When it comes to investing in Bitcoin for the first time, many questions come up. We will try to address the most common questions people ask in our Bitcoin Investment FAQ.
- Can I buy less than 1 Bitcoin?
- What is BTC?
- What is one satoshi?
- Is there a Bitcoin supply limit?
- Where can I buy bitcoins?
- What are Bitcoin wallets?
- Which Bitcoin wallets are safe?
- What is a private key?
- Some Bitcoin exchanges trade BTC against USDT. What is USDT?
- How can I start trading Bitcoin?
- Is there a Bitcoin CEO?
- What is a transaction fee?
- Why are Bitcoin transaction fees so high?
- What is margin trading?
- What how do I calculate the Bitcoin market cap?
- Where do I find BTC price charts?
- Is Bitcoin backed by anything?
- Why does Bitcoin have value even though it is not backed by anything?
Can I buy less than 1 Bitcoin?
Each Bitcoin is divisible to the 8th decimal place.
You could buy 0.00000001 bitcoins which is worth less than a cent.
What is BTC?
BTC is the currency code for Bitcoin just like USD for US dollar.
What is a Satoshi?
Satoshi is the smallest unit of Bitcoin 0.00000001.
10-8 100 millionth:
It is named after Satoshi Nakamoto – the inventor of Bitcoin.
Is there a Bitcoin supply limit?
Bitcoins are created by the process called “mining.”
Bitcoins are created/minded for a fixed rate every time a new block of transactions is created.
Blocks are created every 10 minutes.
The block reward started at 50 BTC in 2009, and it gets halved every four years.
Currently, the block reward is set at 12,5 BTC.
There mining of Bitcoin – the total supply of Bitcoin is limited to 21 Million.
This limit is hardcoded into the protocol and cannot be changed.
Changing the supply by your own is equal to attacking the Bitcoin network.
Where can I buy Bitcoin?
The most common places where you can buy bitcoins are the online cryptocurrency exchanges. You will need to register with the exchange by providing your government ID. After approval, you could load your account with fiat currency like USD, EUR, CNY, etc. using your bank account or credit card. For a step-by-step guide on how to buy Bitcoin on an online exchange click here: Link
Other places where you could buy Bitcoin without registration:
– Bitcoin ATMs
– From other people who already own BTC
– Swiss Railways wants to offer selling Bitcoin through their ticket vending machines
– Austria Post Offices started offering Bitcoin sales through coupons they sell.
– Many more providers are coming up…
What is a Bitcoin wallet?
A Bitcoin wallet is a piece of software that stores the user’s private keys.
Your bitcoin wallet allows you to access your Bitcoin.
These wallets communicate with the Bitcoin network every time you want to send or receive Bitcoin.
Please note: Bitcoins are not stored in your wallet!
Only your private key is stored in your wallet.
If you lose the private key, you lose access to your Bitcoin, and will never be able to access it again, and it will be lost forever.
Backup your private key!
What is a private key?
Your wallet never stores any bitcoins.
The only purpose of a wallet is to keep your private key and communicate with the Bitcoin network.
The private key is a long string of random numbers and letters, and it is always paired with a Bitcoin address.
It creates signatures that are required to spend your funds by proving that you are the owner of the funds used in the transaction.
Losing access to the private key is equal setting your cash on fire.
Which Bitcoin wallets are safe?
Different types of wallets offer a different level of security.
There is are tradeoffs between usability and accessibility.
The least secure wallets are the online wallets, and the most secure ones are the hardware wallets, and paper wallets also called “cold storage.”
More on the topic read here.
Some Bitcoin exchanges trade BTC against USDT. What is USDT?
Online exchanges like Poloniex don’t use real USD dollars for trading.
Instead of USD they use USDT – a USD token – easily exchangeable P2P just like Bitcoin.
USDT is an asset-backed token which means that every unit of USDT is backed by one real US dollar. The units of USDT are called tethers. Each tether represents one real US dollar.
Some exchanges prefer using USDT because of the easier integration compared to real USD.
As opposed to international bank transfers, Tether tokens can also be transferred internationally at almost no costs.
How can I start trading Bitcoin?
Register on online exchanges dedicated to cryptocurrency trading.
Registration on such platforms requires users to send a copy of their government-issued ID.
The validation process could take up to few weeks depending on the user influx.
Examples of Bitcoin exchanges: Bitstamp, Gdax, Kraken, Gemini, Bittrex.
Is there a Bitcoin CEO?
Bitcoin is a Decentralized Autonomous Organization (DAO) and is governed by the community.
Bitcoin lacks traditional top-down structure. Bitcoin is not a company registered in any country.
Bitcoin is a software protocol which lives on the internet.
What are transaction fees?
Each time users send bitcoins a transaction fee has to be paid.
These fees are not fixed and depend on the network load.
If there is a huge transaction spike the transaction fees increase accordingly.
Currently, the Bitcoin network can process a handful of transactions, and any usage increase reflects on the fee price.
The Bitcoin community is working towards solving the problem.
Why are Bitcoin transaction fees so high?
Bitcoin fees are dynamically adjusted.
When there is a usage increase, the fees increase accordingly.
Please refer to “What is a transaction fee?” for more info.
What’s margin trading?
Margin trading is essentially trading with borrowed funds instead of your own.
When you place a margin order, all of the money you are using is borrowed from other users offering their funds as peer-to-peer loans.
The funds in your margin account are used only as collateral for these loans and to settle debts to lenders.
What how do I calculate the Bitcoin Market Cap?
The market capitalization of a cryptocurrency can give you a perspective on how big the market for that currency is.
The current Bitcoin market cap is around USD 41 billion.
In order to calculate it, you need to multiply the today’s price by the total coin supply.
Market Cap = Price x Circulating Supply
$41 538 444 951 = $2526.85 x 16 438 825 BTC
Where do I find BTC price charts?
Is Bitcoin backed by anything?
Bitcoin is not backed by anything.
Its price gets determined by the market.
Why does Bitcoin have value even though it is not backed by anything?
What makes Bitcoin valuable are its properties as a digital asset:
- Limited supply
- Easy storage
- Easy transfer
- It is not controlled by a central bank
- People accept it as a currency in exchange for goods