Bitcoin is a virtual currency, also known as a cryptocurrency. It was developed in 2009 and has grown at a rapid rate since then. Bitcoin is accepted in almost every country in the world; more than 500 million dollars have been transferred via this method till today. It gives an unprecedented degree of financial autonomy to its users.
Bitcoin Basics: Investment in the money without state
Why is Bitcoin so special and what should you consider when buying BTC? In our latest Bitcoin Basics event, bitcoin.de founder Oliver Flaskämper shared his passion and fascination for Bitcoin and explained why the future belongs to BTC as a digital currency. Watch the video in german here!
In each MeetUp, we at BitBucks deal with a different aspect of the world's most popular crypto currency. Lined with top-class guest speakers, the aim is to give both newcomers and Bitcoin veterans an understanding of the significance of Bitcoin as "Money of the Internet".
This time we had the pleasure of welcoming the most well-known Bitcoin pioneer in the German-speaking region as a contributor: Oliver Flaskämper is not only the founder of bitcoin.de, the first German regulated trading platform for the purchase and sale of Bitcoin, but also founder and CEO of Bitcoin Deutschland AG. In his presentation he focused primarily on the differences and advantages that Bitcoin brings in comparison to other fiat currencies?
Bitcoin - a decentralized and deflationary currency
One of the most distinctive features of Bitcoin is probably its scarcity. As the first purely digital commodity, the maximum number of BTCs ever existing is limited to 21 million. This deflationary character of the world's most famous crypto currency alone distinguishes it from traditional fiat currencies such as the dollar or the euro, for which an inflation rate of two percent and higher is common.
Apart from scarcity, there is another core difference between BTC and other currencies: Bitcoin doesn't belong to anyone. The decentralized payment network set up by Satoshi Nakamoto operates separately from the centralized banking system we are familiar with. Bitcoin is revolutionary and driven by its community. States can pass laws on the use of the crypto-currency, but the currency of the Internet itself cannot be contained.
It is the diversity of Bitcoin that fascinates so many - and now more and more - people about the digital currency: Whether from politics, economics or technology - unlike the classic financial system, Bitcoin does not just employ traders and financial experts - BTC goes beyond that.
Bitcoin and the future of fiat currencies
Although the volume of Bitcoin still appears relatively small compared to the Fiat system and therefore currently has a rather minor impact on the development of major national currencies, this could change rapidly in the future. Due to the Bitcoin Halving, it is not unlikely that the exchange rate fluctuations of recent years will continue to level off. The combination of a smaller increase in supply and stronger demand resulting from the halving has the potential to catapult the price upwards.
However, Bitcoin will only help if the international community also plays along. In view of recent examples from South Korea, India and also Germany, this seems to be the case and strengthens Bitcoin's role in media coverage. The legal situation around crypto currencies is increasingly relaxing worldwide - a clear step towards Bitcoin adoption!
The awareness of Bitcoin is elementary for its future success. In addition to government intervention, the active use of BTC is also likely to lead to greater adoption. We at BitBucks are convinced that Bitcoin as a means of payment is a key to integrating it into the everyday lives of many people around the world. If the purchasing power inherent in Bitcoin finds its use, this should ultimately also increase its popularity. So if you already own the desired coins, you shouldn't just Hodl. It is also worth spending them (Spendl) to strengthen the Bitcoin price and thus your own credit balance.
Buy Bitcoin: This is how it works!
But before you decide what to do with your own Bitcoins - hodl or spendl - you have to go through the purchasing process. However, what do you need to consider when investing in Bitcoin? Fundamental research is probably the most important requirement before investing in Bitcoin. Everyone should have a basic knowledge of crypto-currencies - because if you don't know what to do with terms like wallet, exchange or Blockchain, it will be difficult to use the coins in any way at all.
Once this basis has been established, you should turn to a trading platform that is as "reputable" as possible to protect yourself from fraudulent dangers. Ideally, the marketplace should also be located in your own country, as transfers abroad entail an additional risk. There are now several providers on the German market: In addition to Oliver Flaskkämper's bitcoin.de - which has been the first and so far only marketplace for Bitcoin since 2013 - Bitwala and the Stuttgarter Boerse with their app Bison should also be mentioned. An international guide to buying Bitcoin can be found here.
BitBucks: Bitcoin is the currency of the Internet
From our point of view one thing is clear: Bitcoin is the currency of the Internet and therefore also a means of payment. Even if the deflationary character of the crypto-currency invites you to merely hodl it as a store of value - "digital gold" - payments with BTC in particular should have a positive impact on its popularity and ultimately also on its price development.
As an instant payment app, BitBucks enables fast and easy payment with Bitcoin. Especially in the retail sector, many gastronomes, bakers and Co. could thus find a way to a cost-effective, as well as contactless alternative to cash and card transactions. In our view, payments are the key to adopting the world's most popular crypto currency into everyday life - and we are driving this forward with our Bitcoin Wallet.
