Bitcoin,the buzz of the year 2013 that has broken all leaps and bounds and about which everyone seems to have an opinion. It is the most fluctuation currency available today and that’s why it is also revealed by market experts that Bitcoin will be the top source in 2014 to make money with. This guide will help every individual who has the basic knowledge of English to understand anything and everything about Bitcoin. What it is, how it is priced, how you can get Bitcoin, advantages and disadvantages of bitcoin and at-last how you can actually earn money with it. So enjoy reading it!!!
What is Bitcoin?
Bitcoin is a digital currency that is used to pay for Online purchases and transfer. The purpose of Bitcoin and traditional currencies are same but they are widely different in their existence: one is virtual while other is physical. It can be seen just like a share of a company which doesn’t have a physical existence but can be purchased with the physical amount.
Every single transaction i.e buying or selling a bitcoin is recorded digitally in a transaction log called as “blockchain”. It contains the necessary information about the timing, quantity, owner and sender of the bitcoin.
One major term that is used frequently while talking about bitcoins is “Miners”. Credentials of Blockchain that includes verifying of ownership, updating the database, Security and privacy are all checked and confirmed by Miners.
Advantages of Bitcoin
You don’t need to carry cash or gold for bigger transactions. Big players lke reddit, overstock.com and some brick and mortar Retail shops has started accepting Bitcoins and sooner it will be implemented for a wider reach.
2 No Additional Charges:
Bitcoins has no to very small % of fee for every transaction made. This is much more advantageous as compared to Credit Cards where we pay an additional 3-4% to card dealers(Visa, American Express, MasterCard) for every transaction we made through our credit card. Moreover there is no limit to the amount of money we spend in case of bitcoins.
Each bitcoin transaction is showed publicly online except Buyers and Senders identities. The entire bitcoin network is made aware about the complete transaction.
4 Much lesser Inflation and Collapse Risk:
The most important advantage of owning a Bitcoin is that is completely independent of a Country’s economy. Dollars, Indian Rupee widely varies depending upon the Political and economic changes. But Bitcoin is an independent entity, whose amount is fixed.
Additional guide: How to Make Money with Online Casino
How bitcoins are priced?
Bitcoin is the most volatile currency present today. It’s price is dependent on the value of other currencies especially dollar and it’s value fluctuates to a greater extent. But there is no centralised system that set it’s value.
Whenever a bitcoin is transferred from one account(sender’s) to another(buyer), it is done at a price that is currently prevailing in the country & that should be made aware to both parties.
The price of Bitcoin is purely based on demand and supply. When demand of bitcoins increase, it’s price boosts and when it decreases, the price is lowered down. This is due to the finite no. of bitcoins available and steady rate with which bitcoins are created.
How to start with Bitcoins ?
The very first thing to make money with bitcoin is to have a “Bitcoin Wallet”. This is just like a regular wallet except that is virtual and is operated on computers and mobiles to store bitcoins. It is just a software or an app that needs to be installed.
“Multibit” and “Bitcoin Wallet” are 2 most popular and legit Bitcoins wallet available. Multibit is for desktop that runs window, Linux and Mac and Bitcoin Wallet is an app for Android and Blackberry mobile OS.
When you run the setup, it will start downloading tons of blockchains and other essential credentials. It will be long process and will occupy a couple of Gb’s. The very first thing that you need to do after it is installed is to have a copy of wallet.dat file on a external drive(pen drive or hard drive). If for any reason your computer crashes than this is the only means by which you can get all your bitcoins back.
How do I get Bitcoins?
Getting a Bitcoin is not as complicated task as it seems. The most common way to get it is with the help of online Bitcoin exchanges. What you have to do is to register yourself there, enter your bank details and convert your local currency into bitcoins. You are filling your bank details, so you must be careful about choosing a quality Exchange(as there are hundreds in the market). A quick research i have made on it, and depending on you country you can choose the most legit Exchanges by clicking here. The most popular among those is Mt. Gox
How to Make Payment with Bitcoin?
Transferring or doing a payment with the help of bitcoin is a much simpler task. You will need the a wallet, recipient address and of course the bitcoins. With these 3 you can simply make transaction to anywhere.
There are 2 addresses that are involved in Bitcoin. First is Public that is made available to everyone and second is private that is to keep safe. Whenever a bitcoin is transferred the public addresses of both sender and receiver are made available to outside World. Therefore a new address is to made with each transaction(it’s not compulsory).
How can I Make Money with Bitcoin?
I bet, this is the answer you are waiting for the last 3 min after you have read all the above stuff. The wait is over and below I have described all the ways with which you can make money with Bitcoin – Currency of the year(2014)
The most common and safer technique with which anyone having a Bitcoin in his/her wallet can earn is by trading.. The difference in the value of bitcoin in different countries can be seen as an earning source. This is generally described by the term “Arbitrage Play”. Bitcoins can be traded to open international market. Even a slight change in the price of country’s currency can give you unexpected result.
Example: Suppose you have 1000 BTCs in your wallet. The current value of BTCs as seen on Mt.Gox in euro is 685.75€. If you sell all these bitcoins than you will get
685.75 * 1000 * 1.36 = 9.32 million $
On the other hand, The current value of BTCs as seen on Mt.Gox is 950.80$ . If you take the advantage of arbitrage, than you will get
950.80 *1000=9.5 million $.
So you have just earned a fancy amount of money(of course there are some transaction and currency conversion charges applied)
The arbitrage are generally the banks and brokerage firms that completely differs from country to country and where you can sell your bitcoins.
#2 Preserving the Bitcoins
Saving bitcoins for the future sounds to look like a cool job. Buy some bitcoins, save it, wait for it’s value to rise and than bang, Sold it!!. This is just like investing in commodities or holding shares that generates a quality back end income if it’s value increases. But this may not be the thing that you should gamble on. Since it has bigger risk involved in it and with the recent changes it is quoted that “holding a bitcoin for a greater time will definitely loose you money”. But this can generate you million of dollars if everything went right.
The 2 methods described above are the most popularly used method today. There are also other smaller methods or techniques with which you can make money with bitcoin, but these are out of the scope of this post.(I will later publish about these)
Although I have explained everything that you want to know about What is Bitcoin and how to make money with it. But still there are some aspects that you must know before proceeding with it. First is it is completely intraceble: Once you transferred it you will never able to get it back. Secondly, it is easy to loose and hard to trade. Once someone will heck into your Wallet, you will never able to get a single penny. Also no stolen or lost bitcoin can be recovered. The trading of bitcoin is not as easy as I have described above. You actually have to learn a lot form your side for a successful trade. Volatility and newness are the other factors which one simply can’t trust blindly.
So instead of blindly investing in Bitcoin, you must get an in-depth knowledge about the entire network. It has pros and cons(which every big earning source has).It may be million dollar step or the most regreatable one. It completely depends on how you understand it and implement it. You can check out it’s official site bitcoin.org for further info.
If you have any other FAQ’s about Bitcoin, you can simply comment in the below section or you can directly visit a an FAQ forum and if you enjoyed reading it, than don’t forgot to share it on social media.
4 thoughts on “The Layman Guide on How to Make money with Bitcoin”
Indeed, “you must get an in-depth knowledge about the entire network. It has pros and cons (which every big earning source has) “. It’s also possible that many organizations could use Bitcoin as payment for all types of services because of the anonymity the network offers. Take for example existing casino in the web like BetCoin™, it utilize litecoins and bitcoins to all casino games as transaction medium in order to achieve the highest gaming and transaction security and provably fair gaming.