Bitcoin FAQs
What is Bitcoin?
Bitcoin is a type of digital money that allows people to send and receive payments without needing banks or governments. It operates on a decentralized network and is powered by blockchain technology. Bitcoin is stored in a digital wallet and can be traded through exchanges like Coinbase, Kraken, and Gemini. It’s decentralized, meaning no one entity controls it.
How do I store Bitcoin?
Bitcoin is stored in a digital wallet. You can store it in a custodial wallet on exchanges like Coinbase, Kraken, and Gemini, or in your own private wallet for full control. Beginners should consider keeping it on an exchange until they’re comfortable with private wallets. Private wallets give you more control, but you’re responsible for securing your keys.
Is Bitcoin safe?
Bitcoin is safe if you use a trusted exchange and store it securely. The value of Bitcoin has increased over time, but it can be volatile. Bitcoin is widely considered a hedge against inflation, and it has been hitting new highs. While it’s still early in Bitcoin’s adoption, it’s a high-performing asset that can preserve wealth long term. Keep it on exchanges until you fully understand how to use a private wallet.
How can Bitcoin help me?
Bitcoin can be a hedge against inflation, an alternative to traditional banking, and a way to transfer money across borders quickly and cheaply. In the U.S., many people use it as an investment platform to preserve wealth long term. Bitcoin is solving problems in countries dealing with hyperinflation, lack of banking access, and currency instability, where Bitcoin is used as a currency.
How do I buy Bitcoin?
You can buy Bitcoin through trusted exchanges like Coinbase, Kraken, Gemini, or Cash App and many others. These exchanges offer secure buying, selling, and trading of Bitcoin, making it easy to get started. Always use a reputable platform and go through KYC (Know Your Customer) to verify your identity.
Is Bitcoin legal?
Yes, Bitcoin is legal in many countries, including the U.S.
What is blockchain?
The blockchain is a digital ledger where every Bitcoin transaction is recorded. Think of it as a public, unchangeable notebook that everyone can read but no one can alter. It ensures transparency and security for all Bitcoin transactions, making it difficult for fraud to occur.
What is a private key?
A private key is like a password for your Bitcoin. It’s a secret code that allows you to access and control your Bitcoin. If someone else gets your private key, they can access your Bitcoin, so it’s essential to keep it secure.
What is a public key?
A public key is like a Bitcoin address. It's where others can send you Bitcoin, just like giving out your email address. You can share your public key with anyone who wants to send you Bitcoin.
What is mining?
Mining is the process by which new Bitcoin is created and transactions are verified. Miners use powerful computers to solve complex math problems, and in return, they are rewarded with newly created Bitcoin. It’s an essential part of the Bitcoin network.
What is a custodial wallet?
A custodial wallet is when a third party, like an exchange, holds your Bitcoin for you. It’s convenient, especially for beginners, but means you don’t have full control over your Bitcoin. Examples include Coinbase, Kraken, and Gemini. You can choose to store your Bitcoin in a custodial wallet or a private wallet, depending on your needs.
What is a private wallet?
A private wallet is one where you are the only person who has access to your Bitcoin. You store it in your own app or hardware device, giving you more control but also more responsibility. Examples include wallets like Trezor, Ledger, and mobile apps like Blue Wallet, Green Wallet, Edge and many more.