A Beginner's Guide to Bitcoins

A BEGINNER'S GUIDE TO BITCOINS Although Bitcoins have been around since 2009, the hype and fascination over the unregulated virtual currency has increased rapidly. There are currently 11 million Bitcoins in existence, but no more will be made once 22 million have been created. Confused about the Bitcoin? Let's take a closer look at the cryptocurrency. Bitcoins at a Glance Bitcoin Defined The Bitcoin (BTC) is a virtual currency, created by a slow computer process called "mining." The international currency is not regulated by banks and can be used to purchase goods from anywhere in the world. It also trades like a stock or material currency. As of May 2013, each Bitcoin is worth about £80.73, or $140. Number of Bitcoins now existence 11 million International Man of Mystery Maximum number of Bitcoins that will be mined The Bitcoin's creator, under the pseudonym Satoshi Nakamoto, is widely unknown to the public. Few in the world know the developer's actual identity, and only a handful of users have talked with him. As of April 2011, Nakamoto said he has “moved on to other things" and has vanished from the Internet. 22 million Value of all Bitcoins currently in circulation £1.06 billion (Rote ot.65 £/$ at time of conversion) Helpful Terms // Here are just some of the regularly used terms in the Bitcoin universe. Bitcoin Client Bitcoin Address Software that receives and sends Bitcolns. An alphanumeric identifier (e.g.: 13ignD31FysQbaBBVJUzffcQoFxxEuEcbE) representing a payment destination, similar to email, required to send someone Bitcoins. Wallet Miner Bitcoin Protocol Most often referring to a file that stores Bitcoin addresses and the This means that every node in the network is required to download a copy of every Bitcoin transaction. Someone who helps create blocks added to the blockchain. If a valid block is created, the miner receives 50 new Bitcoins from the private keys needed to use them. Bitcoin protocol. This is the process through which all Bitcoins come into existence. Blockchain Private Key Bitcoin Network A public list of all A hidden secret number related to an The network of computers transactions ever sent. address, which permits access to send Bitcoins. If the key is lost, the currency in the wallet is gone forever. through which Bitcoin This allows everyone transactions are broad- to know which Bitcoins casted. It also helps belong to whom. maintain the blockchain. Buying Bitcoins It's not as easy as it sounds. Because Bitcoin transactions are completely anonymous, you must use specific methods to pay for one-which tends to get tricky. Money Transfer Cash The most widely used way to pay for Bitcoins, this method requires you to provide an exchange with your bank account informa- tion and transfer money into Every 10 minutes, 50 more Bitcoins are available in the network. Cash-payment services, like Moneygram, compensate an intermediary at a specific deposit spot. The service This pace won't continue forever, though. The rate of production will slow to 25 more Bitcoins every 10 minutes for the next 4 years, before reducing to 12.5 every 10 minutes. then turns the cash to credit and deposits it into a Bitcoin exchange account. a Bitcoin account. Risky Business Bitcoins Accepted On 10 April, the value of Bitcoins fell by 60%, from a short high of $265, to less than $100. While many online retailers already accept Bitcoins, some major companies still plan to or already have adopted the new currency. Those companies include: 60% $265 $100 Amazon // OKCupid // Western Union Top Bitcoin Searches, by City 100 100 Google Trends Index 0.0 100 81 (Scale represents total number of Google searches but does not represent absolute search volume numbers.) 60 66 62 56 50 45 40 London Warsaw Toronto Sydney New York Melbourne Berlin Moscow Top Bitcoin Twitter Accounts What to do Wwith Your Bitcoins: @BitcoinByte is the Twitter account for B Save them by leaving them on the exchange. banking industry veteran Michael Parsons, who runs the blog Bitcoin Bytes. B Sell them. @BitcoinEconomy posts statistics on the Bitcoin economy from BitcoinWatch.com. B Convert them to cash by selling them on the exchange. Transfer them to a wallet service or your own computer. @BitcoinMagazine is the account for Bitcoin Magazine, known as "the world's first magazine dedicated to the cryptocurrency." B Spend them. SOURCES: BBC, New York Magazine, TheBitcoinTrader.com, Heavy.com