Introduction to Bitcoin

What is Bitcoin?
Bitcoin is a global Peer-to-Peer currency that is designed for the Internet. It is modeled after gold and behaves like cash online, and can be used by anyone. It has no central authority, and is deflationary in nature.

There will only be a total of 21 Million Bitcoins created, and or mined between now and the year 2140.

What is Bitcoin?
The only regulated factor built into the system is the number of coins generated through mining. Currently, the network allows approximately 25 Bitcoins to be mined every 10 minutes. This number halves approximately every four years. The currency is divisible by 8 decimal places.(.00000001) This number can be adjusted within the Bitcoin protocol if needed.

What are they worth?

Like fiat currencies, they are worth what we think they are. When the first Bitcoin exchanges went online, the price per Bitcoin was about $.05*. Currently** the price has been hovering around $100 per Bitcoin.

Bitcoin reached its all time high in April of 2013 when it reached $266 per coin.
Speculators anticipate it can go much higher.*Source:
http://bitcoincharts.com/charts/mtgoxUSD#tgSzm1g10zm2g25zv **August 15. 2013

How do you get Bitcoins?

There are currently four methods of acquiring Bitcoins. 1. Mining (Requires large investment) 2. Wiring in fiat currency to an BTC exchange. 3. Buying from an individual. 4. Selling items for BTC
Bitcoins are commonly abbreviated as BTC. However, ISO standards require an X in front of non-centralized currencies. The official abbreviation has yet been decided.

Where do you store Bitcoins?

Bitcoins are stored in what are called wallets. A wallet is a randomly generated string of numbers and consists of two parts: the public key and private key. Example of a public key:
14GabW85FUMQy62CMWLCToQLo81w7iXL2x

Where do you store Bitcoins?

The second half of the Bitcoin wallet is what is known as the private key.
The reason it is called a private key is that it is intended that only you, the wallet owner, has access to it. Disclaimer: If anyone gets ahold of your private key, they will have access to all of your Bitcoins. ALWAYS KEEP YOUR PRIVATE KEY PRIVATE!

What is a Bitcoin wallet?

There are three different types of Wallets. Online Wallet Services:
All that is required on your behalf is to create and remember a password. The most popular services are Blockchain.info and Coinbase. Considered safe, but still susceptible to network failures and hacking. You can take measures to increase security.

What is a Bitcoin wallet?

Local Wallets or Offline Wallets:
A local wallet is an application that can be downloaded to your personal computer. Your private key(s) are stored locally on your hard drive. Considered safe, yet is important to make backups of your private keys in case your hard drive fails. Also carries a risk of hacking or physical theft.
There are safeguards to make this method more secure.

What is a Bitcoin wallet?

Paper Wallets:
A paper wallet is a public/private key that is generated offline and printed on a physical piece of paper and then stored in a safe location.
Arguably the most secure way to store your BTC. No record of the private key online or your hard drive. Impossible to be hacked.

They are still susceptible to theft, fire and water damage.

How do I send Bitcoins to someone?

Sending or receiving Bitcoins is as simple as scanning a QR code with your smartphone. Online services such as Blockchain.info and Coinbase both use their own official apps. Both have security features that require you to use a PIN to make transactions. Simply scan the receivers QR, enter the number of coins to send, and you are done.

The transaction appears within the network almost

Example of a QR code.

QR Code Generated for the public key:14GabW85FUMQy62CMWLCToQLo81w7iXL2x

How can I keep my Bitcoins secure?

Here are a few tips to keep your Bitcoins safe:
1: Use strong passwords.
2: Use 2 Factor Authentication for online services.

3: Always encrypt your wallet files.

4: Keep your paper wallets in a safe and secure place. 5: ALWAYS run antivirus software if you are on Windows.Think of Bitcoin as cash. You would never leave $10,000 out in the open.

The same should be said for Bitcoin. As the Bitcoin economy continues to grow, taking proper security measures will me much simpler for average users.

Do I have to buy whole Bitcoins?

No. It is very easy to buy fractional amounts of Bitcoins. Coinbase, a service that lets you buy BTC with your bank account, requires a minimum of .10 BTC to be purchased. Therefore, if the market value is $105, then the minimum amount you can buy would be $10.50. If you want to buy less, it is recommended that you wire money into one of the many BTC exchanges.

The process of wiring money takes about 3-5 days.

What can I do with my Bitcoins?

You can spend them, just like cash. You can save them. You can day trade with them.

You can invest in various BTC based companies.

What are the risks involved?

Bitcoin carries many of the same risks that cash does. Susceptible to physical theft. Holes in online services could lead to hacking and theft. The market is incredibly volatile. Fluctuations of 10% or more are fairly common. Government intervention. Misinformed slandering by the Media.

Should I invest, and if so, how much?

Short answer, yes. While many traditional industry analyst still proclaim Bitcoin as a joke, or a fad, the truth is that many of these individuals are perfectly fine with the system in its current form. Their arguments are very similar to those of the 90s when the Internet was coming to fruition. It is highly likely that many of these talking heads are in fact investing heavily into BTC, whilst keeping the mainstream at bay... For now.

Rule #1 of investing:

What is the potential outcome of Bitcoins price?

Bitcoin will either succeed with the mainstream or fail. Below is an example of what the price may be by 2025: The estimated world GDP is expected to be around $71T in the year 2025. If Bitcoin can establish a 0.1% Market Cap or $71B(APPL is $456B) and 25% are used for transactions, then the market price of one Bitcoin would be about...

$14,947

Source:

http://www.btcglobe.com/tool/calculate-future

Have you ever said one of the following to yourself?

I should have invested in Apple. I should have invested in Microsoft. I should have invested in Google.

If the answer is, yes then make sure that in ten or more years you are not stating to yourself...

I should have invested into Bitcoin.