BitCoin a decentralized digital currency for anonymous payments

Bitcoin is a virtual peer to peer currency that can be sent to anyone with a Bitcoin wallet address, it has no central authority to issue new money or keep track of transactions, these tasks are managed collectively by the nodes of the network, Bitcoin utilizes cryptographic digital signatures during mining and they can not be tampered with.

Bitcoins can be sent to anyone without using a middleman and its transactions are designed to be irreversible, Bitcoin inflation system’s money supply is distributed evenly (by CPU power) throughout the network, not monopolized by banks.

Bitcoins are entering circulation gradually, at a steady pace over many years, to nodes supporting the network in proportion to the CPU time they contribute. The total eventual circulation will be 21 million Bitcoins, there will never be more coins than that, Bitcoins can be sent to anyone with a Bitcoin address.

Note that having a powerful CPU would not make you wealthier as more coin creation will drive the price of electricity needed for generating a coin up, hence making it more profitable to buy Bitcoins directly from the market.

How do you get Bitcoins?

Generate Bitcoins running a Bitcoin network node: You will need to download open source Bitcoin software and contribute your idle CPU time to the network, Bitcoin runs in the background when your computer is idle.

Sell goods or services online: Ask to be paid with Bitcoins for your services, you can then in turn use those Bitcoins to anonymously buy other goods yourself.

Use a Bitcoin currency trader: Buy (or sell) Bitcoins using real cash, some virtual currency traders will accept cash in the post and others allow you to buy Bitcoins in person for cash in hand at a face to face meeting, assuming a Bitcoin trader lives near you, you can also buy Bitcoins online.

What can you buy with Bitcoins?

Read BitCoin trade market and BitCoin forums to get an idea of what is for sale, any company is free to accept BitCoins as a payment. There are VPN services like MullVad accepting Bitcoin payments and other companies selling freelance services, adult and hosting or gadgets.

Bitcoin escapes Government and corporations control

While the FBI has managed to raid in the past non Governmental controlled digital currency like Liberty Dollars (fraud charges) and E-gold (money laundering charges), Bitcoin is a peer to peer currency with no central authority to go to, that scenario is now out of the game.

Visa and Paypal routinely invade people’s privacy asking them to show an ID, charge exorbitant middle man fees and refuse to act as a payment processor for business they do not agree with, another form of censorship.

With Bitcoin it does not matter what product or service you are selling or buying, you do not need to worry about a prejudiced payment processing company being able to decline a financial transaction, anything can be bought and sold with Bitcoins, decentralization and anonymity are part of Bitcoin.

Bitcoin is an ideal currency to be used for companies that can not find a payment processor and customers who want to remain anonymous while making a purchase, on top of that everyone saves middle man commission fees.

Bitcoin transactions software
Bitcoin transactions software

Avoid Bitcoin scammers

Remember that Bitcoin money transfers can not be reversed, once you send your Bitcoins that is it, to avoid scams refrain from sending Bitcoins to a third party that you are not sure of they will get back to you, whether it is a loan, providing the product or services they promise.

Treat Bitcoin transactions just as if you give cash to someone, they can run away with it not giving you any goods or service in exchange, ie fraud. You can use a escrow Bitcoin service like Clearcoin if you do not trust the dealer.

You must make sure that your Bitcoin wallet has been backed up and remains encrypted protected with a strong passphrase that nobody else knows.

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One thought on “BitCoin a decentralized digital currency for anonymous payments”

  1. Neat. I’m scratching the surface here, but won’t this be an insecure system?

    In Sweden, at least, the government are controlling the banks with an iron fist, making sure nothing bad happens. Sure, accounts may be frozen, but you have government-controlled security and redundancy.

    BitCoins are created by using CPU-power? And are digitally signed? No encryption/signature is secure enough to protect large amounts of money. Also, if we have no central node, how can a user trust the signature?

    As said, I’m just digging into the subject (which is very interesting!), but right now I can’t understand how this can be a secure way of handling funds.

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