The largest F.A.Q. on bitcoin
There have always been a lot of questions around Bitcoin. We decided to collect 50 answers to them, to dispel all myths once and for all.
Who created the prime cryptocurrency
Bitcoin was created in 2009 by the developer or group of individuals under the pseudonym Satoshi Nakamoto, whose identity has not yet been disclosed. Bitcoin is a digital payment system where the
blockchain technology was first implemented. Is bitcoin legal
In soe countries, bitcoin is legal; in others, there is either no regulation or it is prohibited. The United States and Canada legalised Bitcoin, in Venezuela, cryptocurrencies are banned, and
mining is subject to criminal penalties. Russia has not yet adopted a law on digital assets due to the fall in their popularity, but might resume its consideration. Is it true that bitcoin is often used on darknet or for "grey" payments?
Not really. Yes, fraudsters, guns and drug dealers, and offshore tax evaders often use cryptocurrencies. Since their appearance, cryptocurrencies have become the main payment tool in the darknet, but there are more anonymous cryptocurrencies than bitcoin. For example, ZCash, Monero and
Dash. How to register on the Bitcoin network
To do this, you need to download and install the desktop version of the client, for example, Bitcoin Core - the main wallet on the Bitcoin network, or register in an online wallet, for example, Blockchain.com or Bitcoin.com. There are “cold” and “hot” (online) wallets. Storage on “cold” wallets does not require an internet connection, so they are more reliable. A complete list of wallets can be found in this section.
How many bitcoins exist at the moment
According to CoinMarketCap, there were issued 17,781,637 BTC out of 21 million possible. Chainalysis estimates that over 2.78 million coins have been lost, so the real figure may be about 15 million.
How many people and businesses use the prime cryptocurrency
According to a Cambridge University study, the number of active wallets has exceeded 11.5 million since 2017. Only on the Coinbase
exchange, one of the largest in the world, the number of users has exceeded 13 million. The cryptocurrency is actively being introduced into the business. In addition to cryptocurrency exchanges and services, several dozen large companies use Bitcoin as a means of payment, including Microsoft, PayPal and Overstock. What is the difference between Bitcoin-Qt and Bitcoin Core
Bitcoin-Qt is the earlier name of a Bitcoin Core client that uses the Qt GUI. Hence the original name.
Who owns the majority of bitcoins
The analytical website Bitinfocharts.com has registered 118 wallets, which store more than 10,000 bitcoins. Most of the bitcoins belong to the cryptocurrency exchanges Huobi, Bittrex, Bitstamp and Binance. Huobi leads the list - it owns 151,000 BTC, which is about $ 2 billion at the current rate.
Is it safe to invest in bitcoins?
Investing involves high risks. The more profitable the asset is potentially, the higher the risk of losing all the money. Since the creation of Bitcoin ROI has exceeded 9000%. There are cryptocurrencies that have grown even stronger, which makes them the most risky asset.
Is it possible to track transfers in the bitcoin network
Yes. Blockchain is completely transparent and allows you to track the entire chain of transactions from start to finish. Knowing the public address of the wallet, you can view all incoming and outgoing transactions, and then track the transactions of those purses using the blockchain explorer.
How can I crack Bitcoin
To hack into the system, it is necessary to conduct an “51% Attack”. In order to do this, one centre must have a processing power exceeding the total power of the other miners. Then cybercriminals can spoof transactions and get access to all bitcoins.
Only large mining pools that have enough money to buy equipment can do this. At the same time, the attack is not financially advantageous, since the income from mining will exceed the income from the attack, and if you seize the cryptocurrency, its exchange rate will collapse.
Is Bitcoin subject to taxation?
Bitcoin transfers and exchanges are not taxed unless the investor made a profit from the exchange. Citizens are obliged to pay income tax in any case. Assets that have been invested for more than three years are not taxable.
Can hackers steal bitcoins from your computer
That could be done if the attacker takes possession of the wallet.dat file of your wallet and can pick up a password for it with the brute force method or a seed phrase, which is almost impossible if you use a complex password.
How to protect your bitcoin wallet from theft
If you plan to hold a cryptocurrency for a long time, then it is better to keep it on a hardware wallet or desktop installed on a separate hard drive that can be placed in a safe or bank box. In that case the coins can not be stolen.
