Rich Crocco

Understanding Bitcoin Part 2: Bitcoin Exchanges

Image via https://en.bitcoin.it
Image via https://en.bitcoin.it

In order to get comfortable with the idea of acquiring and using Bitcoin, you need to get comfortable with Bitcoin exchanges. Bitcoin exchanges are the common marketplace to buy and sell Bitcoin. There are alternatives to exchanges but we’ll cover that later. When approaching Bitcoin as a concept, the first thing you need to do is get comfortable with the basics: how the technology works, where it gets its value, etc. This I covered in another blog post named “Understanding Bitcoin: The Basics.”

There are Bitcoin Exchanges located inside and outside the US and more are on the way. There are two types of business models for these companies, either they are full exchanges or they are a digital ‘wallet’ service to store their customers’ Bitcoins, or both. The combination of exchange/wallet service is getting popular now, with a lot of companies offering a mobile app to easily access your Bitcoins from your smart phone.

Transacting Bitcoin
The important question is, when you execute a transaction on an exchange, what is actually happening? This takes us to one of the most important concepts to understand about Bitcoin: the fact that Bitcoin exist only as evidence of a transaction, rather than a ledger or a cumulative file that equals a certain amount of value. Read more…

Understanding Bitcoin: The Basics

Bitcoin

The concept of Bitcoin, or the more general term cryptocurrency, remains a mystery to many people (including myself) for the simple reason that it really is something completely new within a concept that is very old, money. While we have all gotten used to many things in our lives turning digital i.e. pictures, books, retail stores, etc., the idea of money becoming truly digital can have a strange impact. At first one might say, “Hey this is no big deal, we already have electronic credit card payments, wires, ACHs so what’s the fuss?”. However, once you dig a little deeper the questions become a bit more comprehensive. How can I really give someone value over the internet just like handing someone cash? Who’s in charge of this operation? Where does the value of Bitcoin really come from (you can check the current dollar value of a Bitcoin at coindesk.com/price)?  These are just a few of the questions that arise when one considers the implications of an operational digital currency. Now to fully understand the Bitcoin system it would take much more than one blog post, however I will expand on the basic rules of the Bitcoin system here. Read more…