Cryptocurrency: Understanding Bitcoins
BY READERS DIGEST
10th Aug 2020 Down to Business
Bitcoin has brought a revolutionary change in the use of currency. As a substitute for physical currency, it was formulated in 2008. It is a cryptocurrency which exists online and is not issued or printed by the government and traditional banks which states that it is not a legal tender. Trading of bitcoins can be done under a Cryptocurrency exchange or a digital currency exchange (DCE). Bitcoins can be utilized to shop online, book hotels, make international payments etc. But most of the people use bitcoins to do online trading to earn a considerable amount. Bitcoins can be sent the same as a digital currency via mobile phones and laptops.
Mining
Cryptography technique is used by the network nodes to verify bitcoins transactions which are recorded in the public database called blockchain, and recording the transactions in the bitcoin distributed ledger is called bitcoin mining.
Buying Process for Bitcoins
At first, it is to be cleared that bitcoin is legal in your country or not. Some states have legalized the bitcoin, but some have restricted the use of it in the country. After assuring that cryptocurrency is legal under your country law then you have to understand the taxation process regarding the bitcoins, one may have to pay tax on every bitcoin transactions. Requirements regarding purchase are given below.
- Wallet
Bitcoins are deposited in "digital wallet". Digital wallet is like an application which can be installed in user mobile or computer and the cloud. This digital wallet act as a digital bank through which users can do various transactions like buying good, receive and send cryptocurrency. There is no insurance policy applicable on bitcoin wallets like other bank accounts. To purchase bitcoins, one must have a login to the digital wallet, which provides you with unique private key and ID, which is used to do various transactions.
- Documents
One has to verify their original documents under a policy of Anti-Money Laundering for the trading of bitcoins. Documents like driving license have to be verified first.
- Highly secure internet service.
While you are going to sale and purchase of bitcoin through your digital wallet, it must be used with a secured internet connection. Trading of bitcoins on an open network is full of risk and can be attacked by hackers.
- Availability of debit and credit card.
After getting a secure login of a digital wallet, a payment for buying bitcoins can be made through bank transfers or by debit or credit card on a bitcoin exchange. After completing the payment process through your card bitcoins will be transferred to your digital wallet.
- Bitcoin exchange
Bitcoins are available on the digital marketplace called “exchanges”. This exchange is equivalent to other platforms where trader buys shares and stock. You can buy bitcoins and other currency at this exchange. This bitcoin exchange works in the same manner as "forex" do. Coinbase, Coinmama, Gemini, CEX.IO are some of the names of bitcoin exchange place. This exchange links you directly to the cryptocurrency marketplace where you can buy bitcoins with a traditional currency like dollars. If you are interested in bitcoin trading, you can find all details here at trustpedia.io
The beneficial point regarding bitcoins
- Easy payments
There is no payment issue while transferring or receiving bitcoins like traditional currency because there no middleman like a bank in it. Bitcoins can be used for various payment at any-time any-where in this world.
- No security issue
All transactions are under the control of the users. No personal information is shared while doing a bitcoin transaction, which makes the security of bitcoins more beneficial.
- Clarity
All transaction done for bitcoin is visible to everyone, but personal information is always encrypted, only your wallet id is visible. The bitcoin transaction system cannot be interfered by any other because it secured cryptographically.
- Charges
Minimal charges have to be paid by the user to get your bitcoin converted into legal currency at a bitcoin exchange.
- Low rate of threat for traders.
As a bitcoin transaction are highly secures and doesn’t contain any personal details, it cannot be reversed. Thus, making it safer for traders with a low rate of fraud.
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