What is Bitcoin and how it works?

"Bitcoin is cash in the cloud"

You can send bitcoins via the Internet directly to anyone without intermediaries. Like cash, Bitcoin transactions are irreversible. The bitcoin is used worldwide and in all languages.

What is Bitcoin?

Bitcoin is primarily 3 things, a digital currency, a decentralized network that are transmitted bitcoins and finally and most important the blockchain, a decentralized ledger where all the transactions are written.

The network consists of all bitcoin nodes, and each contain a copy of the blockchain. This allows the network to be 100% decentralized since the same information is present everywhere.

Bitcoin, as technology is the first network of decentralized consensus, for which all individuals participating in it can rely on the outcome of a transaction without necessarily knowing the person with whom you are exchanging something. This solves the famous problem of Byzantine generals who aim to coordinate an attack but do not trust the messengers who have to communicate orders.

How does it work?

To use bitcoin the first thing you need to do is have a wallet to store them and with which you can transfer to others. You can create one here or use the one provided to you by bitex.la

A transaction in the bitcoin network starts when a person send from his wallet a defined amount of bitcoins to another.
Typically a transaction in the bitcoin network is instantly visible, it takes about 10 minutes to an hour to spread and have all the necessary confirmations to not be rejected by the rest of the network.

The architecture of the bitcoin network itself requires a minimum of 6 confirmations of network nodes to mark a transaction as valid.

Once the transaction begins to travel on the bitcoin network, the work the nodes do is to confirm that the transaction attributes are valid and do not belong to an already issued transaction, thus avoiding the occurrence of double spending thereof. This distributed consensus makes the distributed nature of the network very efficient to avoid fakes or scams.

Each transaction has a cost of 0.0001 Bitcoin which is distributed among all network nodes working to confirm each transaction.

In addition to the work of confirming transactions, network nodes, also known as miners are responsible for generating new bitcoins that they will be turned over to the network every 10 minutes. The issuing policy is predefined in the bitcoin protocol and says that each miner will be awarded a certain amount of bitcoins, which will be reduced by half to 4 years to reach 21 million Bitcoins which is the total in circulation find.

Currently the reward is 25 new bitcoins in 2017 will be reduced to 12.5 Bitcoins and so on every 4 years to reach the total of bitcoins issued.

A little history

Satoshi Nakamoto 2008-2009 paper as a solution to the problems that were introduced bye the global financial crisis.

starting block in 2009, 50 bitcoins

1st transaction, January 12, 2009

1st use bitcoin as purchasing, May 22, 2009, "pizza day" 2 pizzas of 25USD per 10,000 BTC = $ 2,400,000 today, bitcoin value at the time = 0.005 USD

Some peculiarities of bitcoin:

  • It does not belong to any state or country and can be used worldwide alike.

  • It is a decentralized currency, is not controlled by any state bank, financial institution or company.

  • It is impossible to counterfeit or to duplicatie thanks to a sophisticated cryptographic system.

  • No intermediaries: transactions are made directly between people.

  • The transactions are irreversible.

  • You can exchange bitcoins into pesos, euros or other currencies and vice versa.

  • The money belongs to you 100%; can not be operated by anyone and the accounts can not be frozen.

  • It is predefined and controlled so it is an anti-inflation emission.

  • The transfer cost is negligible (less than 10 cents).

  • Transfers are instantaneous.

  • There are no limits on the amounts to be transferred.

  • Although the bitcoin is completely anonymous, it is also fully traceable.

Bitcoin for ordinary people

Paying with bitcoin is easier than using a credit card. With bitcoin, you do not have to fill out a credit card number, expiration date, name on the card or a security code.

Cheaper prices. Merchants typically pay between 2% and 3% for transaction fee for credit cards. Merchants who accept bitcoins can avoid credit card charges and can pass these savings on to consumers.

Increased privacy. With bitcoin, only the information necessary for the merchant is provided. For example, if the product will not be shipped, you need not give the merchant your address.

