Topic: Common Q&A about bitcoin: non-technical edition. How much do YOU know? (Read 1507 times)

You can't definitively say shit like this without sounding like you're shilling the coin for the sole purpose of shilling the coin. Bitcoin is already illegal in many countries, with more undoubtedly following suit. Vietnam, Bolivia, and Ecuador are amongst the countries that have already banned Bitcoin, and Russia will more-than-likely pass a bill to make it illegal, as well. You have to understand that governments hate Bitcoin because there is no way to legislate it, which means there are no security and safety measures that they can take to protect its people from it. Please refrain from spewing shit like "bitcoin is going to get legalised all over the world" because it's simply not true.

When bitcoin was introduced in 2009 there were lots of questions coming in the minds of millions of people that what are these crypto currencies and how do they work, what is the technology behind it and how beneficial is in investing into these crypto currencies then with time people has understood the fate and potential of bitcoin and now still it is still in lots of controversy but I am sure for one thing very well that in future, bitcoin is going to get legalised all over the world.

The recent situation in the market has made me come to hear of the whales, Who are they? and how are they manipulating the market given the fact that bitcoin is decentralized how is that even possible.

No problem. Thanks for the merit.

@retprogramisto, awesome job! This is more along the lines of what I was hoping for when asking to explain bitcoin and its terms in newbspeak. I will be updating the Q&A section based on some of your answers. Thanks for taking the time to break it down!

Edit: added some of your answers. Enjoy the merit! Feel free to ask any common questions that you're asked by bitcoin noobs and non-believers!

(Sorry that the responses are long. I originally wrote this in a text file and cant find a spoiler tag. If this is a problem, I can summarize the answers.)

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Q. What is Bitcoin? Isn't it just made-up money?
A: Bitcoin is a digital currency based on cryptography. It is the equivalent of cash, but for the internet.

You can download a bitcoin wallet to generate a bitcoin address and private key, and share the bitcoin address to receive money. Make sure to keep your private key safe and dont give it to anyone (treat it like a password, as anyone with access to your private key can steal your bitcoins).

 You can buy and sell bitcoin in centralized exchanges or p2p exchanges like localbitcoins, or you can earn bitcoin, if you sell a product or service.
 
Right now it is unprofitable to mine bitcoin with a CPU/GPU (although pre-2013 this used to be the main way to earn bitcoins) and mining now requires ASIC hardware and low electricity costs.

Bitcoins price is based on supply and demand. This means if a lot of people want to buy bitcoin, and few people are prepared to sell (hodlers), the price will increase. Bitcoin is also deflationary (less bitcoins are mined per 4 years, and the final bitcoin will be mined in 2140), which means the supply slowly decreases, and with constant or increased demand, the price of 1 bitcoin will rise. Even when all bitcoins are mined, it is still possible to buy, sell and use bitcoin - the only difference would be increased price and tx fees.

You dont need to buy a whole bitcoin. If you cant afford to or dont want to pay $7600 (current price in Aug 1 2018) for 1 bitcoin, you can buy any smaller amount, such as 0.5, 0.0024 or 0.000123 bitcoin.

No government or bank controls bitcoin. It is controled by you, the user. You have full control over your funds, as long as you protect your private key, they cant be seized or stolen. You dont need to provide personal information to use bitcoin, all you need is a bitcoin address and private key. The bitcoin network is run decentrally on hundreds of computers, which means it is difficult to attack. And your payments are stored permanently in the blockchain, which means no one can undo them or claim you didnt pay.

Bitcoin is a new way to pay online and in reality and is potentially safer than Paypal, Venmo and bank transfers. It is open to anyone in the world with an internet connection, and offers quick payments (you generally only need to wait 10 minutes for 1 confirmation, compared to 2-3 days for a bank transfer) and low fees (e.g. for a payment of $1000 you only need to pay $1 fee).

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Q: Is Bitcoin a scam? What about a Ponzi scheme?
A: Bitcoin isnt a scam or a ponzi scheme, it is a currency. The price can vary due to changes in supply and demand, but this doesnt affect bitcoins use as a currency to buy and sell products and services online and in person.

Ponzi schemes promise unrealistic rewards and rely on new investors to pay the profits of current investors, and in the end exit scam and leave the new investors with nothing.

