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What Is Bitcoin? And Is It Safe?

Bitcoin is widely touted as the money of the future. However, it has been the subject of a number of rumours and concerns that may worry nervous internet users or parents not in the know.

So what ACTUALLY is it?

Well, put simply, Bitcoin is an online payment system that uses a form of digital currency (AKA crypto-currency). Bitcoins can be used like actual money much like sending cash through Paypal, but using a different currency.

(Copyright: REX)
(Copyright: REX)



These Bitcoins are (mostly) stored in a virtual wallet and can either be saved on your computer or stored online.

Much like in-app purchases, Bitcoins may not feel like real money to youngsters, so it’s wise to educate them on how they are real money.

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How can you get Bitcoins?

Most people interested in Bitcoins buy them through dedicated sites (such as bitbargain) just like you would use a currency exchange company to change sterling into dollars or euros.

(Copyright: bitbargain)
(Copyright: bitbargain)



There is a bit more flexibility in price with Bitcoins. You decide how many you want to buy and how much you are willing to pay for them. The site will match your request with suitable seller profiles that are selling at the rate you are after.

Sellers have a Bitrating to show how reliable they are, in the same way that ebay gives it sellers a star rating. You can then pay using instant payments systems to buy them.



You can also buy Bitcoins from ATM machine like the one above.

Where Can You Use Bitcoins?

The number of retailers that accept Bitcoins as payment is still limited, and are more common in the US. However, an increasing number of large companies including Dell and Expedia have announced plans to accept Bitcoin payments.

Parents should be aware that the best know UK retailer is CeX. This is an exchange business where you can buy and sell used games and electronics. This being the case, kids are more likely to adopt the new Bitcoin currency so make sure they are fully aware of how it works.



Although users don't have to gives names, addresses or any other identifying information, all Bitcoin transactions are recorded in a public ledger, known as the 'block chain'. Other users can see how many Bitcoins are in other accounts but they don't know who the account belongs to.

Many users run lots of different bitcoin addresses so that they don't ever have a high number of coins in any one account.

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Who controls Bitcoin?

No one fully controls Bitcoin, it's completely decentralised so a bank or government does not oversee it. It’s more of a democracy of all Bitcoin users. Bitcoin can only work correctly with a complete consensus among all users.



What are the benefits?

Bitcoin transactions are pretty much instant, while a bank transfer, particularly an international one can take several days. What's more, transaction fees are either minimal or in many cases completely free.

Bitcoins are immune from inflation as only 21 million will ever be created.

Are bitcoins legal?

As with most forms of currency, the answer is yes, depending on what you're doing with it. If you're using bitcoins to pay for legal goods or services then you're fine. If you're mining bicoins (for which you need specific software) it's a little more complicated - as future laws may require you to be regulated.

Are bitcoins safe?

While mostly used by law-abiding web users, Bitcoins are also known to be popular with cybercriminals, especially when making transactions on the 'deep web'.

This is a part of the internet that is not indexed by standard search engines like Yahoo and Google, where criminals can buy black market goods. So make sure you and any loved ones stumble into that area!

Because you don't have to give away any personal information to set up a Bitcoin account, there's no real chance of that information falling into the wrong hands – which sounds like good news for nervous internet users or youngsters in particular.



However, if anything goes wrong with a transaction, there's currently little protection for consumers. Therefore, if you or your family are using Bitcoins, it’s recommended to only deal in small transactions for the time being.

For example, buying and selling a few used video games carries much less risk than shelling out several hundred pounds in one transaction for a smartphone.

As the currency is still in its early stages, it's likely that more laws and regulations will emerge over the next year or two as government agencies understand the currency more. So for the time being, keep a close eye on anyone using it – especially children.