Understanding Bitcoin

To a techie: Bitcoin is Money Over Internet Protocol

To an economist: Bitcoin is irreversible, ultrasecure, mathematical cowry shells

To an entrepreneur: Bitcoin is digital money Lego–you can use it to build anything

To grandma: Bitcoin is money that you can send like email

To a merchant: Bitcoin is no service fees, no specialised hardware, and no chargebacks

To a first generation immigrant: Bitcoin is 90% off Western Union fees for everyone

To Joe Everyman: Bitcoin is a 5% discount on online shopping

To your great-grandchild: Dollar bills were how people paid for things before we had Bitcoin

What is bitcoin?

A digital or virtual currency that uses peer-to-peer technology to facilitate instant payments. Bitcoin is a type of alternative currency known as a cryptocurrency, which uses cryptography for security, making it difficult to counterfeit. Bitcoin issuance and transactions are carried out collectively by the network, with no central authority. The total number of Bitcoins that will be issued is capped at 21 million to ensure they are not devalued by limitless supply. They are divisible to 8 decimal places; Bitcoin fractions are called satoshis. Users store their Bitcoins in a digital wallet, while transactions are verified by a digital signature known as a public-encryption key.

How to accept bitcoin for your organisation

To start accepting bitcoin you will need a piece of software called a’wallet’. This will allow you to accept payments to your wallet address.

Accepting payments

Once you have a wallet you can generate a ‘wallet address’, which anyone can send bitcoins to. A wallet address is a string of characters starting with a ’1′ and looks like this: 1KzRTpZd8vSVNVNQsQDANe7kGwLNUt8Ta
This address can also be represented as a 2D barcode, which can be scanned with a tablet or phone. This is generally much easier than trying to write it out. Here is the same address:

If your wallet does not generate a 2D barcode for then you can manually generate one by entering your wallet address into the search field at blockchain.info. Display this on your website or near the till and customers can scan it to send you bitcoins when they pay.
Blockchain.info also shows incoming payments on a live basis. So a quick search for your wallet address can confirm you’ve been paid.

Using your bitcoins

Once you have your bitcoins you can do a number of things with them: some people convert them straight back into their local currency, some keep them in Bitcoin as they like to diversify their savings and some people spend them with other organisations who also accept Bitcoin.

Remember Bitcoin is money and the more organisations that accept it the less you will need to convert it back to your local currency to buy the good sand services you want.

Don’t forget that holding bitcoins is very similar to having your money in the bank except no one can take your bitcoins away from you, whereas if a bank goes bust, you lose your money with it. As a result, some people have moved their savings into Bitcoin as they feel it is a safer bet. Please do your own research and form your own opinions before you make any decisions and remember any choices that you make are entirely at your own risk.