Page 2 – Bitcoin Is a Commodity, Bitcoin Wallets, and Bitcoin Faucets
Bitcoin Is a Commodity
Another thing to know is there are a fixed number of Bitcoins available. Some are still available to be mined (a process of solving complex math equations), but some time in the year 2140 the last fraction of a Bitcoin will be mined, and no new ones will be created.
The fact that Bitcoin isn’t controlled by any one entity or government combined with the fact that no one can make any more of them makes it an attractive commodity for a lot of reasons. Combine that with the anonymity of transactions – not even the IRS knows if we sent you a Bitcoin for reading this (we didn’t) – and it gets even more attractive.
It also is perhaps the most efficient way to send money to someone overseas, and that’s attractive, too. If we converted dollars to Bitcoin and sent that to you (nope), you could then take that Bitcoin and convert it into whatever your chosen currency is. Doesn’t matter who you are or where you live. And no one knows where that money came from (though, obviously, once you convert it into government-approved currency there will be records of that).
Bitcoins are stored in digital wallets. There are various types of wallets, but they’re generally just a piece of software that connects to that network of computers we mentioned. Everyone knows about everyone else’s Bitcoins, but it’s mostly anonymous. Yes, we all can see every Bitcoin transaction on something called the Blockchain, but transactions only have account numbers attached—like Swiss bank accounts—not names.
A couple of points about this:
- Beware! If you lose access to your wallet, there’s no way of getting it back!
- There are sophisticated ways agencies like the NSA have employed to attach names to some Bitcoin addresses. Bitcoin is pseudonymous, not completely anonymous
Web-based wallets are another option. There are significant tradeoffs in operating a web wallet because you’re putting your trust in a third party. We have personally used Blockchain.info‘s wallet, which we like because we own the keys. Of course, if we lose those keys, we lose access to our wallet, but that’s actually the point.
Another option is Coinbase, a hosted web wallet where you don’t control the keys. Coinbase’s main benefit is that it is also an exchange where you can buy and sell Bitcoin. Many people trade Bitcoin there, and then move it to a more secure wallet.
We’ve used both Blockchain.info and Coinbase and have been pleased with our experiences.
Bryan has been running a Bitcoin faucet guide here at TMO for years. Bitcoin faucets give you a fraction of a Bitcoin in exchange for loading up a page full of ads. Bitcoin faucets won’t make you rich, but it’s a way of getting into Bitcoins without buying them, and a lot of them are even fun.
If you have additional questions, let us know in the comments below.