Bitcoin Basics: Bitcoin, Blockchain and Beyond
Published in: Education
Transcript
- 1. education Bitcoin Basics Bitcoin, Blockchain and Beyond education
- 2. What is Bitcoin? An Introduction to Digital Currencies
- 3. education Bitcoin Basics3 What is Digital Currency? Digital currencies are decentralized mediums of exchange that are created and stored in a digital format. This is in contrast to fiat currencies which exist in physical form as paper dollars or metal coins and are issued by governments. What is Bitcoin?
- 4. education Bitcoin Basics4 Digital Currency Origins Digital currency is gaining widespread recognition as Bitcoin becomes more popular and widely accepted. However, the idea of digital monetary systems dates back to the early 1990s when several companies and programmers tried their hand at creating money meant to be exchanged virtually. Many of these early currencies struggled to find their footing due to insufficient technology, poor security features, lack of adoption and a slew of other issues. The cryptocurrency segment of the digital currency universe was created in 2009 with the invention of Bitcoin. Though you may have only heard of Bitcoin, in reality there are hundreds of digital currencies available around the globe. These currencies differ based on the type of algorithms used, number of coins that can be issued, network safety and anonymity and the overall acceptance and size of each currency system. What is Bitcoin?
- 5. Why Bitcoin? Examining Bitcoin’s Strengths
- 6. education Bitcoin Basics6 Bitcoin Strengths Stability Through Decentralization The decentralized nature of Bitcoins eliminates the prospect of government control or ownership. Further, only a finite amount of bitcoin (21 million) is available. Thus, no governing body or entity can artificially manipulate bitcoin value through an in- crease or decrease in currency production or oth- er means. This leaves bitcoin value largely to the laws of natural supply and demand economics. Transparency The blockchain is a permanent public record of all confirmed transactions that occur in the system and an integral part of the Bitcoin ecosystem. The blockchain helps promote order and transparency while prevent counterfeiting. Why Bitcoin?
- 7. education Bitcoin Basics7 Bitcoin Strengths Faster, Cheaper Payment Solution Digital payments to individuals and merchants can occur at anytime and are processed faster with lower fees. This is due in large part to removing banks from the transaction processing equation. These benefits extend to payments ranging from basic P2P transfers to remittances. Remittances are instantaneous and inexpensive, coming in at under 1% cost of transactions. With regards to cross-border business, FX fees are eliminated. Privacy Although all Bitcoin transaction details are stored publicly, the identities of the users involved remain relatively anonymous. It doesn’t offer the complete anonymity of cash, but certainly a far more private experience than making online payments or trans- actions using debit or credit cards. Why Bitcoin?
- 8. Bitcoin Basics Obtaining, Storing and Using Bitcoins
- 9. education Bitcoin Basics9 How Do I Obtain Bitcoins? There are four common ways bitcoins are obtained, ranging from simple transactions to complex mining methods. Bitcoin Basics
- 10. education Bitcoin Basics10 Transactions Like any currency, Bitcoin can be obtained in exchange for goods and services rendered. Bitcoin ATMs Bitcoin ATMs are an increasingly popular solution for buying the digital currency because of their convenience and simplicity. Making a transaction at a bitcoin ATM is pretty straightforward. ATM us- ers first verify their bitcoin wallet by scanning a QR code on their smartphone. They then insert cash into the ATM and submit to complete the transac- tion. The appropriate amount of bitcoins are then transferred to their wallet based on the current ex- change rate. Digital Currency Exchanges Digital currency exchanges operate similarly to fiat currency exchanges, allowing investors to buy and sell Bitcoin at the current market rates. Bitcoins can be purchased using a variety of fiat currencies including the Euro, U.S. Dollar and many others. Mining Miners are the backbone of the Bitcoin ecosystem, providing services that help secure the network and keep it running smoothly (ex. Processing and facilitating transactions). Miners are rewarded for their services with Bitcoin payments. Mining is a competitive process that re- quires specialized software and the ability to solve complex mathematical algorithms. Bitcoin Basics Four Ways to Obtain Bitcoins
- 11. education Bitcoin Basics11 How Do I Store My Bitcoins? What is a Bitcoin Wallet? Selecting a wallet is a necessary step in owning and using bitcoins. Wallets are where your bitcoins are virtually stored and what you use to facilitate payments and transactions. Bitcoin Basics
- 12. education Bitcoin Basics12 Hot vs. Cold Wallets Bitcoin Basics Hot Wallets • Connected to the internet • Allow for instantaneous transfer of funds • Greater ease of use but more vulnerable to hacking Cold Wallets • Offline wallets that live on user’s computer • More secure, but payment process is more cumbersome
- 13. education Bitcoin Basics13 How Do I Keep My Bitcoins Safe? Bitcoin Basics Backup Wallet Backup your wallet to your computer, external hard drive and/or the cloud. Encrypt Data Encrypt your data to add an extra layer of protection. Cold Storage Storing some or all of your wallet data offline ensures a greater level of security. Update Software Be diligent about updating your wallet software. Make sure you are always using the latest version of your wallet.
