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Bitcoin can still be challenging and intimidating for new users, and many are not even aware of the other virtual currencies. The reasons for this situation, as we have discussed before, are varied. When the biggest story on bitcoin is that hackers were able to force a hospital to pay a bitcoin ransom, it can be difficult to convince the average citizen that bitcoin is used by more people than criminals. So, when someone does take the first step into the virtual currency world, it's important that they keep these basics in mind:
1. Bitcoin transactions are designed to permanent. Bitcoin does not allow reversible transactions, which can benefit scammers and thieves. So, when buying or selling to another user, you should consider looking at platforms such as Bitrated.
Bitrated creates a reputation-management system that allows users to select buyers and sellers with good reputations. It also brings in a third party to act as a trust agent, and if there is a dispute, the trust agent can intervene to ensure fairness.
2. Choose a good bitcoin wallet. In order to store your bitcoins, you need a wallet, and these come in several forms.
For example, there are online and hardware wallets. You can get an online wallet through several bitcoin exchanges and providers, or you can purchase a physical hardware wallet. This allows you essentially to keep your bitcoins in "cold storage," which means the bitcoins are stored offline.
Online wallets are more vulnerable to security breaches, so many users recommend keeping your wallet in cold storage. Another option for bitcoin users is to select hierarchical deterministic wallets. This allows bitcoing users to have a "master seed," which, in turn, allows them to create additional bitcoin addresses and back up their wallets. Some HD wallets also allow users to create subwallets with their own separate passwords, known as keys.
3. Bitcoin and other virtual currencies are naturally volatile. Bitcoin’s value can vary significantly from day to day in a way that makes using it as a traditional currency difficult. For this reason, many people buy up bitcoin for speculation purposes.
Make sure to pay attention to the current value of bitcoin on a daily basis; one bitcoin last year was worth around $250 and today it is worth more than $400.
4. Understand the basics of the block chain and the current debate surrounding it. In order to prevent people from spending their bitcoins in two places at once, miners work to confirm transactions in the decentralized public ledger known as the block chain.
The ledger is made up of blocks each 1MB in size, where transactions are recorded. Currently, there is a debate in the bitcoin community over whether the block size should be increased to 2MB or more to accommodate more transactions and speed up the process of confirmation. Currently, there has been a slowdown in confirmation speed due to an influx of transactions.
Finally, it is important to understand that we are just now entering the next stage of virtual currency technology. Banks worldwide are experimenting with the block chain to build applications.
In a young and innovative field such as virtual currency, things can change in an instant. Thus, it is important to keep up to date with the latest developments in virtual currency, because progress stops for no miner.