Bitcoin FAQ

Mon Apr 02 16:03:25 CST 2018

Find answers to common Bitcoin related issues and bugs. Catalog Overview What is Bitcoin? Who created Bitcoin? Who controls the Bitcoin network? How does Bitcoin work? Is anyone really using Bitcoin? How to get Bitcoin? How hard is it to pay with Bitcoin? What are the advantages of Bitcoin? What are the disadvantages of Bitcoin? Why do people believe in Bitcoin? Can I make money with Bitcoin? Is Bitcoin completely virtual and immaterial? Is Bitcoin anonymous? What happens when Bitcoin is lost? Can Bitcoin expand its scale to become a major payment network? Is legal bitcoin legal? Is bitcoin useful for illegal activities? Can Bitcoin be supervised? What is the relationship between Bitcoin and tax? How does bitcoin and consumer protection economy Bitcoin come about? Why is Bitcoin valuable? What determines the price of Bitcoin? Bitcoin will become worthless? Is bitcoin a bubble? Is bitcoin a Ponzi scheme? Will Bitcoin not benefit early adopters more? Is there no limit to the limited amount of Bitcoin? Bitcoin won't fall into a spiral of deflation? Will speculation and price fluctuations be a problem for Bitcoin? What if someone bought all the existing Bitcoins? What if someone creates a better digital currency? Why do I have to wait 10 minutes for the transaction? What is the transaction fee? What happens if my computer receives Bitcoin when it shuts down? What does "synchronous" mean? Why does it take a long time to synchronize? Mining what is bitcoin mining? What is the principle of bitcoin mining? Is mining not an energy waste? How to help protect Bitcoin's security through mining? What do I need before I start mining? Is security bitcoin safe? Has Bitcoin been hacked in the past? Can users join together to attack Bitcoin? Is quantum computing a threat to Bitcoin? Help me want to know more. Where can I get help? Overview What is Bitcoin? Bitcoin is a consensus network that has resulted in a completely new payment system and a fully digital currency. It is the first decentralized peer-to-peer payment network that is controlled by its users without the need for a central management agency or middleman. From the user's point of view, Bitcoin is much like Internet cash. Bitcoin can also be seen as the most outstanding three-style bookkeeping system. Who created Bitcoin? Bitcoin is the first currency to implement the concept of "hidden currency." In 1998, Wei Dai first described the concept of “hidden currency” in the cypherpunks mailing list, namely: a cryptographic principle that controls the issuance and trading of currencies, rather than relying on a new currency form of the central authority. In 2009, Satoshi Nakamoto’s pseudonym published the first Bitcoin specification and proof of concept in the cryptography mailing list. At the end of 2010, Nakamoto left the project and did not disclose too much about his identity. Since then, many developers have been working on Bitcoin projects and the Bitcoin community has grown rapidly.

Nakamoto's anonymity often causes unfounded concerns, many of which are related to the misunderstanding of the open source features of Bitcoin. Bitcoin's protocols and software are publicly available, and any developer around the world can view their code or develop their own modified bitcoin software version. Just like current developers, Nakamoto's influence was limited to those changes he made that were adopted by others. Therefore, Satoshi Nakamoto did not control Bitcoin. Well, today, the issue of the identity of the inventor of Bitcoin may be the same as the identity of the paper inventor. Who controls the Bitcoin network? No one owns the bitcoin network, just as nobody has the technology behind email. Bitcoin is controlled by all Bitcoin users around the world. Developers can improve the software, but they cannot force changes to the rules of the Bitcoin protocol because all users are free to choose the software they want. In order to maintain compatibility with each other, all users also need to select software that follows the same rules. Only when all users reach a complete consensus, Bitcoin can work properly. Therefore, all users and developers are very motivated to accept and protect this consensus. How does Bitcoin work? From the user's point of view, Bitcoin is a mobile application or computer program that can provide a personal Bitcoin wallet that users can use to pay for and receive bitcoins. This is how Bitcoin works for most users.

