What is Bitcoin?
Bitcoin is a highly innovative payment network that employs the use of a new kind of universal money. It makes mobile payments very easy by allowing the user to pay with just a simple two step scan and pay process. There is no need to sign up, swipe a card, type in a PIN number, or give a signature. All that is required to receive a Bitcoin payment is to show the Bitcoin QR code within the Bitcoin wallet app, then allow the other user to scan your mobile device. The two phones can also be touched together to complete the transaction though the use of something called NFC radio technology.
Bitcoin wallets are available online via websites such as www.coinbase.com and www.blockchain.info. Bitcoin wallets can be created on your personal computer with several different software packages. Bitcoin wallets can also be stored within “paper wallets”; these paper wallets consist of a wallet ID as well as a Key to enable spending of Bitcoins from the paper wallet.
Safe and Secure. Bitcoin offers unparalleled control and security over money. All Bitcoin transactions are secured using the best in military grade cryptography. No other user or entity will be able to charge a Bitcoin user for any amount or make a payment on another user’s behalf without going through the payment initiation process described above. As long as required steps are taken to protect your wallet, Bitcoin allows for complete control over the funds as well as a strong level of protection against most types of user fraud.
- Bitcoin can work everywhere, at any time. Just as with email, matching service providers or software applications is not required to correspond with other users, Bitcoin can work with any user currency. This allows friends, family, and customers to stick with their preferred method of payment and currency, as they are all compatible with Bitcoin. The same open technology is employed, and the Bitcoin network never takes a break; it is open 24 hours a day, seven days a week, 365 days a year. Unlike banks, Bitcoin is open and available for use on every holiday.
Rapid international payments. International users love Bitcoin for its convenience and rapid service. For example, Bitcoins can be transferred from the country of Africa over to Canada in about 10 minutes. This is possible because there isn’t a banking system or infrastructure to slow down the process. Users also won’t receive outrageous fees or have to worry about the transfer being frozen. Users are able to pay their neighbors in the same manner as a member of their family in another country can be paid. Bitcoin makes it all possible with no hassle or long wait times.
Low or no fees. Bitcoin allows for the sending and receiving of payments at zero cost or very low cost. With the exception of some special cases, such as very small payments, there is no enforced fee to use Bitcoin as a sender or a receiver. However, it is recommended that users pay a higher voluntary fee to remunerate the people who operate the Bitcoin network and to ensure faster confirmation of Bitcoin transactions.
Your identity is safe and protected. When you use Bitcoin, there’s no credit card number to deal with that a malicious hacker can intercept, collect and use to try and impersonate an unsuspecting user. As a matter of fact, it’s even possible to send Bitcoin payments without revealing one’s identity at all, similar to using cash to pay for goods and services. Users should, however, take note that certain steps and efforts are required to fully and comprehensively protect privacy.
Privacy Considerations and Traceability
Bitcoin is sometimes perceived as and known for being an anonymous payment network. In reality, Bitcoin is actually one of the most transparent payment networks around. That said, Bitcoin provides security and privacy for users when implemented correctly. Users should keep in mind that it is their responsibility to use safe practices so that privacy can be assured and maintained.
Bitcoin offers unprecedented transparency for users that put a premium on this feature. All of your Bitcoin transactions will be traceable, public, and permanently stored within the Bitcoin network database. Because of this, if privacy is desired, each Bitcoin address should only be used once. Users’ Bitcoin addresses are the only piece of information needed to define where Bitcoins are allocated as well as where they have been sent. These Bitcoin addresses are created privately within each user’s wallet. Once these addresses are used, they are connected with the history of all transactions that have been associated with them. Anyone can potentially see the balance and all of the transactions of any address. Since users must typically reveal their identity to receive goods and services, Bitcoin addresses are by nature not fully anonymous. Again, for these and other security reasons, Bitcoin addresses should be used only once. Users should also take care not to disclose their Bitcoin addresses in other venues.
Unless the user is fine with receiving public payments or donations with full transparency, using Bitcoin addresses in any public space via a website or social network could jeopardize privacy. If public spaces are used, users should remember that if funds are moved with one address to another user addresses, this history will be traceable. If privacy is paramount, users might also want to take care not to publish information about purchases and transactions that could allow another person to identify any of the Bitcoin addresses.
IP addresses may be of concern to some users; because Bitcoin is a peer-to-peer network, transactions’ relays and IP addresses can be logged. Users might want to consider hiding their IP addresses with a tool like Tor when using Bitcoin so that their IP addresses won’t be logged.
Users should also be aware that math-based digital currency is a considered a technology that has the potential to vastly alter banking and commerce in a way that is similar to how the Internet has altered communications. Virtual Currency is treated as property for U.S. Federal Tax Purposes, and general rules for property transactions can apply to Bitcoin users at tax time.
North Dakota hosts many international tourists, seasonal agriculture workers, oil workers, and international university students. These international visitors should have the ability to spend Bitcoin in North Dakota or convert their Bitcoin to USD. Bitcoin is coming to North Dakota and state regulators, city government, local merchants, and consumers can be excited about the many opportunities that come with it.