Create a complex password and save the seed phrase in a safe place that only you know.
What is the probability that the price of bitcoin will drop to zero
This can happen if governments declare war on cryptocurrencies and prosecute them for use, i.e. Iran, whose authorities confiscate mining farms. However, such a reaction from the governments of all countries is unlikely. The number of interested users is growing, and the currencies emissions are limited. It all depends on the balance of supply and demand. With the current economic situation in the world, Bitcoin looks more reliable financial instrument than national currencies, the rate of which is regulated by central banks.
Why bitcoin fell
There are several explanations for that:
After the hype in December 2017, the exchange rate reached $20,000, and early investors, who held a large number of coins, began to short profits.
The fall accelerated due to the FUD effect amid negative news that the bitcoin “
bubble” burst, and those who bought at the peak of the price began to sell out the coin.
Moreover, within the period of 2017–2018, the
ICO boom took place - an analogue of crowdfunding for cryptocurrencies. Projects have collected a large number of bitcoins for the implementation of their projects. But many of them sold out bitcoins and shut down. Has Bitcoin Reached the bottom Price
The last bottom was at the end of 2018 - the beginning of 2019, when Bitcoin dropped to $3,300. Since then, its price has risen to $ 12,000. Analysts disagree: some claim that the
crypto winter is over, according to others - Bitcoin should soon go to the new bottom. No one can be sure, because it depends on many factors: social, economic and political. Is it too late to buy bitcoins
Recently, when Bitcoin rose up to $9000, many expected the onset of correction and thought it was too late to buy. But soon Bitcoin grew to $12,000. A similar picture was repeatedly observed on the crypto market, which works contrary to the expectations of the players. But the correction will come sooner or later. For forecasting purposes, it is necessary to understand the structure of the market and follow the fundamental prerequisites.
What is the difference between bitcoin and blockchain
Bitcoin is a payment system and a digital currency based on the blockchain. Blockchain is a decentralised database technology consisting of chains of blocks. The blockchain stores the records, but the rules by which the blockchain is used and the transactions are processed are written in the cryptocurrency code.
How Bitcoin differs from
The difference lies in software algorithms and bandwidth. Ethereum is able to process 2-3 times more transactions per second than Bitcoin. Ether uses smart contract technology that allows you to conduct secure transactions between two parties without intermediaries, reducing the expenses of organisations and individuals who don’t have to contact lawyers or guarantors anymore. On top of the Ethereum blockchain, you can create transparent and reliable decentralised applications that protect users from human intervention and eliminate frauds on the part of companies: honest casinos, transport logistics management, decentralised exchanges (DEX) and others.
Does Bitcoin Have a Future?
In terms of technology, Bitcoin significantly lags behind the more modern cryptocurrencies in terms of scalability and transaction processing speed. Despite this, it is still called “digital gold” and the prime cryptocurrency, and it dominates the market. Bitcoin also determines the movement of the market and acts as one of the main indicators: if it falls, the other
altcoins follow it. How is Bitcoin being mined
Bitcoin in mined using specialised equipment - ASIC-miners. Using personal computers to extract Bitcoin is already unprofitable due to the high complexity of the network, and for effective production one will require large investments. Read more about mining in a special section.
Which bitcoin pool is the most profitable
Income from mining in mining pools depends on the methods by which the share of participants and the fees charged are calculated. The larger the mining pool, the higher the potential profit. On Blockchain.com you can see who produced the latest blocks. According to the list, the most successful among them are: BTC.TOP, F2Pool and BitFury. It remains only to choose a suitable pool based on the conditions for mining to be the most profitable.
How do bitcoin transactions work
For successful transfer of bitcoins 12 confirmations by other participants are required. Processing time varies from 30 minutes to several hours depending on the network load. To make the transaction go as fast as possible, you need to increase the commission to the miners. If the commission is too small, the transaction will freeze forever, and the coins won’t be sent.
Was bitcoin the first project on the blockchain
Bitcoin was the first successful implementation on the blockchain at the end of 2008. The first ideas appeared in the first half of the 80s and the late 90s, one of which belonged to Nick Sabo.
Which wallet is better to use to store bitcoins
The most reliable crypto wallets are the “cold” ones. They allow you to store cryptocurrencies without an internet connection. They can be either hardware ones (Trezor or Ledger) or desktop ones (Bitcoin Core). Bitcoins cannot be stolen without direct access to them.