FAQ - Bitcoin Basics
What is Bitcoin?
Why is Bitcoin so revolutionary?
Bitcoin is a truly international currency which is inflation-resistant, private, autonomous, does not require consent and cannot be censored. There is no central bank devaluing money through inflation, nor any banks or other middle-men conducting the transfer between sender and receiver. Bitcoin transactions are without borders. The user's private key gives full ownership of Bitcoin units, and with a passphrase you can even store it in your head.
Who can use Bitcoin?
Anyone who has access to the Internet. Everyone is equal with Bitcoin; the network does not require permission. Age, gender, religion, social status, origin - Bitcoin does not recognise these categories.
Can bitcoin transactions be censored?
If you make the transaction yourself - no. Transactions are pseudonymised and processed by a network without distinction. As Bitcoin is a decentralised network, there is no central location with the power to prevent other nodes from carrying out and verifying transactions - as long as these are covered and valid according to the rules of the network.
Who does Bitcoin belong to?
Bitcoin is, in essence, an open-source software. This means that it belongs to no-one and therefore to everyone. No-one can build a fence around Bitcoin - everyone has access.
How does bitcoin protect against inflation?
While in Fiat money the central banks can control the money supply, in Bitcoin it is determined by an algorithm. The miners are forced to mine the amount of bitcoins specified in the protocol. The amount of bitcoins in circulation can be checked in the present by anyone and predicted for the future. Currently, there are more than 17.5 million bitcoins, the creation of new coins reduces by half every four years. There will never be more than 21 million bitcoins.
What is an BTC address?
Bitcoins are sent to addresses. An address is an approximately 35-digit character combination. It has a similar function as the IBAN number for bank transfers: You can transfer money to it by entering it in a field on the transfer form. However, unlike IBAN numbers, your wallet can form an almost infinite number of addresses.
How do I pay with Bitcoin?
It's simple: copy the recipient's address into a field within your Bitcoin Wallet, enter the amount, and click "Send". In most BTC wallets, you can specify the amount in your local currency, so no conversion is required. Payment requests or the payment protocol are often used. They already include the amount and can either be activated by clicking or by copying them into the send field. Mobile wallets are able to scan transaction requests, so you only have to confirm the transaction. Bitcoin Wallets such as BitBucks even allow you pay with BTC by scanning the recipients QR-Code.
What is the lightning network?
The lightning network is a so-called “offchain” network. It does not transport Bitcoins to the blockchain, but operates through “payment channels”. These increase the privacy of transactions and the scalability of the system, but so far they still offer users reduced convenience and security.
An alternative to the lightning network is a fiduciary wallet such as BitBucks, which carries out transactions for users within its own system. This is less autonomous, like lightning, however results in the same effect in terms of scalability and can be better integrated into a convenient user interface.
What are “coins”?
In Bitcoin terminology, Bitcoin are not saved to addresses but as UTXO or “unspent output”. UTXO is commonly known as “coin” as it represents just this: coinage to the specified value of Bitcoin. Such coins can only be spent as a whole. If they are larger than the sum to be sent, then the remaining amount comes back into your wallet as change.
Why choose Bitcoin over other virtual currencies?
There are 1,000 virtual currencies, and none of these offer any significant advantages over Bitcoin. Bitcoin is the face of the financial revolution, the brand name of virtual currencies, the best-known and most widely accepted of them all. Why, then, would anyone want to start from scratch with another currency?
What is the difference between Bitcoin and PayPal?
PayPal is a closed system. The money that is moved via PayPal remains in that system, and can only be accessed through PayPal software. Bitcoin, on the other hand, is an open system. The user can transfer money directly, without a middle-man. At the same time this means that there is a market for middle-mens, who can provide users with an interface for Bitcoin and, with a wallet like BitBucks, payments are cheaper and more convenient.
Isn't the Bitcoin price too volatile and therefore a risk for me as a merchant?
If you sell your Bitcoin on the same day at the end-of-day price, the volatility of the Bitcoin price hardly plays a role for you as a merchant. In addition, due to the pending halving and the deflationary character of Bitcoin, the price is expected to stabilize over time anyway.
Can bitcoins be seized?
If you store your private key securely, no one can confiscate your bitcoins. Only the one who has the key can access bitcoins. It is protected by strong cryptography.
Is Bitcoin legal?
In almost all countries, the use of Bitcoin to send and receive money is permitted. In a few countries this is restricted or completely forbidden. Please seek reliable information as to the legal situation regarding Bitcoin in your country.
What is Bitcoin legally? Can I even accept it as a means of payment?
Yes, in Germany, crypto assets such as Bitcoin belong to the German Banking Act and are therefore considered a financial instrument. As a merchant, you can therefore accept Bitcoin without hesitation.
What is the german government's position on Bitcoin? Is there a danger of stricter rules?
Stricter regulations in Germany would amount to a ban, which seems more than unrealistic in the current development.