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Bitcoin (EVERYTHING YOU WANT TO KNOW)

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Virtual currencies like Litecoin, Ethereum and Bitcoin are concepts that are changing today's world. For some, they pose as a "rebellion" against state power, but for others, they are investment instruments and a means of exchange. The most well known cryptocurrency is Bitcoin. Do you know how it is created, the benefits, how to buy them, and how to use them? Learn all this and more in today's article.

FYI Bitcoin and Bitcoin Cash... What happened? The new and independent virtual currency, Bitcoin Cash, was created as a result of the too busy Blockchain database. Fees skyrocketed, and Bitcoin became unreliable with some users unable to get their transactions confirmed, even after days of waiting.  Existing owners of Bitcoin will have the same amount in Bitcoin Cash at the time of the fork in the ledger. However, most of the community, especially the large wallets and stock exchange, does not accept the new currency, and as a result, most of the currency users will not touch the change. The value of the new virtual payment will depend on market confidence and the life of the currency, and this might be a big issue.

What do you know about bitcoins?

  1. What is a virtual currency?
  2. What is a cryptocurrency?
  3. Basic information about bitcoin
  4. Extraction and creation of bitcoins
  5. Bitcoin as a deflationary currency
  6. How to get and buy bitcoins?
  7. How to pay for bitcoin?
  8. How can you get the bitcoins?
  9. How does a bitcoin wallet work?
  10. BTC and € - what is the price of bitcoin?
  11. Open a wallet and get free bitcoins
  12. Bitcoin Calculator
  13. Major risks associated with bitcoins
  14. Bitcoin, Litecoin and Ethereum

What is a virtual currency?

A virtual currency is a denomination for a currency that is electronically created and also stored. Some of these currencies can be used to buy a great deal of services and merchandise. Others can only serve as a currency in computer games to buy virtual items. Unlike physical means of exchange, the virtual currency is not tangible in any way, and all interactions take place via a computer interface.

What is a cryptocurrency?

As the name suggests, it is a type of virtual currency that is based on cryptography. Cryptocurrency can not be falsified or falsified using complicated encryption, nor can it be controlled by any organization. Secured currencies are already used exclusively for the purchase of real goods and services. Other features of cryptocurrency are transparency, minimal transaction fees and the inability to cancel the payment. The most well-known cryptocurrencies include Bitcoin, Ethereum, Litecoin, Zcash and Dash.

Basic information about bitcoin

Bitcoin is the name for the most widespread cryptocurrency and the payment network where it is used. It was created in 2009 by a programmer (or possibly a whole group of programmers) who appeared under the pseudonym of Satoshi Nakamoto.

bitcoin, logo, grafika

Bitcoin allows you to make instant payments to anyone in the world. It uses peer-to-peer technology that works without any central authority. Managing transactions and issuing (mining) coins are done collectively on the network. For bitcoin, the term coin is often used. A coin is the unit of 1 BTC.

FYI Peer-to-Peer
Also known as p2p, is a computer network in which clients communicate directly and without intermediation by a third-party.

Extraction and creation of bitcoins

New bitcoins are generated on the network through the mining process. Full nodes on the network are rewarded with bitcoins each time they find a solution to some mathematical problem (and thus create a new block). The block resolution compensation is automatically set so that every 4 years of operation will generate half the amount of bitcoins created in the previous 4 years. For example, in the first 4 years, about 10,500,000 coins were created, and every four years the amount is reduced by half.

The block extraction frequency and the number of bitcoins resulting are thus still smaller. Furthermore, mining requirements become more demanding each year. At present, a reward for a block of 12.5 BTC is confirmed. Similarly, all fees from the transactions executed will be received by the miner who created the block. The new block includes information for all of the transactions. Charges are voluntary on the part of the person carrying out the bitcoin transaction and serve as a guarantee for the transaction to be included in the block.

Bitcoin as a deflationary currency

Due to the previously known formula for creating bitcoins, we can say today that the total number of coins will not exceed 21,000,000. Bitcoin is thus an example of a so-called deflationary currency. As demand grows, its value will also rise. Why? In contrast to the current so-called inflation currencies (USD, EUR, GBP etc.), the central bank can not proceed with the "printing" of new banknotes (coins).

This means that as the bitcoin value grows, the amount of coins needed to buy goods will be reduced. The average transaction size will decrease and may need to be expressed in bitcoin subunits like a mBTC (milibitcoin) or a microbitcoin.

The independence of bitcoins from any authority is the basic pillar of its credibility. Owners know that bitcoins will not be weakened by the expansionary policy of the central bank.