This is not bitcoin. Bitcoin is in essence a software run by thousands of computers decentrally (and you access this network when you use a web wallet or desktop wallet). It is based on secure cryptography. Bitcoin isnt owned by one person and cant exit scam. Bitcoin will always be available as long as there are full nodes, miners and people who want to use it. And anyone can run a full node on their computer without high expenses or detailed technical knowledge.

Bitcoin is also deflationary, which means less bitcoin is generated per 4 years, which decreases new supply and keeps the price stable or increasing. This shows that bitcoin is planned for the long-term and will be around as long as we - the users - buy, sell, hodl and use bitcoin.

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Q: Isn't it too late to get into Bitcoin?
A: It is never too late to start using bitcoin. No one can predict the future price of bitcoin, but bitcoin has a lot of potential and with more users (=more demand), it is likely that the price will increase. You dont need to buy 1 whole bitcoin if it is too expensive. You can buy any smaller amount such as 0.5, 0.03, 0.001 btc at any time. The bitcoin community is open and welcomes new users, and people are happy to give help and advice about bitcoin.

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Q: Is Bitcoin legal? I heard it's illegal in some countries. Why?
A: Bitcoin is a currency, therefore it is irrational to ban it, just as it would be irrational to ban cash or USD. Some countries claim to have banned bitcoin, but even in these countries you can still use bitcoin, download and run bitcoin software, and buy and sell bitcoin peer-to-peer. If the legality of bitcoin concerns you, you can search "is bitcoin legal in [country]" in any search engine.

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Q. Don't people use Bitcoin for the black market or for illegal stuff?
A: The majority of bitcoin transactions and usage is to buy and sell legal goods and services and to legally trade bitcoin-fiat or bitcoin-altcoins. Bitcoin can be used as one of multiple payment methods in darknet marketplaces, but cash and even traceable bank transfers can be used for illegal purchases. This is not the fault of bitcoin, just as it isnt the fault of banks or cash, when these payment methods are used for illegal purchases. Associations of bitcoin with illegal uses are generally FUD, designed to encourage you to sell your bitcoin cheap, so that FUDers can profit. You wont be accused of crimes, if you use bitcoin, just as you cant be accused of crimes, if you simply carry cash (also anonymous and can be used for illegal purchases) in your wallet.

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Q: Why is Bitcoin so expensive? I can't afford a bitcoin.
A: Bitcoins price depends on supply and demand, i.e. the price of bitcoin depends on how much people are willing to pay for it.

Because bitcoin is a deflationary currency, you cant simply print more money, if more people want to have it. Generation of new bitcoin requires electricity (=proof of work mining), which means it costs money to make new bitcoin. Additonally the block reward is halved every 4 years, which means miners generate less bitcoin as time goes on.

This means that the supply of bitcoin decreases over time (due to less bitcoin in circulation due to hodlers) and increased demand will increase the price of 1 bitcoin.

Price spikes may also happen suddenly due to increased demand in bitcoin and constant supply. Meaning, if a lot of people want to buy bitcoin and there is a limited number of bitcoin on sale, the price can increase rapidly.

This means that people who bought bitcoin at a lower price can earn profits, if they sell some of their bitcoin at the higher price. Or they can hold their bitcoin (hodl) which decreases circulating supply and therefore can increase bitcoin price.

You dont need to buy 1 whole bitcoin. You can also buy 0.5, 0.03, 0.0001 btc. The smallest unit of bitcoin is a satoshi and equals 0.00000001 btc.

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Q: If Bitcoin isn't bad, why do famous financial gurus like Warren Buffet warn us to stay away from it?
A: Banks, gurus and governments want the world to stay as it is. They dont want to lose power, influence or profits to bitcoin. Therefore they spread FUD (fear, uncertainty and doubt) and false assumptions about bitcoin, to discourage people to use it.

Bitcoin can be liberation from financial institutions like banks and credit card companies. People can use bitcoin freely and anonymously like cash, without required trust in a third party (how can you know that your bank keeps your money safe? that it doesnt invest your money into causes you disagree with? that it cant be stolen or seized?).

Bitcoin can be a viable alternative to Paypal, banks and credit cards to buy online and in person, as you dont need to trust a financial institution with your money. With  bitcoin, people can send money internationally to anyone with processing times as low as 10 minutes and fees as low as 50 cents. No monthly fees, personal information or long contracts required. Bitcoin puts the control back in your hands - if you protect your bitcoin private key, only you have control over your money and no one else can access it.

