What is Bitcoin?

Posted by Tollfreenumber.ORG  at January 14th, 2014

You may have heard of Bitcoin in the past few months for several different reasons. Bitcoin was a popular form of currency for an untraditional type of website called Silk Road – a site that offered a marketplace of less than legal items but, somehow, worked for years. Though the site was shut down and is still under plenty of investigation, a part of it remains: the bitcoin.

Bitcoin is getting a lot of talk in the media but has most of scratching our heads asking what it is, how it works, and, should I use it in my business?

What is Bitcoin?

Bitcoin is a virtual currency. Similar to buying things on credit or via paypal – same idea. You have your government approved money and that money can be used to purchase bitcoin which you can then buy stuff with. The major difference with bitcoin is that there is no middle man when giving your bitcoin to someone else so, while you still pay a transaction fee every time you use it, it’s much less than what you would pay a bank to handle those transactions for you as you would when using a credit card. As well, your personal information isn’t necessarily attached to the transaction you make. When purchases are made, the bitcoin goes from your own bitcoin account (or “wallet”) to the bitcoin accepting party. Keep in mind that “Bitcoin” is not a company; it’s simply a software program.

How does Bitcoin work?

First off, because Bitcoin is a program and, an open source program meaning that anyone has free access to it, anyone can obtain it and use it. The application is a called a ‘bitcoin miner’. This application is accessible via your computer and give you access to actually generate bitcoins. “Mining” bitcoins isn’t super simple so, in order to get them, you’ll have to spend some time on it. This is because the maker of the program likely wanted the currency to have a certain stability. The harder it is to access, the less likely the system will become overrun with users. Once you unlock your bitcoins (or to make it easy on yourself you could just buy them from a reputable dealer), you store those in your ‘wallet’ online, and use them with any person/company that accepts them as payment. That payment uses an electronic signature rather than your name and personal information and the to and from are straight from you to your payee – think handing cash to someone.

Should I use bitcoin?

While bitcoin is certainly gaining a lot of popularity these days, it’s still a relatively new, although brilliantly written, application. There are pros and cons to using bitcoin. We must admit that, similar questions had been raised at the advent of credit cards and the currency may likely improve as it continues to gain momentum. The transactions are done swiftly, buyers can be somewhat anonymous, but businesses can feel secured in knowing that their payment is in their hands right away. While no one should just jump right into being a bitcoin user, they should also not immediately shy away from it.

Bitcoin is popular for a reason. People like it. And the more people use it, the more popularity it will gain so if you already own or are starting a business, look at the pros of using it along with other cost-effective marketing tools like search engine optimization, social media, and, our favorite, toll free numbers!