FYI If the above information was read by an economist, he might have something to say about the "simplicity" of our interpretation. If you want to know more about the issue, open the tab below, and we will explain how standard currencies differ from virtual ones. We will also discuss what the consequences of a fixed amount of money may have on the its value and price stability.

Does bitcoin pose a risk to the economy?

"Fiat lux" was the first word spoken by God according to the book of Genesis, and the creator made light from the void. It is therefore convenient that current currencies are called "fiat money". The central bank, like God, create money from nothing. This is not possible in the case of bitcoin and many other virtual currencies. But is that such a win?

Common currency vs. bitcoin

The central banks main objective is to control price stability. When inflationary pressures arise, the central bank will start to impose restrictive policies to reduce the money supply (i.e. increase interest rates), while deflationary tendencies will release monetary policy. Ideally, the value of the currency does not change over time. If it does, it is only in a pre-announced manner (the so-called inflation target). However, the mechanisms of virtual currency are different. In particular, there is no central authority to influence the supply of money. Cryptos are a commodity similar to gold or silver. Instead of being released by a central monetary authority, they are "mined" by users. Just like minerals, the total amount of cryptocurrency is usually limited.

What does it mean in practice? Virtual currencies tend to have a higher volatility, and if the demand continues to grow, their value will also grow (We are talking about deflation in relation to currencies). This is a great news for investors, but it is not good news for the daily so-called transactional deals. In a nutshell - people are postponing purchases, which is detrimental to entrepreneurs. It also increases the real cost of employees, and they are forced to either reduce the number of employees or reduce wages. It is a dirty downward spiral.

Bitcoin is a risk mainly for investors.

The risk for bitcoins is primarily in the investment. It will stay this way as long as you can not buy basic supplies like food and pay taxes with them. Investors should therefore be particularly alert. They should not forget that despite the steady growth in value in recent years, bitcoin is still a risky investment that can bring in fairy tale amounts of revenue as well as create a black hole in their account.

How to get and buy bitcoins?

You can buy and receive Bitcoin coins in many different ways.

  • Sale of goods or services for bitcoins.
  • Conversion through bitcoin wallets (usually with a small transaction fee).
  • Change bitcoins for a regular currency, or even for gold and other commodities.
  • Buy bitcoins using bitcoin ATMs
  • Find someone who will exchange bitcoins with you through a local directory.
  • Become part of the mining groups, or set up some of your own.

Bitcoin ATMs are located in many cities. They are basically a bitcoin "exchange". You can buy or sell bitcoins according to the current exchange rate. They are then connected to your bitcoin wallet.   A detailed map of bitcoin vending machines can be viewed at Coinatmradar .

bitcoin ATM, v obchodním centru, Brno

How to pay with bitcoin?

If you buy ordinary consumer goods and you decide to pay with bitcoin, it is not a complicated process. First, the amount is converted to bitcoin during checkout. Subsequently, you will make the transaction with a smart phone using the QR code you have loaded. You must have a bitcoin wallet installed on the phone and have access to an Internet connection.

bitcoin accepted, Brno, Subway

Alza now also accepts bitcoins! Our partner company, Bitcoinpay, will be operating as a payment gateway for BTC payments.

Alza now also accepts payment in Bitcoins

Bitcoin has enjoyed growing popularity in recent years. This is why Alza has met numerous customer requests and introduced the ability to pay for purchases with the most popular virtual currency. Want to know more?

Bitcoin

Where and how to pay with Bitcoin

Bitcoin will now be accepted not only at Alza.cz, but also at Alza.sk, Alza.de, Alza.at, Alza.co.uk and Alzashop.com.

Payment by Bitcoin is more convenient and faster. Our partner company, Bitcoinpay, will be operating as a payment gateway for BTC payments.

Bitcoin is just the beginning, and you'll soon be able to pay on Alza with other cryptographic currencies, such as Litecoin and Ethereum.

Virtual Currencies and Bitcoin in Brief

The impetuous development of the Internet has brought, among other things, a new concept, namely virtual money. Their meaning has been overlooked for a long time, and the traditional focus of their application lied in online games, where they were used to trade game items. However, the virtual currencies used in digital services and Internet communities are now becoming increasingly important. The term "cryptocurrency" referred to a specific subset of virtual currencies. The first such currency was Bitcoin, and it started in 2009.

Why are Bitcoins so popular? Among other things, this is a so-called deflationary currency. The amount of Bitcoins available is predetermined, so a central bank (or other entity) cannot devalue the currency by creating (emitting) additional money. Bitcoin's growth is transparent - users are "using" computers. It is said that all "coins" will be minted by 2140. You can also benefit from downloading the relevant software.