It is clear to see the benefits of bitcoin over traditional payment methods, and banks can see this too. Bitcoin is a competitor to banks and some banks see it as a threat, while other banks greet bitcoin and even integrate crypto trading into their offers.

That is why it is better to do your own research and read multiple sources, instead of naively believing "gurus" or "leaders". These people can have agendas and give misleading information to discourage people. Therefore as with any research look at a variety of sources and think critically about the information you read.

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Q: How do I cash out Bitcoin?
A: You can cash out bitcoin to fiat (bank transfer, cash, etc) via many routes.

If you want to sell bitcoin for bank transfer, you can use a centralized exchange such as Coinbase.com (US), Poloniex.com (Intl) or Bitpanda.com (EU). Localbitcoins.com and Liberalcoins.com are decentralized p2p marketplaces that also offer bank transfers.

If you want to sell your bitcoin for cash, you can check Localbitcoins.com and Liberalcoins.com for cash in mail or cash in person trades. Bisq (https://bisq.network) is another decentralized exchange. Additionally you can check local bitcoin meetups or find a buyer in the Local topics in Bitcointalk. Some cities have bitcoin ATMs where you can sell bitcoin directly for cash at any time, you can check the list here: Coinatmradar.com This is the most anonymous way to cash out bitcoin, as it doesnt require KYC (scan of passport or drivers license).

Additionally there are some bitcoin prepaid debit cards (VISA and MasterCard). You order the card, receive it in the mail, then transfer bitcoin to the card (your balance will be in USD or EUR). Then you can spend the funds in any online or brick and mortar store and withdraw funds from regular ATMs. Some current providers are Wirex (EU), WageCan (Intl) and BitPay (US).

There are other ways to cash out bitcoin, such as to other payment processors like Skrill or PerfectMoney, to store giftcards or prepaid phone credit. You can check decentralized exchanges such as Localbitcoins.com and Paxful.com to see these other methods.

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Q: Is Bitcoin safe?
A: Bitcoin is safe if you protect your private keys. It is better to use a paper wallet (access with https://coinb.in), trusted desktop wallet like Electrum or secure hardware wallet like Trezor or Ledger. Dont share your private key with anyone and ignore all phishing emails/social media messages. Check wallet and exchange urls and bitcoin addresses carefully to avoid typos. If you use Windows, use anti-virus software to protect against viruses that can steal bitcoin. If you buy or sell a product or service for bitcoin, make sure to use a trusted escrow. If you trade bitcoin, dont keep your money on the exchange - transfer it to a wallet that you control and only transfer to exchange when you want to immediately trade. Avoid HYIP programs, bitcoin doublers and cloud mining as these are generally scams. Be careful when you invest into any coin or ICO, as the market could always change and there are no guarantees or refunds. Good advice for the world of crypto: 1) Keep your private keys safe and private 2) Never invest more than you are prepared to lose

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Q: Who controls Bitcoin?
A: No single person or group controls bitcoin. Bitcoin is a decentral cryptocurrency, which means thousands of people cooperate worldwide to provide full nodes and miners.

The bitcoin technology itself was created by Satoshi Nakamoto and is developed by Bitcoin Core team. The Bitcoin code is open source, which means anyone can audit it. It is possible to contribute to the code and suggest improvements.

Due to blockchain technology, no one can reverse confirmed transactions and generation of new coins requires proof of work (electricity costs) and the total supply of coins is limited, which means that no one can generate new coins from nothing and cause inflation. Due to cryptography, it is currently computationally unfeasible to crack a bitcoin private key. The only way to lose your bitcoin is if you store it with a third party (exchange or web wallet), publish your private key (accidentally or due to phishing attack), or you lose it and dont have backups (always keep encrypted backups of your private keys on different mediums).

The price depends on supply and demand. While the media can influence hype or FUD and whales can influence the market, no single person can decide the price of 1 bitcoin in USD.

When you own bitcoin in a wallet, it is under your control. No one can seize or steal it, as long as you keep private keys safe.

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Q: Will Bitcoin make me rich? (asked by Walrus1 here)
A: There is no guarantee in any market and useful advice is "Dont invest more than you are prepared to lose". While there are good reasons for bitcoin to increase in value, nothing can be guaranteed.

Bitcoin offers many opportunities to earn money online - from trading, sale of goods or services or mining - and many people profit from bitcoin.