Behind the scenes, the entire bitcoin network shares a common ledger called a "block chain." This ledger contains every transaction processed so that the user's computer can verify the validity of each transaction. The authenticity of each transaction is protected by the electronic signature corresponding to the sending address, which allows the user to fully control the bitcoins transferred from their own Bitcoin addresses. In addition, anyone can use the computing power of specialized hardware to process transactions and receive Bitcoin rewards for this purpose. This service is often referred to as "mine mining." You can read more about bitcoin by reading the dedicated pages and original papers. Is anyone really using Bitcoin? Yes, more and more companies and individuals are using Bitcoin. This includes traditional businesses like restaurants, apartments and law firms, as well as popular online services like Namecheap, WordPress, Reddit and Flattr. Although bitcoin is still a relatively new phenomenon, it is growing rapidly. At the end of August 2013, the total value of Bitcoin in circulation exceeded 1.5 billion U.S. dollars. Bitcoin worth millions of U.S. dollars is being exchanged every day.

How to get Bitcoin? As a payment method for goods or services. Buy Bitcoins at a Bitcoin exchange. Exchange Bitcoins with people near you. Earn Bitcoin through competitive mining. Although some people may be willing to allow the other party to purchase their own Bitcoin by means of credit card or PayPal payment, most trading platforms do not accept funds from these payment methods. This is to prevent someone from using PayPal to buy Bitcoin under certain circumstances and then withdraw it halfway through the transaction. This is often referred to as a refund. How hard is it to pay with Bitcoin? Bitcoin payments are easier than shopping on a debit or credit card and you can receive Bitcoin payments without a merchant account. In the wallet application on your computer or smart phone, enter the recipient's Bitcoin address and payment amount and press the send key to complete the payment. In order to more easily enter the address of the payee, many wallets can obtain addresses through two-dimensional code scanning or NFC technology touching two mobile phones.

What are the advantages of Bitcoin? Freedom to pay - Any amount of money can be paid and received instantly and at any time. No bank holidays, no borders, no restrictions imposed. Bitcoin allows its users full control of their funds. Very low fees - Current processing of Bitcoin payments does not charge fees or only a small fee. The user can include the handling fee in the transaction to obtain the processing priority and receive the transaction confirmation sent by the network faster. In addition, there are merchant processors that assist merchants in processing transactions, converting bitcoins into legal tenders every day and depositing funds directly into the merchant's bank account. Because these services are based on Bitcoin, they can provide much lower fees than PayPal or credit card networks. Reduce the risk of merchants - Bitcoin transactions are secure, irrevocable, and do not include customer's sensitive or personal information. This avoids the loss to merchants due to fraudulent or fraudulent claims, and it is not necessary to comply with the PCI standard. In places where credit cards cannot be used or fraud rates are unacceptably high, businesses can easily expand new markets. The end result is lower costs, larger markets, and less administrative costs. Security and Control - Bitcoin users have complete control over their own transactions; merchants may not be forced to charge fees that may or may not be found in other payment methods. Payments in bitcoin can eliminate the need to bind personal information in transactions, which provides a great deal of protection against identity theft. Bitcoin users can also protect their own funds through backup and encryption. Transparency and Neutrality - All information about Bitcoin's funding supply itself is stored in a chain of blocks that anyone can examine and use in real time. No individual or organization can control or manipulate the Bitcoin protocol because it is password protected. This makes Bitcoin Core believe it is completely neutral, transparent and predictable. What are the disadvantages of Bitcoin? Acceptability - There are still many people who don't know Bitcoin. Every day more companies accept Bitcoin because they want to benefit from it, but the list is still small. To benefit from the network effect, more companies are still required to support Bitcoin. Volatility - The total value of Bitcoin in circulation and the number of companies using Bitcoin are still very small compared to their likely size. Therefore, relatively small events, transactions or business activities can significantly affect their prices. In theory, as bitcoin markets and technologies mature, such fluctuations will decrease. The world has never seen any new currency before, so it is very difficult (and exciting) to imagine how it will progress. In the development phase - Bitcoin software is still in beta, and many of the unfinished features are in active development. New tools, features and services are being developed to make Bitcoin safer and more widely used. Some of these features are not currently available to every user. Most Bitcoin businesses are new and do not provide insurance. Overall, Bitcoin is still in the process of maturing. Why do people believe in Bitcoin? Most of the trust in Bitcoin comes from the fact that it does not need any trust at all. Bitcoin is completely open source and decentralized, which means that anyone can view the entire source code at any time. So any developer in the world can accurately verify how bitcoin works. Anyone can query all existing Bitcoin transactions and issued Bitcoins at a glance in real time. All payments are independent of third parties and the entire system is protected by cryptographic algorithms reviewed by a large number of experts, such as those used for online banking. No organization or individual can control Bitcoin, and even if not all users are trustworthy, the Bitcoin network is still secure. Can I make money with Bitcoin? You should never expect to become rich through Bitcoin or any emerging technology. It is always important to be vigilant about anything that sounds incredibly good or that violates basic economic laws.