- 14. education Bitcoin Basics14 How Do I Use My Bitcoins? Purchases A growing number of merchants, large and small, are accepting bitcoin as a form of payment. Go buy yourself something nice! P2P Payments Take advantage of bitcoins’ faster transfer times, lower fees and absence of trans- action limits next time you make a payment. For micro-payments, the ability to use fractions of cents offers greater flexibility. Investing Bitcoins are frequently traded on digital currency exchanges. Charitable Giving Bitcoins offer a faster and safer way to give to charities in the developing world and countries marred by social and political unrest. Bitcoin Basics OPEN
- 15. Introducing the Blockchain Reshaping the Financial Industry and Beyond
- 16. education Bitcoin Basics16 What is the Blockchain? Blockchain technology is arguably the greatest triumph of the Bitcoin system. The blockchain is a constantly updated public ledger of all transactions that have occurred. It provides transparency across the Bitcoin system, allowing transactions to be processed in a decentralized, trustless manner. Introducing the Blockchain
- 17. education Bitcoin Basics17 Blockchain Primer Why is it Important? Validation Transparency of public ledger serves to self-verify and record transactions between payment sender and recipient. Mining Miners confirm validity of blocks of transactions and add new transactions to the blockchain. Security Eliminates double-spending of bitcoins by ensuring codes used to identify each coin are unique and rejecting attempted payments if the coins have been previously spent. Empowering Users Eliminating traditional intermediaries for transaction validation and facilitation (ie. banks) creates new possibilities that extend beyond bitcoins. Introducing the Blockchain
- 18. education Bitcoin Basics18 Future Uses Beyond Bitcoin Smart Contracts Contracts, which once set up, are self- enforcing and self-executing. Eliminates the need for a third-party to judge the situation and execute the outcome. Issuance of Securities Issuing coins or tokens that represent claims on company ownership, future profits, merchandise, etc. These can be traded in a peer-to-peer manner with ledger-tracked ownership via blockchain technology. Introducing the Blockchain
- 19. Looking Ahead Future Outlook for Bitcoin and Digital Currencies
- 20. education Bitcoin Basics20 Future Outlook Mainstream Acceptance • Technological advancements and innovations are empowering individuals. • Bitcoin’s core fundamentals are in-line with global social, political and tech- nological trends favoring decentralization. • The spread of Bitcoin exchanges and ATMs, coupled with increasing mer- chant acceptance, makes it easier than ever to obtain and use bitcoins. Looking Ahead
- 21. education Bitcoin Basics21 Future Outlook Regulations and Legislation • Regulatory climate varies sharply from country to country. • Governments still determining where dig- ital currencies fit in the currency system. Consumers and institutions are waiting for resolutions. Developing World • Decentralized nature of bitcoin can promote socio-economic progress and security to under-banked nations with unstable fiat currencies. • Reduction in remittance fees would be a game-changer in emerging nations. Looking Ahead
- 22. About itBit is a global exchange offering institutional and retail investors a powerful platform to buy and sell bitcoin. Built by Wall Street professionals, itBit is institutional-grade and 100% compliant within every jurisdiction it operates. The company’s stringent compliance program ensures the highest level of customer security and protection. Co-founded in 2012 by CEO Charles Cascarilla, itBit has offices in two key financial markets, New York and Singapore, which enables the exchange to serve global customers around the clock. • Fully compliant in all countries we operate • Best-in-class AML/KYC program Regulatory Compliance Bank-Level Security Global Presence Financial Expertise • Around the clock customer support • Multiple bank accounts worldwide 100% of customer bitcoins stored in offline cold wallets itBit’s team has diverse market expertise across digital currency and financial industries
- 23. Connect with itBitStart trading today Open New Account Learn More about itBit Legal Disclaimers: The information contained in this itBit Welcome Guide (this “Welcome Guide”) provides only a general overview of itBit Pte. Ltd. (“itBit”). Accordingly, while itBit makes every attempt to ensure that the information contained in this Welcome Guide is true and accurate when made, itBit is not responsible for any errors or omissions, or for the results obtained from the use of the information contained herein. All information in this Welcome Guide is provided “as is,” with no guarantee of completeness, accuracy, and timeliness or of the results obtained from the use of this information. In no event will itBit, its related entities, or the owners, agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information contained in this Welcome Guide or for any consequential, special or similar damages, even if advised of the possibility of such damages. In no event shall the information contained in this Welcome Guide be construed as the rendering by itBit, its related entities, or the owners, agents or employees thereof of professional advice or services. As such, the information provided in this Welcome Guide should not be used as a substitute for consultation with professional advisors. Before making any decision or taking any action regarding trading, you should always consult with a licensed financial advisor and tax advisor to determine the suitability of any investment. Bitcoin trading involves a high degree of risk. The Bitcoin market is new and unproven and may not grow. Currently, there is relatively small use of Bitcoin in the retail and commercial marketplace in comparison to relatively large use by speculators, thus contributing to price volatility that could adversely affect an investment in Bitcoin. It should not be assumed that trading Bitcoin will be profitable or that it will not result in losses. In order to participate in the trading of Bitcoin, you should be capable of evaluating the merits and risks of the investment and you should be able to bear the economic risk of losing your entire investment. No material contained in this Welcome Guide should be considered as an offer by itBit to sell or a solicitation by itBit of any offer to buy Bitcoin.