with paid seeding|
|MORPHiS||Decentralized, encrypted internet|
|Storj and Sia||Decentralized file storage|
|Streamium and Faradam||Pay in real time for on-demand services|
|Abra||Global P2P money transmitter network|
|bitSIM||PIN secure hardware token between SIM & Phone|
|Identifi||Decentralized address book w/ ratings system|
|Coinometrics||Institutional-level Bitcoin Data & Research|
|Blocktrail and BitGo||Multisig bitcoin API|
|Insight||Open source blockchain API|
|Leet||Kill your friends and take their money 😉|
One Bitcoin is quite large (hundreds of £/$/€) so people often deal in smaller units. The most common subunits are listed below:
|millibitcoin||mBTC||1,000 per bitcoin||SI unit for milli i.e. millilitre (mL) or millimetre (mm)|
|microbitcoin||μBTC||1,000,000 per bitcoin||SI unit for micro i.e microlitre (μL) or micrometre (μm)|
|bit||bit||1,000,000 per bitcoin||Colloquial "slang" term for microbitcoin|
|satoshi||sat||100,000,000 per bitcoin||Smallest unit in bitcoin, named after the inventor|
For example, assuming an arbitrary exchange rate of $500 for one Bitcoin, a $10 meal would equal:
- 0.02 BTC
- 20 mBTC
- 20,000 bits
For more information check out the Bitcoin units wiki.
Still have questions? Feel free to ask in the comments below or stick around for our weekly Mentor Monday thread. If you decide to post a question in /r/Bitcoin, please use the search bar to see if it has been answered before, and remember to follow the community rules outlined on the sidebar to receive a better response. The mods are busy helping manage our community so please do not message them unless you notice problems with the functionality of the subreddit. A complete list of bitcoin related subreddits can be found here
Note: This is a community created FAQ. If you notice anything missing from the FAQ or that requires clarification you can edit it here and it will be included in the next revision pending approval.
Welcome to the Bitcoin community and the new decentralized economy!