If you’ve ever wondered, “what is bitcoin?”, read on for more information about who created the famous cryptocurrency, what it’s used for, and how to get it.
What is Bitcoin?
At its simplest, Bitcoin is virtual currency. Think of it as cash for the internet age. Before Bitcoin, you would make transactions by check, wire, or cash – these methods work well in general, but are far from perfect. Making transactions in dollars requires a third party (bank, government) to process your transaction and it’s generally a slow process – sometimes taking days or even weeks to settle transactions.
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Bitcoin is an exchange of digital information that allows you to buy or sell goods and services without a third party. The transaction gains its security and trust by running on a peer-to-peer (p2p) computer network that is similar to Skype, or BitTorrent, a file-sharing system. With bitcoin, you are in full control of your money.
Who created it?
In October 2008, an unknown man/woman/group called Satoshi Nakomoto released a paper which would lay the foundation for . This shook the online community to its very foundations, for it was the first time we had a working model for digital currency.
In January 2009, the network officially launched and a digital currency revolution was born. Bitcoin differed from earlier p2p systems because it was designed for everyone on the network to have an economic incentive to “follow the rules”. It also solved the “double-spend” problem that had baffled computer scientists for years. More on the double-spend problem in the next section.
How does it work?
Without getting into the technical details, Bitcoin works on a massive public ledger called a blockchain, where every single coin transaction is packaged into a ‘block’ and stored on the network. As each block enters the system, it is broadcast to the peer-to-peer computer network of users for validation.
In this way, all users are aware of each transaction, which prevents stealing and double-spending. Double-spending occurs when one user tries to spend the same money in two different places. On the internet, we’re used to making limitless copies of information like photos and emails, but Bitcoin wouldn’t be a very useful currency if we could just make more out of thin air on demand. Thanks to the blockchain, cryptography, and mathematics, the Bitcoin network can be secured against these kinds of problems and allows all users to trust the system.
Is it legal in Canada?
It is completely legal to hold, mine, and trade Bitcoin in Canada.
Why should I use it?
The best thing about Bitcoin is that it is decentralized, which means that you can settle international deals without exchange rates and extra bank charges. Bitcoin is free from government interference and manipulation, so there’s no Federal Reserve System to hike interest rates or print more money. It is also transparent, so you always know what is happening with your money.
You can start accepting bitcoins instantly, without investing money and energy into details, such as setting up a merchant account or buying credit card processing hardware.
How do I buy and sell it in Canada?
In Canada there are a few options for buying and selling Bitcoin.
Online Exchange: If you want to buy or trade Bitcoins at the best available rate, you‘ll want to use an online exchange like Coinsquare. Exchanges act as an escrow by storing both Bitcoin and fiat currency on behalf of their customers. Here you can make your own orders to buy or sell Bitcoin at the best rates with the click of a button. On exchanges, fees and the spread are low, however you are required to submit personal information like your address to comply with Canadian regulations.
ATM: Maybe the most private method to acquire Bitcoins is a Bitcoin ATM. These machines where you can get money with your card. Some companies also produce ATMs where you can buy Bitcoin with cash. ATMs have very high fees of 5-8% percent or even more.
Gift Cards/Voucher: This is another easy method to buy Bitcoins. In Canada you can use cash or debit to buy a Flexepin voucher at thousands of retail purchase locations. These vouchers can be redeemed on exchanges like Coinsquare for Bitcoin. Like ATMs, these voucher cards tend to charge relatively high fees.
How do I store it?
To store your Bitcoin, you will use some form of a wallet. Wallets function similar to traditional wallets except it’s not a physical wallet and it doesn’t actually store currency – digital currency wallets simply interact with the blockchain to keep track of your funds.
You’ll find wallets come in many types including desktop, mobile, web, paper and hardware wallets. Each of these has its advantages and disadvantages.
When you buy Bitcoin on Coinsquare, you are automatically given a web wallet to track your Bitcoin so you don’t have to worry about setting one up.
Additional links for Bitcoin
Image credit: Bitcoin logo
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