When will the bitcoin halving happen
The date of the next bitcoin halving is May 21, 2020, after which the reward for the extracted block will again be halved and will be 6.25 BTC. That’s confirmed by the data from bitcoinblockhalf.com, where there is a halving calculator. According to historical data, before the halving, the price of Bitcoin increases greatly. Read more about this phenomenon in the article about halving and bitcoin price.
When bitcoin was worth 1 dollar
The last time Bitcoin was worth $1 was in early 2011. Anyway, by June, the exchange rate jumped to $30 due to low capitalisation and high demand.
When the mining of Bitcoin will stop
As soon as the number of mined coins reaches 21 million BTC. When that happens, the miners’ income will be generated for confirming the transactions.
Which exchanger is the best one for bitcoins exchange
The most popular Bitcoin exchangers are: LocalBitcoins and Coinbase (currently unavailable in Russia). The exchanger allows you to buy Bitcoin directly from sellers or place your own purchase order, and your Bitcoins are transferred to a personal account in your study. Service acts as a guarantor of transactions. Sellers will be charged a commission of 1%. A list of reliable exchangers can also be found on the BestChange monitoring site. It is safer to exchange through LocalBitcoins, but you will have to pay a commission for withdrawing Bitcoins from your personal account.
Who is a typical Bitcoin user
Among the main Bitcoin users the ones that stand out are:
- miners, who mine cryptocurrency and getting profit from the sale of coins;
- investors and traders who speculate on the highs and lows of the cryptocurrency exchange rate;
- users making international transfers and crypto enthusiasts.
What is the difference between a public key and a private key
The Public Key is the address of the bitcoin wallet that must be reported in order to receive coins. Private Key - a password that provides access to a bitcoin wallet. When it is lost, the user will lose bitcoins, so it can not be reported to anyone.
What determines the price of Bitcoin
The price is based on the demand for the asset and its offer. When buyers are few and supply is high, the price drops. It is important to understand what causes the demand to rise or fall:
- the emergence of positive or negative news, which provokes users to react accordingly;
- economic, political and social factors. Bitcoin in a period of acute political situations can serve as an alternative tool to diversify risks;
- local factors: the manipulation of the Bitcoin rate by major players, FUD and FOMO.
What impact does bitcoin have on altcoins?
Bitcoin acts as a market indicator. In the long run, when Bitcoin grows, altcoins grow. In the short run, the rapid growth of the prime cryptocurrency can cause the fall of altcoins, since investors get rid of them in order to buy Bitcoin. The opposite is also true: when a correction occurs, a part of the funds “flows” into the altcoins.
How a bitcoin address is generated
Bitcoin addresses are randomly generated by clients. There are utilities, however, such as Vanitygen, that allow you to get a unique Bitcoin address with specified parameters, and then integrate it into a wallet.
How bitcoin affects the global economy
So far crypto market has no tangible impact on the global economy. Rather, on the contrary, economic crises contribute to the development of the cryptocurrency market. In the current state, cryptocurrencies are unlikely to replace fiat currency due to high volatility. But technologies are developing, and as an alternative, stable coins have come to the market, which can actually replace banks in terms of coins. Blockchain allows you to process transactions without the participation of hired staff: managers, accountants and lawyers. This will make transactions faster, cheaper and more convenient.
On the other hand, when the blockchain and cryptocurrencies are widely distributed, this can lead to the loss of a large number of jobs and the market will change a lot.
Do banks perceive bitcoin as a threat
Yes, but not too serious so far. Mass distribution of cryptocurrency threatens banks with loss of profits, but until now cryptocurrency has completely replaced traditional currencies. Some banks, such as JP Morgan, develop their own cryptocurrencies. Banks are gradually introducing blockchain technology, since it can reduce maintenance costs.
How Bitcoin mining works
Computers with the help of a special program solve complex mathematical problems, for the solution of which they are rewarded in the form of a certain number of coins. The result of the task is the extraction or formation of a new block, which includes information about current and previous transactions, due to which the block size is constantly growing.
If the transaction is false, it is rejected by the miners and is not to be included into the new block. The probability of mining a new block directly depends on the power of the computer in comparison to the entire network. Therefore, the probability of production using a conventional computer with the current complexity drops to zero.