Bitcoin is a growing field of innovation. There are opportunities here as well as risks. Even though Bitcoin has been developing at a rapid pace so far, nobody can guarantee that it will continue to grow. Any investment in Bitcoin's time and resources requires entrepreneurship. There are many ways to make money with Bitcoin, such as mining, speculating or running new business. All of these methods are very competitive and there is no profit guarantee. Everyone should make their own assessment of the costs and risks involved in any such project. Is Bitcoin completely virtual and immaterial? Bitcoin and people's daily use of credit cards are as virtual as online banking networks. Bitcoin, like any other currency, can be used to pay online or in physical stores. Bitcoin can also be converted into real money such as Casascius, but mobile payment is usually more convenient. Bitcoin balances are stored in a large distributed network and cannot be maliciously modified by anyone. In other words, Bitcoin users have the sole control over their funds, and Bitcoin will not disappear because of its virtual nature. Is Bitcoin anonymous? Like any other currency, Bitcoin is designed to allow its users to pay and receive payments at an acceptable level of privacy. But Bitcoin is not anonymous, so it cannot provide the same level of privacy as cash. Using Bitcoin leaves many public records. There are several mechanisms that can be used to protect user privacy, and more are under development. However, before most of the Bitcoin users use these functions correctly, there is still time to invest.

Some people worry that Bitcoin's private transactions can be used for illegal purposes. It is worth mentioning that Bitcoin will no doubt be subject to similar regulations that have already played a role in the existing financial system. Bitcoin will not be more anonymous than cash, and it is unlikely to prevent crime investigations from proceeding. In addition, Bitcoin is designed to prevent large-scale financial crimes. What happens when Bitcoin is lost? When a user loses his wallet, the consequence is that the money is withdrawn from circulation. Lost Bitcoin still exists in the blockchain like other Bitcoins. But lost Bitcoins will always be dormant because no one can find the private key that can use them again. According to the law of supply and demand, when the available Bitcoin becomes less, the remaining Bitcoin will have a higher demand, and its value will rise as compensation. Can Bitcoin expand its scale to become a major payment network? The Bitcoin network has been able to handle a much larger number of transactions per second than the current throughput. However, it has not yet fully matured to the extent that it can scale to major credit card networks. The work to increase the current limit is in progress and the future needs are very clear. From the outset, every aspect of the Bitcoin network has been maturing, optimized, and specialized. This process will continue in the next few years. As traffic increases, more Bitcoin users may use lightweight clients, while full network nodes may become more specialized services. For more details, please check the wiki page Extensibility. Is legal bitcoin legal? As far as we know, bitcoin is not defined by the legislature as illegal currency in most jurisdictions. However, some administrative jurisdictions (such as Argentina and Russia) strictly limit or prohibit foreign currencies. Other jurisdictions (such as Thailand) may restrict the licensing of certain entities, such as Bitcoin trading platforms.

Regulators from different jurisdictions are taking steps to provide individuals and businesses with rules on how to combine this new technology with a formal, regulated financial system. For example, the US Department of the Treasury’s Financial Crime Enforcement Network (FinCEN) issued non-binding guidance on how to describe certain activities involving virtual currency. Is bitcoin useful for illegal activities? Bitcoin is a currency, and the use of money has always been a legitimate and illegal purpose. In the extent of being used by financial crimes, cash, credit cards and the current banking system are far better than Bitcoin. Bitcoin can bring about major innovations in the payment system, and the benefits of these innovations are considered to far exceed their potential drawbacks.

The design of Bitcoin is a huge step forward in improving currency security, and it is also an important protection mechanism against many forms of financial crime. For example, bitcoin can't be faked at all. Users fully control their payment transactions and do not receive unverified fees as credit card fraud. Bitcoin transactions are irrevocable and avoid fraudulent chargebacks. Through very powerful and useful mechanisms such as backup, encryption and multiple signatures, Bitcoin can protect funds from being stolen and lost.

Some people worry that bitcoin may be more attractive to criminals because it can be used for private and irrevocable payments. However, these features already exist in perfected widely used cash and