Frequently Asked Questions (FAQs)

What is Bitcoin?

Bitcoin is a digital currency that lives on the internet and has many of the monetary qualities of gold. This is why Bitcoin is frequently called “digital gold”.

Who created Bitcoin?

Satoshi Nakamoto. Satoshi is a pseudonym for the person, or group of people, who created the Bitcoin network. Learn more about Bitcoin origins and Satoshi Nakamoto, here.

How does Bitcoin work?

In short, Bitcoin is a digital currency and transaction network that combines old world monetary principles with new world technology! Miners secure the network, nodes make sure everyone plays by the rules, and the blockchain provides a robust and distributed ledger to make it all work. Learn about miners, nodes, and blockchain, here.

What is a Bitcoin wallet?

A Bitcoin wallet (or crypto wallet) is a software program that stores your bitcoin or cryptocurrency.

What are Public Keys?

A public key is an address that allows you to receive, not send, bitcoin or crypto.

What are Private Keys?

A private key is an address that allows you to send, not receive bitcoin or crypto. For more about public and private keys click here.

Is Bitcoin backed by anything?

This is a hang-up for many people. The US dollar is backed by a strong economy, government, and military. Is Bitcoin backed by anything? Bitcoin is backed by:

Hundreds of millions of dollars worth of hash power securing the network.

Traditional monetary characteristics and other exceptional characteristics that money has never seen before. Learn more, here.

An opt-in monetary policy that can’t be changed by politicians, bankers, or other financial intermediaries, and can be audited by anyone at any time.

Network effects and some of the greatest computer science and entrepreneurial minds in the world.

Who controls the Bitcoin network?

No one person can change Bitcoin. The Bitcoin network is decentralized and regulated by rules originally set by Satoshi Nakamoto and enforced by nodes from around the world. Some of these rules can be changed, but it is incredibly difficult to do so. Bitcoin nodes must come to a consensus on any rule changes or else the changes will not be adopted. 

Are Bitcoin digital, physical, or both?

Bitcoin is natively digital and therefore lives on the internet. There are, however, a few ‘bearer’ (meaning, whoever physically holds them, owns them) instruments such as Open Dime that allows for the physical transmission of bitcoin. The bitcoin still live on the internet, but the bearer instrument holds the private keys. So, bitcoin and crypto are digital with a few physical instruments.

How many bitcoin are there?

There will never be more than 21,000,000 bitcoin. Ever. There are currently over 18,000,000 bitcoin in circulation with the rest waiting to be released as a reward for miners. In a world of uncertainty bitcoin’s supply is capped and is certain.

Is Bitcoin anonymous?

In short, no. Each user can receive bitcoin to a public address, but each of these addresses are unique. This means that bitcoin isn’t anonymous, but pseudonymous. The blockchain makes Bitcoin the most transparent, honest monetary network in the history of exchange. 

How are new bitcoin created?

New bitcoin are created through a process called mining as a reward for the computers that process transactions and secure the network.

How do I buy Bitcoin?

You buy bitcoin and other cryptocurrencies from an exchange! Click here to see our recommendations for HODLers and for Traders.

Do I have to buy a whole Bitcoin?

NO! You can buy 1/100,000,000th of a bitcoin – or 0.00000001. You can buy a fraction of a bitcoin for pennies. This is one of the greatest roadblocks for new investors because they’re apprehensive (rightfully so!) about buying a whole bitcoin. Start small!

Is Bitcoin divisible?

YES! Each bitcoin is divisible into 100,000,000 sub-units affectionately called ‘Satoshis’ or ‘Sats’ in honor of the bitcoin creator. 1 bitcoin = 100,000,000 Satoshis (Sats).

How do you store Bitcoin?

Keep on an exchange.

Send to a crypto wallet

Send to a crypto wallet and store your keys on a hardware wallet.

Store your crypto in an interest-earning account..

Is Bitcoin a scam or a ponzi scheme?

Is gold a scam? Is gold a ponzi scheme? Bitcoin is not a scam or a ponzi scheme – it is a digital currency with incredible monetary characteristics that is capped in supply. Consider Bitcoin to be Gold 2.0.

Is the Bitcoin network secure?

Yes. The Bitcoin network has never been hacked.

Can you trust Bitcoin?

You don’t have to! You can audit the supply (can’t do that with gold or fiat currencies), you can hold your own bitcoin (can’t do that with a bank), and you can verify all the other rules that every single participant has to abide by (can’t do that with a government!).

Is Bitcoin regulated?

Bitcoin is regulated in almost every area, and many politicians are working to make bitcoin more accessible and mainstream (see: Lummis, Cynthia – Wyoming Senator).

How do I protect my Bitcoin?

There are a couple ways. If you don’t want to be responsible for holding your own keys you have to choose a respected and secure exchange. We can’t stress this enough. Check out our favorite exchanges for HODLers, here.

Is Bitcoin dead?

Despite Bitcoin being pronounced dead 1,000,000 times by the media it is not, in fact, dead. It is growing rapidly and evolving at an incredible rate. New use cases are being discovered seemingly every day, and the rate of innovation on an open source, incredibly safe, and decentralized protocol will keep it alive for a long, long time.

Do you have to pay taxes on realized Bitcoin gains?

Yes – if you sell your bitcoin / crypto you have to pay taxes on your gains as you would a stock.

What is an altcoin?

An altcoin is any digital cryptocurrency that is not Bitcoin.

What is the next Bitcoin?