What determines the complexity bitcoin mining
The complexity of mining has become a response to the problems of traditional currencies - deflation. To control inflation and emissions, developers have introduced mining complexity. If it did not grow, then it would have been difficult to control the process, and all Bitcoins would have been mined very quickly. As a result, their value would have come to zero. The complexity is calculated based on how long it took to form a certain number of blocks.
Why bitcoin became popular
The popularity of Bitcoin contributed to the media coverage and high speculative interest. In periods of rapid growth, users expected a high return on their investments. This factor also played in the opposite direction: after intensive growth, the inevitable correction and general emotional decline follow.
How safe is it to store bitcoins on exchanges?
It is not safe to store cryptocurrency on stock exchanges. It makes sense to do only if you are engaged in
trading and play on the fluctuations of the rates.Exchange may be hacked at any time. You can also get caught on phishing and transfer the account data to the attacker, who will soon steal all your funds. You can lose money by transferring API keys to fraudsters. You can choose the safest exchange with our special filter. How they launder money via Bitcoin
Entrepreneurs launder money through cross-border payments, as it does not require mandatory identification to own a bitcoin wallet. Often money is laundered by moving Bitcoins through exchanges and companies located in offshore zones, IP and LLC. In order to hide transactions they use special Bitcoin mixers, popular in dark net, which hide the real addresses of senders and recipients. More recently, Europol has detained crypto thieves who stole $27 million.
How long does a bitcoin transaction take?
One transaction can last from several minutes to several hours after 12 confirmations by miners have passed. In some cases, with a high network load, the transaction may take more than a day.
What is the commission for a transfer in a Bitcoin network?
The commission is set taking into account the network load: from a few cents to ten dollars. And regardless of the number of bitcoins sent. In this sense, it is pointless to use Bitcoin to conduct micro transactions. Anyway, if you want to transfer, say, a million dollars, paying only ten dollars - quite a small amount. The size of the commission can be set manually, focusing on the minimum and optimal commission. With an optimal commission, the transfer will be faster, since it will be a priority for miners. At the same time, it makes no sense to set too high a commission, because it will not add speed. But if you set the commission too low, then the transaction will be hanging on the network for quite some time.
Can Bitcoin be used to hedge risks?
Yes. During negative situations in the fiat exchange market, some traders and investors “poured” their assets into bitcoin and altcoins. Against the background of falling currency quotes, the price of bitcoin can jump, and the purchase of cryptocurrency can be viewed as opening a short currency position.
Can bitcoin challenge the dominance of the dollar in the global economy
Financial experts and crypto analysts believe that cryptocurrencies are unlikely to replace fiat money. In fact, that’s not necessary. Any digital technology can not fully function without the Internet or electricity. Even if the cryptocurrency becomes the main means of payment, it will be necessary to keep the currency reserve in case of an emergency.
What is the minimum amount of a transaction on a Bitcoin network?
You can tranfer any amount other than zero. At least 1 satoshi (0.00000001 BTC). That, however, will not affect the commission.
What occupations have Bitcoin generated and which ones might disappear because of it?
Thanks to Bitcoin and the altcoins that followed it, a large number of new occupations and services appeared: blockchain developer, bounty manager, solidity developer, blockchain lawyer, ICO managers and advisors who accompany and promote blockchain projects.
The promotion of cryptocurrency and blockchain can lead to the extinction of other professions, including lawyers, accountants, logisticians, administrators, engineers.
Where can I see the history of the price of Bitcoin throughout its existence?
The full price history has been preserved only in references that do not display the full history. The latest chart, which displayed the full chronology of the Bitcoin course, belonged to the Mt. Exchange closed in 2014. Gox. The current schedule can be found on the CoinMarketCap website, which displays the history of Bitcoin movement since April 2013 and is based on data from the largest cryptocurrency exchanges. We also prepared a special material that shows how the cryptocurrency capitalisation has changed during their existence.
When will bitcoin die
The prime cryptocurrency was “buried” by journalists 90 times in 2018 alone. A year earlier, that figure was 125. Anyway, despite of the number of Bitcoin opponents, nothing foreshadows its death. The coin is too decentralised and cannot simply disappear even theoretically.