Frequently Asked Questions

There are a few reasons why you might want to decide to use Bitcoin over traditional currencies. These are a few of the most compelling:

Convenience! Bitcoin can be used anywhere, anytime, and in any amount. There are no transaction limits, no borders, no public holidays, no time zones, no weekends, no bureaucracy – all aspects of Bitcoin are instead controlled by the users.

Lower fees! When receiving Bitcoins you do not pay any fees, and when sending Bitcoins from your wallet, often you will be given an option to choose how high your fees are depending on how fast you want the transaction to be verified and completed.

Additionally, all transactions, no matter how many Bitcoins you are sending, will cost the same amount in fees. You can send 500,000 BTC or only 5 BTC and the fee for the transaction will be the same.

Merchants are also offered special merchant processors that assist them with processing transactions.

Security! All Bitcoin transactions are irreversible, secure, and contain no personal information.

For users, this means merchants cannot charge them without their knowledge – which can be done in more traditional transactions, for example if your credit card is skimmed.

For merchants, this means they can operate in locations that would traditionally have high fraud risks, while keeping their services or products safe from fraud.

Transparency! All transactions are transparent and clear on the public block chain therefore if there are any issues with a transaction, they can be instantly looked up on the public ledger and verified.

What happens if I lose my bitcoins or someone steals them?

Bitcoin wallets are protected by your own private key, so it isn’t possible for someone to steal them.

Since Bitcoins are stored in your software wallet, it also isn’t possible for you to lose the them.

However, you can lose access the wallet which contains your Bitcoins if you lose your private key.

bitcoin is a decentralised digital currency based on open source code – known more commonly as a cryptocurrency. Unlike traditional currencies bitcoin is not printed, it was created and is held electronically (more like a debt or credit card). While bitcoin is not a physical asset, bitcoin balances are kept in a large network which distributes the information among the holders of each balance. This network cannot be altered by anyone.
bitcoin is also the largest cryptocurrency in the world in terms of market cap. While bitcoin with a lowercase ‘b’ is associated with the currency (coin), Bitcoin with with a capital ‘B’ is associated with the peer-to-peer network that underlies the whole system. 

Bitcoin works as a decentralised peer-to-peer virtual currency.

Let’s break that down:

‘Decentralised’ means that there isn’t an overarching body that regulates bitcoin transactions. Instead, bitcoin operates according to a majority-rules principle, where a transaction won’t be considered valid until at least 50% of the machines on the network have verified it.

‘Peer-to-peer’ means that you can send bitcoins to other users on the network without having to go through any middlemen – such as a bank. Instead, you might say that you wanted to buy a pizza using bitcoin, and you’d see who was willing to sell pizza to you while accepting bitcoin as a form of payment.

‘Virtual currency’ means that no physical, tangible bitcoins exist, they are entirely electronic. There are no metal bitcoins out there that you can hold in your hand like you can with Australian dollar coins or notes, and there likely never will be.

However, at a very basic level, bitcoin works in the same way as many other currencies around the world. It can be exchanged for goods and services with vendors who accept it as a form of payment. They are also stored in digital bitcoin wallets, not dissimilar to the physical wallet in your pocket.

This is how a transaction works:

1. If you wanted to buy something with bitcoin, you’d go to your bitcoin wallet and choose to send an agreed amount of bitcoins to a vendor for a product.
2. Once a transaction has been completed, it is lumped together with other completed transactions into a ‘block’, which is then assigned a unique signature or reference number – called a ‘hash’.
3. Once a block has a hash, it is broadcast to the network for verification and if it is determined to be valid, it is added to the ‘blockchain’ for everyone else on the network to see.

There is some controversy and mystery surrounding the origin of Bitcoin.

Officially, Satoshi Nakamoto is the person responsible for Bitcoin.

Nakamoto’s work first surfaced in a paper around October of 2008 and the first software responsible for launching the network and the first unit of bitcoin currency was released in January, 2009.

Nakamoto continued to work on the Bitcoin project up until mid 2010, when he vanished and Gavin Andresen took on the role of lead developer for Bitcoin.

However, Mr. Nakamoto was incredibly secretive about his identity so there is no proof that he was the original creator of Bitcoin – or even existed.

In fact, the most widely accepted origin story is ‘Satoshi Nakamoto’ is merely a pseudonym for the person or group that created Bitcoin. The true origin of Bitcoin remains an unsolved mystery.

The blockchain is the public record of all bitcoin transactions that have ever taken place.
This transparency is one of the most attractive aspects of the Bitcoin network because it means that everything that has ever happened on the network – every transaction, every change to the system, every bitcoin ever spent – is available for everyone to see, all the way back to the genesis block.

So, while bitcoin and the Bitcoin network might not be subject to regulation by organisations such as the Financial Conduct Authority (FCA) or the Security and Exchange Commission (SEC), the blockchain takes on this role.