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7 Questions to get you started with Bitcoin

November 10, 2017 10:00 am Published by

From the outset, Bitcoin may seem like a tricky subject to wrap your head around. But honestly, it’s a lot more simple than it seems. Before you dive right into it, it’s best to familiarise yourself with these 7 questions – at least for the sake of keeping up with the Joneses.

1. What is Bitcoin?

Digital money. That was easy.

Well, it has a few other bells and whistles as well, but we will get into that later. We’ve covered it in more detail in our free Bitcoin Confidence Report. 

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2. How is it different/better than traditional money?

Well, it has faster transaction times, saves on international transfer fees and has a cap of 21 million coins. This cap means it’s guarded against inflation and deflation. Unlike traditional money, you can’t just print more bitcoins.

3. But is it safe?

Bitcoin is built for maximum safety. It uses a new technology called the blockchain to verify transactions. It works like a global ledger, distributed to every user. This ledger synchronizes across the whole network, and every version of the ledger must be the same to verify a transaction. This makes fraudulent or duplicate transactions impossible.

Furthermore, for a hack of the system to occur, one person would have to own 51% of the network. There are 1000’s of independent miners running nodes, making a hack logistically impossible.

Of course, securing your own Bitcoin stash is necessary. We have detailed guides on how to secure your Bitcoin.

4. What can I do with it?

You can buy it, sell it and spend it. more and more places are accepting Bitcoin as payment. If you get yourself a Wirex card, you can transfer your Bitcoin into whatever currency (pounds, dollars, euros) you need when making a payment. The Wirex card can then be used anywhere Visa is accepted (both online and offline); you can even withdraw cash from ATM machines.

5. Is now the right time to buy?

Many people think that because of its recent meteoric rise, they have missed the Bitcoin boat. But this isn’t necessarily true. People were saying the same in 2011 when Bitcoin rose from around $1.00  per bitcoin in February to $31 in July. That certainly was a huge price rise.

[edited] But fast forward to now, with Bitcoin recently breaking the $10,000 mark, (and now aiming for the $20,000) and not many ever predicted that happening. Perhaps now is as good a time as ever, in my opinion. 

For more detailed analysis on timing your buy, check out our post on buying bitcoin when the price drops.

6. How much could Bitcoin be worth?

The value of bitcoin is based on the law of economics: Supply & demand. Unlike gold, we know exactly how much supply of bitcoin there is. As the growing demand for bitcoin rises, so will it’s expected value.

In truth, no one really knows. A lot of the finance industry still refuse to even consider it as a form of payment. You may have seen the comments from JP Morgan’s Jamie Dimon, calling it a ‘novelty’ and claiming it’s ‘worth nothing’. (Take a look at the price charts and have another think about that one hey Jamie?).

Anyway, there are some Bitcoin ‘experts’ forecasting a rise to up to $100,000 in the not so distant future. It is still early days. The vast majority of the world haven’t even accepted it as a valid payment form and it’s already worth 5 times the amount gold is.

Like any investment, Bitcoin could of course crash completely and fade out of existence. But on the other hand, the sky’s the limit for Bitcoin. The world is beginning to come to terms with it, and the more people that adopt it, the more its price will rise.

7. So how do I get started?

Well to hold any Bitcoin that you buy, you’re going to need a Bitcoin wallet. You want to make sure it is easy to use and most importantly secure. There are plenty of options out there, but we’ve made it simple to get started. With a Wirex account, you’ll be able to buy, store, exchange, and spend bitcoin safely, instantly, and securely. All you need is to download the Wirex app and register. Here’s a guide to help walk you through it.

Have any other questions you need answering? Head down to the comments section below!

Notable Replies

  • TuxSax

    Nice read.
    One thing I don’t understand is, if inflation can’t happen because the quantity is known up front, then the opposite will happen, we already see that the price being so high (the article claims it’s just the beginning) how can it be possibly become a daily use currency?
    Let’s assume it will reach the $100K or even the $1M as some predict, how the heck am I gonna pay with it for a bubble gum at the kiosk? It’s very unmanageable to deal with numbers such as ฿0.00000000000000213.
    The higher the demand and price in bitcoin, the larger the fraction that will occur.
    That’s why I don’t believe it will become a normal currency you pay with at grocery store, unless they find that problem a good solution.
    Just my opinion.
    Cheers!
    Ziv

  • Daniel_Keen

    Its pretty likely that to make it easier, we will start calling fractions of bitcoin something else. for example, one-hundred-millionth of a bitcoin is called a ‘satoshi’ - so we could deal in satoshis instead, and pay for a coffee with 100 satoshis or however much it is worth.

  • TuxSax

    Something like that will have to happen, to makes things simpler…
    Let’s hope that there will be only a few crypto currencies that will become the official and well accepted, because dealing with thousand different coins will also complicate things up…

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