Bitcoin FAQ

What is Bitcoin?

Bitcoin is a digital currency that can only be created, stored and used online. The number of bitcoins in circulation is capped at 21 million. However, the smallest possible denomination is 0.00000001 of 1 bitcoin, so there are plenty to go around.

Bitcoin is the most popular and widely used digital currency for a few reasons. Unlike regular money transfers, Bitcoin transactions never take more than a few hours, no matter how large the sum is, or where the user is located. Fees are also considerably lower, never being more than just a few cents. Chargebacks are not possible with Bitcoin, making fraud almost impossible. No bank, government or person controls Bitcoins. This means that, unlike fiat currency transactions, Bitcoin transactions remain anonymous and cannot be seized.

Bitcoin's legal position is improving all the time. How Bitcoin is regulated, what you can do with it, and how it is taxed still varies greatly from one country to another. In addition, new laws and regulations are being added and amended on a regular basis. If you would like to understand more about your government's position on Bitcoin and possible changes in the future, you can contact a legal adviser.

How do Bitcoin transactions work?

Bitcoin transactions send currency from one online wallet to another. First, the payee and the payer exchange a private key (a randomly generated number). The transaction then goes through a number of confirmations from 0 to 5. The most common number of confirmations is 1, however, more is recommended when sending larger amounts of bitcoins. However, it is worth noting that each confirmation takes about 10 minutes to complete in the Bitcoin network. Once completed, a transaction can be viewed by anyone in the blockchain, but no sensitive information is revealed.

How do Bitcoin transactions work?

Bitcoins can be purchased at the following places:

  • Exchanges: Buying bitcoins at an online exchange is the best option for those less interested in privacy because the exchanges often require proof of identity. As well as buying bitcoins through an exchange, you can also store them there.
  • Over the counter: This means buying bitcoins from another person directly. Although this sacrifices the anonymity of a normal bitcoin transaction, it is still very popular. There are many websites that connect Bitcoin sellers with buyers.
  • Bitcoin ATMs: These look and act like regular ATMs, but instead of receiving cash, you get a receipt with a designated code. Scanning this code adds bitcoins to your wallet.
  • MoonPay: If you choose “Buy Bitcoins” from our Cashier Menu, you can actually use a third-party service we have partnered with to purchase bitcoins with a bank account or credit/debit card, which are added to your account balance directly.”
  • What is a Bitcoin wallet?

    Bitcoin wallet is a software program in which bitcoins are stored. There are a number of bitcoin wallets to choose from. Some are cloud-based, while others are downloaded to your PC, tablet or smartphone. All of the wallets provide the same functionality, i.e. transferring bitcoins from one place to another, but each wallet has its own benefits.

    Cloud wallets are the easiest & most convenient to use. However, when storing your bitcoins in the cloud you are ultimately handing the responsibility over to the business holding your BTC. Therefore, trust is essential when it comes to storing bitcoin in a cloud wallet. We recommend the cloud wallet.

    Software wallets are downloadable programs that run on your computer, tablet or smartphone. They are considered more secure than cloud wallets because you have total control over them. However, they do still come with their own risks. The software wallet that we recommend is Electrum

    Bitcoin can provide very high levels of security if used correctly. Always remember that it is your responsibility to adopt good practices in order to protect your money. Points to consider:
  • Like in real life, do not keep all your funds in one wallet.
  • Choose your online wallet carefully, bearing in mind that a 2-step verification process is a good additional assurance to have.
  • Back your wallet up on a regular basis. Encrypting any backup that is exposed to the network is a good security practice.
  • Make sure to store your password in a safe place, be it in your mind or in a physical location. Unlike conventional banks, there are very limited options for password recovery in the Bitcoin world. Use a strong password that contains letters, numerals, punctuation marks, and is at least 16 characters long.
  • An offline wallet, also known as cold storage, provides the highest level of security for savings. It involves storing a wallet in a secured place that is not connected to the network. When done properly, it can offer a very good protection against computer vulnerabilities.
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