Some things you need to know
If you are about to explore Bitcoin, there are a
few things you should know. Bitcoin lets you exchange money in a
different way than with usual banks. As such, you should take time to
inform yourself before using Bitcoin for any serious transaction.
Bitcoin should be treated with the same care as your regular wallet, or
even more in some cases!
Securing your wallet
Like in real life, your wallet must be secured. Bitcoin makes it
possible to transfer value anywhere in a very easy way and it allows you
to be in control of your money. Such great features also come with
great security concerns. At the same time, 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.
Bitcoin price is volatile
The price of a bitcoin can unpredictably increase or decrease over a
short period of time due to its young economy, novel nature, and
sometimes illiquid markets. Consequently, keeping your savings with
Bitcoin is not recommended at this point. Bitcoin should be seen like a
high risk asset, and you should never store money that you cannot afford
to lose with Bitcoin. If you receive payments with Bitcoin, many
service providers can convert them to your local currency.
Bitcoin payments are irreversible
Any transaction issued with Bitcoin cannot be reversed, they can only
be refunded by the person receiving the funds. That means you should
take care to do business with people and organizations you know and
trust, or who have an established reputation. For their part, businesses
need to keep control of the payment requests they are displaying to
their customers. Bitcoin can detect typos and usually won't let you send
money to an invalid address by mistake. Additional services might exist
in the future to provide more choice and protection for the consumer.
Bitcoin is not anonymous
Some effort is required to protect your privacy with Bitcoin. All
Bitcoin transactions are stored publicly and permanently on the network,
which means anyone can see the balance and transactions of any Bitcoin
address. However, the identity of the user behind an address remains
unknown until information is revealed during a purchase or in other
circumstances. This is one reason why Bitcoin addresses should only be
used once. Always remember that it is your responsibility to adopt good
practices in order to protect your privacy.
Instant transactions are less secure
A Bitcoin transaction is usually deployed within a few seconds and
begins to be confirmed in the following 10 minutes. During that time, a
transaction can be considered authentic but still reversible. Dishonest
users could try to cheat. If you can't wait for a confirmation, asking
for a small transaction fee or using a detection system for unsafe
transactions can increase security. For larger amounts like 1000 US$, it
makes sense to wait for 6 confirmations or more. Each confirmation exponentially decreases the risk of a reversed transaction.
Bitcoin is still experimental
Bitcoin is an experimental new currency that is in active
development. Although it becomes less experimental as usage grows, you
should keep in mind that Bitcoin is a new invention that is exploring
ideas that have never been attempted before. As such, its future cannot
be predicted by anyone.
Don't forget government taxes
Bitcoin is not an official currency. That said, most jurisdictions
still require you to pay income, sales, payroll, and capital gains taxes
on anything that has value, including Bitcoin.