There is no “Next Bitcoin”! The conditions required for Bitcoin to grow into what it is today can’t be replicated so there will never be another Bitcoin. That doesn’t mean that there won’t be other valuable or useful cryptocurrencies – there will be. Lots of other cryptocurrencies will carve out their own niche, but there will never be another Bitcoin.

What is a network fork?

There are 2 kinds of network forks:

What is a Soft Fork?

This means changes were made to the code, but there is still only 1 blockchain in the past and future. Usually, this means that even after a soft fork the non-updated nodes can still operate within the network. Soft forks are usually used for protocol and feature upgrades.

What is a Hard Fork?

A hard fork takes place when no compromise can be made between 2 visions of the future of the project. A new network is created that branches off the original blockchain. The new network is not backwards compatible to the old network and has become an entirely new cryptocurrency.

Are Altcoins a scam?

Most altcoins are scams. There are thousands of altcoins now, many of whom are no longer functional or being developed, but some of them are creating digital efficiencies that will change the world and are/will be valuable.

Is Bitcoin trading profitable?

It absolutely can be! Trading cryptocurrency is like trading ForEx on steroids. Crypto trading offers more coin pairs, more volatility, and has most of the same qualities (margin and leverage trading). Click here to see our favorite crypto trading platforms.

What percent of my portfolio should I put into Bitcoin?

This is up to the individual based on savings, income, knowledge, and conviction. We will never make recommendations on portfolio allocation percents or total dollars.

Does anyone actually use Bitcoin?

Absolutely! People all over the world use crypto as personal savings accounts and mediums of exchange. Many places that have corrupt governments or unreliable banking have switched over to crypto economies. Bitcoin Beach in El Salvador is a good example of such a place.

El Salvador has officially made Bitcoin a national currency, so yeah, people actually use Bitcoin and the Lightning Network.

Can I make money by HODLing Bitcoin?

Almost every single HODLer – ever –  has made money on their bitcoin purchases.

Is Bitcoin used on the Black Market?

It has been before, but because the blockchain is transparent it isn’t a good option. The US dollar is used much more for illegal activities, in total and as a percent, than any cryptocurrency.

What is Bitcoin mining?

Bitcoin miners are CPUs or GPUs that solve complex math problems to process transactions on the Bitcoin network.

Will Bitcoin miners leave the network if they’re unprofitable?

Yes – If miners become unprofitable they will simply turn off or sell their machines.

What if all miners are unprofitable and leave the network?

Written into the Bitcoin protocol is a safety valve called the difficulty adjustment. If lots of miners leave the network the difficulty adjusts down making mining more profitable and also protecting the network. If lots of miners join the difficulty adjustment goes up and it becomes harder to mine.

One piece of FUD (fear, uncertainty, doubt) that the media and Bitcoin critics like to point out is the infamous “miner death spiral”. This is an assumption that if bitcoin’s price were to fall miners would turn off their equipment leaving the network less secure. This would, in turn, drop the price and lead to a death spiral. The difficulty adjustment solves that problem.

What is the halving?

The halving or halvening is a pre-programmed reduction of the mining reward that occurs every 4 years. 

Is Bitcoin mining bad for the environment?

This is question basically comes down to: is Bitcoin useful or not? The people who say Bitcoin has no utility will say it is bad for the environment. The people who believe it DOES offer utility will point out a few facts:

60% of Bitcoin miners run off renewable / sustainable energy.

Bitcoin miners are also popping up in areas where energy would otherwise be wasted, but instead is converted into securing a monetary network.

Bitcoin mining is much, much better for the environment than legacy finance: primarily, legacy finance and gold mining. And the current system still leaves billions without banking or the ability to invest.

Bitcoin consumes less energy than just the United States uses on drying their clothes. This is not a joke. This is a common complaint against Bitcoin, but it really just comes down to whether or not the individual thinks Bitcoin or cryptocurrency have utility.

If you still aren’t convinced check out this article written by Nic Carter: Bitcoin Energy Debate

Are there cryptocurrency banks?

There are a few exchanges that have been granted a Wyoming banking charter – currently Avanti and Kraken have been given this charter.

Does China control Bitcoin?

No. Not even a little bit. An attack on the network would be incredibly costly, require an unheard amount of coordination, and wouldn’t really be able to impact much. A lot of Bitcoin mining is in China, but that is due to the cheap electricity. More and more miners are coming on every day from all over world, and Texas is becoming a hub of mining.

We’re leaving this one up even though China has effectively outlawed cryptocurrency mining – to their own detriment. This goes to prove that, no, China NEVER controlled Bitcoin.

Will governments ban Bitcoin?

It is our belief that the genie is out of the bottle and won’t go back in. The cryptocurrency industry is too broad, integrated, and lucrative for large countries to ban owning Bitcoin or other cryptocurrencies. Too many Fortune 500 companies own it on their balance sheets, too many senators are pro-Bitcoin, and now we even have publicly traded mega-corporations like Coinbase and Grayscale Trust from the cryptocurrency industry. It’s out, and there is no going back in. Banning cryptocurrencies now would be like banning the internet in the 1990s, and will only hurt economies.

China tried! Bitcoin is like water and will fill the shape of whatever vessel it can. The Chinese miners left China and found homes across the United States, Kazakstan, and many South American countries. The United States is now primed to be the world leader in Bitcoin mining – a gift from China.

Need a shot of conviction?. The 5 links below are where we encourage you to start. Onward!

What is Bitcoin? Part 1 – Origins

What is Bitcoin? Part 2 – Technology

What is Bitcoin? Part 3 – Principles of Money

The Bitcoin Revolution

Best Overall Exchange