Bitcoin (BTC) is a cryptocurrency payment system based off blockchain, a core component of the digital currency.
Bitcoin’s system is a decentralized peer-to-peer payment network with no central authority. This means it provides a certain level of anonymity with no central point of failure, though most services and business using Bitcoin are centralized in one way or another.
While there are numerous legitimate uses for Bitcoin like investing, paying friends or shopping, a number of criminals have adopted the currency for selling services and deploying ransom campaigns due to its level of anonymity.
The Bitcoin “Bank Account”
Before you can purchase Bitcoin, you first need somewhere to store it. An online Bitcoin wallet and exchange is accessible via the web from a browser or a cellphone. Some exchanges like Coinbase even offer an app for both Android and iPhone that makes buying and selling Bitcoin and in-store purchases very simple.
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Paper wallets are a form of cold storage with the address and private keys printed on them from offline computers. By printing the paper wallets offline, the exposure for your wallet being compromised is greatly reduced. There are even hardware wallets specifically designed to securely hold your Bitcoin.
Once you have a wallet, you can buy and deposit your Bitcoin, as well as send and receive it.
How to Purchase Bitcoin
Users wishing to invest, purchase or shop using Bitcoin only have to take a few basic steps before being able to use it. One can either purchase it online at a number of digital exchanges or locally at a Bitcoin ATM, or alternatively, accept it for goods and services.
There are a number of online exchanges you can use to purchase Bitcoin. Exchanges like Kraken, BitStamp, and OkCon all offer services where you can buy it online. Coinbase is one of my favorite online exchanges and one I use personally. Their app is very user friendly and convenient to use.
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On Coinbase, you can convert your local currency into and out of Bitcoin and Ethereum, another cryptocurrency, by linking your wallet to your bank account. You can also use debit and credit cards to purchase BTC on Coinbase.
Coinbase allows users to buy and sell items via its app as well. To send money, you simply enter the recipients’ BTC address. If you are purchasing from a local vendor, you can use the app to scan the merchant’s Bitcoin address displayed in the form of a QR code. Coinbase also provides a great interface for watching the digital market so you can buy low and sell high, as the value of Bitcoin does rise and fall like the normal stock market.
You can also purchase Bitcoin at a Bitcoin ATM, if there is one nearby. For example, there are several in Brooklyn (mostly made by three companies, BitCOIN, CoinBTS and CoinSource) that let you purchase and sell Bitcoin at a physical location.
Where Can I Use Bitcoin?
So who uses Bitcoin and where can you use it? Many merchants have adopted or used Bitcoin in one way or another over the last few years, and e-commerce stores are following suit. You can purchase items on websites like Overstock and Newegg Tiger Direct with Bitcoin. And some physical stores accept it. In New York City, for example, a wide array of bars, coffee shops and other independent stores accept Bitcoin.
Perhaps most notably, Darknet marketplaces like Empire and Apollon, along with the DDoS-for-Hire industry, have adopted BTC as their currency of choice. Even ransomware authors are choosing to accept payments via Bitcoin. Criminals will use a number of methods to anonymously purchase and store ill-gotten BTC through the use of services such as tumblers (online services used to launder Bitcoin in an attempt to mask the coin’s origin or to prevent it from being identified while purchasing illegal goods online).
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As the currency continues to mature, users may see even more legitimate uses and big name stores accepting Bitcoin. Bitcoin is the first mainstream digital currency, so there will be more growing pains, especially when it comes down to government control and taxes, but there are many benefits and security features behind accepting the digital currency.
This post was updated on September 10, 2019.
Read “The Trust Factor: Cybersecurity’s Role in Sustaining Business Momentum” to learn more.