Buy or sell Bitcoin using the BTC ATM

Besides being able to pay for purchased goods by transfer, Alza also introduced the BTC ATM . It is basically a Bitcoin "currency exchange". Here you can buy or sell Bitcoins according to the current exchange rate. These are then attached to your wallet, and you can apply this "credit" to purchases not only in our country but anywhere else. Alternatively, you can keep your Bitcoins as an investment for the future and bet on future increases in their value.

Secure shopping with TREZOR bitcoin wallet

Alza also offers a new Bitcoin wallet called TREZOR . It allows you to safely store your bitcoins. Its main benefit is the protection of your bitcoin account against theft. Bitcoins are physically stored in an encrypted vault where they can not be remotely alienated.

Alza introduces payments with Bitcoins - An interview with Jan Sadík

The introduction of payments in Bitcoins is a significant innovation step. We have prepared answers for the most important questions that relate to the topic. Jan Sadílek, the Head of the Internet Marketing Department, answered for Alza.

Why did you choose to accept Bitcoin payments?

Our customers have asked for it, and Alza is a technology company that has long kept up with current trends. Bitcoin is a progressive technology, and this is a step to meet unlock its potential and the resulting benefits for our customers.

Why did Bitcoin customers want it?

This is an increasingly popular form of payment for goods and services. Customers have spoken to us about Bitcoins for a long time, and the interest has only grown. It is for this reason that we began to think about introducing it.

What are the benefits of paying by Bitcoin for your customers?

First of all, the speed of processing a Bitcoin payment is comparable to other forms of online payment. It is also very simple. Another reason for the huge popularity of Bitcoin payments is the ability to pay online even if you do not have a bank account or a credit card.

Why did you decide to use Bitcoin and not another of the so-called cryptocurrencies?

Bitcoin payments currently account for more than 90 percent of cryptographic transactions. Of course, we are also preparing to accept other cryptocurrencies such as Litecoin, Ethereum, Dash and others.

How about Bitcoin and taxes?

Bitcoin is only a way to pay for goods, so the tax payment mechanism is the same as the normal sale of goods.

How is payment security guaranteed?

We process payments via the Bitcoinpay.com payment gateway, operated by British Confirmo Ltd., which has many years of experience in receiving Bitcoin.

Where can customers purchase Bitcoins?

There are many ways. One of the easiest is a Bitcoin ATM machine that allows Bitcoin to easily be bought and sold.

Which other companies are receiving Bitcoin?

The big ones are Microsoft, Dell, T-Mobile, WordPress, and Wikipedia. There is also a huge number of smaller merchants that are also accepting Bitcoin.

Do you accept Bitcoin abroad?

Yes, we will also accept payments in Bitcoins at alza.sk , alza.de , alza.atalza.co.uk and alzashop.com.

Can customers save Bitcoin?

Definitely! For example, a customer who bought Bitcoins a few months ago will save more than 30 percent of the price at the current rate.

How to pay with bitcoins on Alza?

  1. Place the selected goods in the basket.
  2. Choose delivery.
  3. When selecting a payment method, select BitcoinPay in the online payment category.

At the end of the order, you will be redirected to the contractor's payment gateway to complete the order. The pay-as-you-go principle works within minutes.

How to mine bitcoin?

Until recently, graphics cards have been used to extract bitcoins. Now you need special hardware in the form of ASIC chips. They cause mining to be considerably more demanding for computing power. At the same time, acquiring high-quality ASIC chips is also not the cheapest thing to do. Software for mining is free to download for various platforms on the Internet.

FYI How to set-up a PC for mining?
To maximise the profit from cryptocurrency mining, you must find the ideal balance between power and power consumption for each individual computer component. The most important element of classic mining is a powerful graphics card, and the motherboard must have as many of these graphics cards as possible. This means higher power performance is then required at the source.

As a result of the increasing difficulty of mining, this process for individuals is virtually insignificant. For this reason, an association of miners has begun to emerge where each miner receives a portion of the reward corresponding to its mining contribution. These associations are also referred to as "mining pools" and are usually subject to regular monthly fees.

How to get started with bitcoin mining?

If you still want to start mining bitcoin, despite the economic disadvantages, here is a simplified guide to getting started.

  1. Choose the best mining hardware and create your own mining rig. Take advantage of our instructions here. Another option is to buy an ASIC chip that is used most commonly for bitcoin mining.
  2. Download the freely available bitcoin mining software. The most popular bitcoin mining programs include CGminer, Bitcoin Miner, DiabloMiner and BFGminer.
  3. Maximal profit can only be achieved by joining an existing mining pool. There are several to choose from. It is important to find out at an early stage how much you have to pay in group fees and what you can expect as a reward for your mining. The best-known pools working on European servers are BTC.com and Slush's pool (the world's first well-known mining pool, originally from the Czech Republic).
  4. As a reward for mining, of course, bitcoins will be given to you, so it is necessary to have an active bitcoin wallet set up. You can choose one from here.
  5. The last thing is to stay informed about all of the bitcoin world news.