However, bitcoin is a currency and not a get-rich-quick scheme. You can definitely earn money with bitcoin, but you need to make effort. Check bitcointalk.org and reddit.com/r/bitcoin to learn how to earn with bitcoin.

Technically speaking, Bitcoin isn't a currency, and that's the argument that most noobs throw back at me, because they've seen it on the news, and how the SEC or US gov doesn't qualify it as a currency or "money".

When I'm asked about the volatility of bitcoin, I tend to steer them towards the conversation of precious metals, and how they're valued based on the supply and demand at any given time, along with the limited quantity available. Gold isn't a currency, but it's still bought and sold as a commodity, much like bitcoin.

You all don't need to answer these questions so technically. Chances are that most bitcoin noobs won't understand any of these terms, and that they'll be more confused than before you answered the question.

Review the original list of questions, and try to answer them in terms that are easy to understand for people that have never experienced crypto.

Good luck, all!

Q: Isn't it too late to get into Bitcoin?
A:My opinion is,people claim every year that it's too late to get into Bitcoin but compared to trillion dollar Stocks market we are still in terms of billions,so Bitcoin has huge potential to grow in future,this is in terms of price and trading.

In terms of technology to get into bitcoin,the technology still holds the value but lacks in quiet few things like complete anonymity and scalability.

That's not a good explanation. Most people are being told that they can become rich if they buy Bitcoin and hold it. The only problem is that the value of Bitcoin increases thanks to the effort of our community. Investing in ICOs and trading is a different thing and I doubt that an ordinary person would risk their money and buy some altcoins. Most ICOs these days are only about shiny pictures which aim is to attract investors. Do you really want to exchange your precious bitcoins for some worthless tokens? You'd better bought Monero, Litecoin or any other cryptocurrency which is unique.

Q:Isn't it too late to get into Bitcoin?

A: No,with its limited supply and being the main currency in this very young crypto market bitcoin will always have a huge potential to grow..

This world have an unlimited amount of paper money to buy limited amount of bitcoin.

Q:Where did Bitcoin story begun?

A: The Bitcoin story began on a cryptography message board when the world was in the midst of the 2008 financial crisis, a time when trust in traditional financial institutions was at an all-time low. A mysterious poster using the name Satoshi Nakamoto posted a paper entitled Bitcoin: A Peer-to-Peer Electronic Cash System. It laid out the framework for "a purely peer-to-peer version of electronic cash" that would replace the need for trust in banks and governments with reliance on computer code, algorithms and cryptography.

So what was so special about Nakamoto's proposal? It was not the first digital currency ever attempted - it had several predecessors that all failed, mainly because they were unable to solve what's referred to as, the "double spend problem", without appointing some kind of trusted 3rd party to make sure no one was cheating the system. If a 3rd party is needed to verify transactions, it starts to look like a bank, which is precisely what Bitcoin aimed to avoid.

I see that there are a few answers to these questions already posted however none of them seemed to hit quite the right note with me so i figured i'd post my own answers for anyone else to peruse.

Q: Why is Bitcoin so expensive? I can't afford a bitcoin.
Bitcoin is so expensive because a number of people derive a given value from it for a variety of reasons. There are the speculators that see its volitility as a positive as use it in order to make short term gains on swings in demand. There are people who believe it is a revolutionary friction-less currency that can be used globally without the need to third parties such as banks. Then there are people that see it as something that may increase in value and believe that they will be able to sell it to the next guy for more money. All of these reasons tie into each other and can play off against each other. With the introduction of segwit and lightning network (decreasing friction in terms of fees) there will probably be more demand from persons wanting the global currency, that plays into the group that hold for increased value, but then these people hear about a government thinking about banning its use and then the volatility seekers get their fill.
You don't need to be able to afford a bitcoin, it can be broken down into units called Satoshis which is 0.00000001BTC making it more accessible that some people give it credit. If your purpose is gains you can just make a % gain based on your initial capital.

Q: Will Bitcoin make me rich?
A: Bitcoin will not make you rich. Your financial interactions with bitcoin may be able to generate wealth for you, perhaps more so that more traditional investments, however the existence of bitcoin will not inherently make you rich. The globe is scattered with people that got sucked into fomo, and purchased during the euphoric 20k run up that are now licking their wounds. Bitcoin will not likely make them rich. There are also swarms of people out there that left their coins on exchanges that were hacked, did not securely hold their private keys or just lost their harddrive with keys on it. Bitcoin will not make them rich. Bitcoin is like train tracks, you need to have both a train (capital) and the ability to operate it in order to get to your destination. The world is littered with train-wrecks from people who thought "bitcoin will make me rich" and did not take the time and diligence to find out How bitcoin Can make you rich. 

