How Bitcoin Works

Bitcoins are a decentralized form of cryptocurrency. This means that they are not regulated by any financial institution or government. So, unlike a traditional bank account, you don’t need a long list of documents like an ID to create a so-called Bitcoin wallet. A bitcoin wallet is what you will use to access your bitcoins and send bitcoins to other individuals.

How to set up an account

You can purchase a Bitcoin wallet from a Bitcoin broker such as Coinbase. When you open a wallet through a certified broker, you are given a Bitcoin address, which is a series of numbers and letters, similar to an account number for a bank account, and a private key, which is also a series of numbers and letters, which serves as your password.

How Bitcoin works as an anonymous payment processor

You can do 3 things with bitcoins: make purchases, send money to someone anonymously, or use it as an investment. More and more merchants are accepting Bitcoin as a form of payment. By using bitcoins instead of cash, you are essentially making this purchase anonymously. The same goes for sending money, based on the fact that you don’t need to send a mountain of payment to establish bitcoin anonymously, in fact you can send money to someone else anonymously.

How Bitcoin Works as an Investment

The price of Bitcoin fluctuates from time to time. For a larger overview: At the beginning of 2013, the average price of Bitcoin was approximately $400 per Bitcoin, but by the end of 2013, the value of Bitcoin had exceeded $1,000. This meant that if you had 2 bitcoins worth $800 at the beginning of 2013 and you kept them as an investment until the end of 2013, those two bitcoins would be worth more than $2000 instead of $800. Many people hold bitcoins because their value fluctuates.

Bitcoin casino and poker sites

Because of Bitcoin’s anonymity, the gambling industry has adopted Bitcoin as a payment method. Both bitcoin casinos and bitcoin poker sites are coming alive and offering their players to make deposits, play with bitcoins at the table and withdraw money directly to their bitcoin wallet. This means that there are no taxes or opportunities for government control. Just like a regular Nevada casino where you don’t need to register anywhere and all your transactions are anonymous.

How do you send Bitcoin

To pay for goods and services or send bitcoins to an individual, 3 things are required. Your bitcoin address, your private key, and the person’s bitcoin address. From now on, you will host 3 pieces of information through your bitcoin wallet: input, balance and output. The input refers to your address, the balance refers to the number of bitcoins you intend to send, and the output is the recipient’s address.