How does a bitcoin wallet work?

For the end user, the work is no longer as complicated as mining bitcoin. These users need to send, save, and pay with bitcoins. In order to do this, you need to have a bitcoin wallet installed on your computer or smartphone.

The wallet generates a unique address which works like a bank account number. The payment is made by entering the required number of coins and the recipient's address. This transaction will be carried out in a transparent manner until the miners confirm it. With this final confirmation, the entire network of participating users will learn about the transaction, and a minimal fee is charged.

bitcoin peněženka, grafika

The safest solution is hardware wallets . They allow bitcoins to be kept under surveillance and safe from hacker attacks. With a regular currency conversion, you confirm the transaction with a password. A hardware wallet works in a similar way, but the private key validation runs outside of a PC with multiple authentications and one way only.

BTC and Euros - what is the price and price of bitcoin?

The current rate (€) is around €3613.41 for the purchase of 1 BTC. The price of bitcoin, after a few falls and constant fluctuations, grew to almost dizzying heights. Forecasts are such that, given the deflationary nature of the currency and the ever-increasing popularity, the price for one coin will rise even higher.

Open a wallet and get free bitcoins

Bitcoin mining can also be difficult for a knowledgeable user, and not everyone is willing to invest in bitcoins. On the other hand, the internet makes it possible to start receiving bitcoins and to try using this virtual currency.

FYI What is a bitcoin exchange?
It is an online trading platform designed to provide an environment where bitcoins can be sold and purchased. Bitcoin exchanges allow the exchange of classic paper currency (dollars, euros, pounds, etc) for bitcoin, or even other virtual currencies, and vice versa.

Sites where you can get free bitcoins usually require some form of registration (usually just an email address and a bitcoin wallet address). Are you wondering why anyone would give you anything for free? Charity, of course, is not. Thanks to the users, these sites have high traffic and attract a lot of advertisers. Try it yourself on freebitcoin or moonbit. Just a few clicks and the bitcoins in your wallet will start to jump up by very small amounts.

Bitcoin Calculator

Bitcoin calculators provide quick transfers of BTC coins to the national currencies. Some can do even more than just that. Using the basis of the above costs of electricity, the mining rate, the exchange rate and the amount of rewards received for the extracted block, they can calculate the estimated profit for a certain period of mining.

Major risks associated with bitcoins

Although the entire bitcoin network and the bitcoins themselves are safe and the level of cryptography behind them has not yet been broken, there are risks that bitcoins have. What are they?

  • Extremely high fluctuations in bitcoin value - within a few days, the bitcoin value may change drastically.
  • Inability to cancel a specified payment - Once the payment is sent, there is no way to cancel it.
  • A wrongly sent and executed payment (i.e. an inadvertently exchanged wallet address) can not be reversed
  • If you lose your bitcoin wallet (and you do not have a backup), then all of the bitcoins are lost. 
  • Inability to reset the private key password that is required to access your account - losing your password means losing all the bitcoins.

Last but not least, the number of hacker attacks aimed at the bitcoin exchanges and exchange offices is also quite scary. Recently, the public was informed that hackers had stolen a database of client information from one of Bithumb's BitTorrent employees, and the resulting loss was huge.

FYI Do you still want to know more? Then check out the bitcoin wiki or the official site for bitcoin currency.

Bitcoin, Litecoin, Ethereum, Zcash and Dash

Bitcoin is really just the beginning. Today, there are cryptocurrencies, which people believe will grow even more rapidly than Bitcoin. One of those is Litecoin. It is one of the first to exploit using an improved script algorithm. Another cryptocurrency on the rise is Ethereum, which falls into the next generation of cryptocurrencies also referred to as Bitcoin 2.0. The mining of this currency is becoming increasingly demanding, and for example, a GPU with a VRAM of less than 4 GB becomes disadvantageous.

bitcoin, litecoin, ethereum

Zcash is one of the youngest cryptocurrencies, and it offers more security than bitcoin. In addition, its value has climbed very high very quickly. This is why it has become a favourite for mining in 2017. The last cryptocurrency to be mentioned is a Dash. It is a cryptocurrency that is also offering instant transactions and has been among the most popular virtual currencies.

CurrencyBitcoinLitecoinEthereumZcashDash
Exchange Rate€3613.41€38.08€256.02€177.95€171.14

The example rates in the table are from August 2017.

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