Greater security. With bitcoin, you pay directly to merchants and as with cash, there is no need to give any payment information, which can be lost, stolen or used to make unauthorized charges.

Using bitcoins increases its value. If you have any saved bitcoin, it may be more valuable by using bitcoin. Using bitcoins increases demand, which in turn increases the value of your bitcoins saved.

Bitcoin for merchants

No chargebacks in expenses. Reputable merchants can provide refunds as necessary. But this is at the discretion of the trader and it does not have any risk of fraudulent charge backs.

Low transaction fees. Receiving bitcoin is free and shipping costs less than 10 cents. Merchants can convert Bitcoins to dollars and thus protect themselves from price volatility.

It is a form of payment in the international arena. Take payment from anyone, anywhere in the world with confidence. Within seconds traders see that the payment is on the way. After one hour, the transaction will be fully confirmed.

You do not need a payment processor or pay commissions. Merchants accept payments directly from consumers. Merchants have no relationship with any service to begin accepting bitcoins. Traders do not have to worry about a payment processor who refuses to provide service to your business, delaying their funds or make an outage.

Bitcoin is the best of coins

  • It is international and can be spent worldwide.

  • It can not be faked. There is no printing technology that is able to fool the bitcoin network.

  • It can not be issued arbitrarily. Bitcoin only 21 million will be issued. Unlike fiat currencies, since Bitcoin is not controlled by any government or bank, raising the debt ceiling and quantitative easing can not devalue bitcoin.

  • There are no limits in bitcoin transactions. You can send as little or as much as you want.

Bitcoin is better than gold

For thousands of years, gold has been one of the safest value stocks. Many people have gold to reduce fiduciary risk. Bitcoin has many advantages over gold:

  • It is divisible to 8 decimal figures. The gold can not be easily and accurately divided into smaller portions.

  • At any time you can show your tenure. Gold is not instantly analyzable, you can not instantly know if it is pure.

  • At any time you can get your balance. Gold is not instantly weighable, a precision balance is needed.

  • You can easily send them over the internet. Sending gold notes has counterparty risk.

  • It can not be banned or confiscated. The US government has made it illegal to own gold.

How do you get bitcoins?

Easy to get Bitcoins for cash:

1- Open a free account Bitex
2 - Deposit money into your balance.
3 - Buy and sell anytime.

What to do with your bitcoins?

Keep them. The easiest way to save your bitcoins is simply leaving them in Bitex.la

Sell ​​them. Whenever you want, you can convert your bitcoins cash by selling them Bitex.la

Transfer them. You can transfer your bitcoins to a wallet or service to someone else. If you have knowledge that your equipment is safe and creates backups on a regular basis, you can download and install the software on your computer bitcoin wallet and transfer your bitcoins to your computer.

Spend them. There are thousands, every day, in places that accept Bitcoin as payment.

Bitcoin risks

Do not invest anything in bitcoin you can not afford to lose. Investing in bitcoin or any other currency is not without risk, for example, any of the following cases could happen with bitcoin:

  • Another cryptographic currency could overcome bitcoin. Several already have tried and failed.

  • A weakness in the encryption could be discovered. This is the same encryption used in online banking.

  • As banking systems, if a fault is found in a given algorithm, the bitcoin client can be upgraded to use different encryption algorithms.

  • Governments could try to prohibit or regulate bitcoin. This would be similar to the government banning the internet because of illegal use. The ban on internet is unlikely since the government would put people at a disadvantage and strategic communications. The prohibition of bitcoin is equally unlikely, and would put the government and its people in a strategic economic disadvantage.

  • Irreparable defect could be discovered in the bitcoin protocol. People have been trying to find a flaw since its invention.

Do you have more questions? Write to hola@bitex.la

Bitex

Bitex provee servicios financieros sobre la red Bitcoin. Realiza pagos y cobros globales usando Concierge, opera Bitcoin en nuestro exchange, haz compras OTC o acepta pagos en Bitcoin en tu negocio.

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