I'll probably be back for others later.

A: A lot of people become interested in Bitcoin because of it's price spike but other than that bitcoin transactions are relatively fast, anonymous, and tax free. Bitcoin has a limited supply and because of the interests it got the demand becomes higher. Having a high demand with a limited supply will drive the price up . That's how bitcoin reached it current price right now .

Do you really need a bitcoin? Do you know that there's a lot of bitcoin alternatives that's way more cheaper? I'll give you an example we have Ethereum which is faster than bitcoin and cheaper than bitcoin. But if you really want to have a bitcoin you can offer your services or products in exchange for bitcoin .

OP: I think we should add this question

Q: Why is Bitcoin so expensive? I can't afford a bitcoin.
A: 1. It's the first decetralised digital currency in the world.
    2. It's easy to trade as almost all market trade bitcoin.
    3. With limited supply of 21 milion and more and more people start aware about bitcoin, so it's all depends on Supply and Demand.
        More demand bitcoin has, ore expensive it will be.

I want to answer
T. Why is bitcoin so expensive ..?
A. Due to the cause of its rising prices and the falling of bitcoin prices depending on supply and demand,
his example when his demand is high and the amount of citcoin available is low then his bitcoin price will be high .

Trying to do some answer with limited knowledge and hope it helps 

Q: Is Bitcoin a scam? What about a Ponzi scheme?
A: Ponzi scheme / Pyramid scheme definition by society: Is a high yield investment program which offer high interest beyond imagination to an investor. Where did they got the money for that high interest? It was gathered from other new investor's investment so basically the interest money generated by newcomers and if there is no new guinea pig (new investor) or the quantity of new investors money can't cover the interest regularly then the investment will failed. Is bitcoin a scam if you compared with ponzi scheme, then it isn't because bitcoin didn't generated interest or money from newcomers rather than the price of it depends on the demand and supply.

Q: Will Bitcoin make me rich?
A: It depends, bitcoin is an investment so like any other investment you can either make money or lose money from it. So if bitcoin makes you rich then its probably because you've been good at making decision from it. 

Q: Why is Bitcoin so expensive? I can't afford a bitcoin.
A: What do you know about assets? like gold. Gold can not be created, but can be found. Just like bitcoin. Bitcoin is discovered through mathematical problem solving which involves a series of complex algorithmic calculations on the computer. This is what makes miners sell bitcoins at a great price. And because the number of bitcoin is also limited. Bitcoin itself was originally designed to produce only a limited amount of 21 million pieces. Currently it is about half of that number mined and circulated. But the price of this bitcoin can still rise and fall. The cause of this price volatility is from demand and supply. So, if you want to buy bitcoin, Try to buy at the lowest price. Because bitcoin is long-term investment.

How can I get free bitcoins?

I feel like I could answer this one mostly due to the fact it's the way I'm getting my share of Bitcoin.

There are several ways one could get free Bitcoin one of these ways are through websites called faucets, these websites pay people a small fraction of Bitcoin based on their completion of simple task as filling out  surveys, Recaptecha and solve captcha's to claim these small portions of any cryptocurrency that they might be interested in.

While another way to earn free Bitcoins would also be to participate in a airdrop for less known cryptocurrencies and then exchange those coins for Bitcoin as well.

I would like to answer the question about, "Is Bitcoin legal? I heard it's illegal in some countries. Why?", Each country has its own legal considerations of bitcoin and cryptocurrency. Some classify bitcoin as money and legal, some consider bitcoin as either legal or illegal. The United States is a country with the most users in the world. buying and selling and other transactions using bitcoin is legal there. And in japan as well, Bitcoin has been legalized there for digital transactions.

Q: Will Bitcoin make me rich? (asked by Walrus1 here)
A: Bitcoin can not make you rich. Bitcoin is a tool. Ask yourself, can a hammer, build a house for you? Knowledge and practice, will help you to build a house with his help. Learn the mining, market, entry points, exit, exchange trading, investment, try, make mistakes, but do not give up. And YOU will became rich, USING Bitcoin.