Recently Updated Bitcoin Interview Questions Part – 2
How Can I Sell Bitcoins?
Bitcoins can be sold locally using LocalBitcoins, on Bitcoin brokerages / exchanges, using two-way Bitcoin Teller Machines (BTM’s) or you can pay for a good or service with them.
Bitcoins can be sold to just about anyone as long as they have a Bitcoin address, and can be sold for any fiat currency in the world or traded for a physical good. Feel free to check out our recommended list of exchanges and brokerage services to sell your bitcoins online.
What Can You Buy With Bitcoin?
You can purchase just about anything with bitcoins, from goods like clothing, electronics, food and art to handmade crafts. Bitcoin can also be used to purchase large items like cars, real estate, and investment vehicles such as precious metals. By using Purse.io users can buy just about anything from Amazon and get a discount of up to 20% just by using Bitcoin.
Additionally, many merchants who accept Bitcoin also give discounts for people who pay with the digital currency. Show your friends how easy it is to use bitcoin – head over to our own bitcoin.com Store and buy a T-shirt, hoodie, bag, all kinds of accessories, even art and bitcoin wallet hardware.
Bitcoin.com offers a searchable database that enables our users to search for specific items sold for Bitcoin. Just type in the product you wish to purchase using Bitcoin and you’ll see a list of online merchants selling that item. For merchants that don’t accept Bitcoin, there’s still a way to use your cryptocurrency to purchase the items you’re interested in by using a Bitcoin debit card.
Bitcoin.com has a list of Bitcoin debit card companies to choose from; some cards can only be issued to certain countries, and all have varying fees so be sure to read up on your options in order to choose the best card for you.
For cryptocurrency enthusiasts, Bitcoin.com also has its own store which sells Bitcoin-related merchandise such as T-shirts, artwork, coffee mugs, Bitcoin famous Alpaca socks and more. If you’re looking for some Bitcoin swag make sure you head over to our store to find quality items that make great conversation pieces and show off the Bitcoin spirit.
What Is A Bitcoin Address?
A Bitcoin address is a long string of 27 – 34 numbers and letters that acts similarly to an email address. The address enables the Bitcoin blockchain to recognize when bitcoins are sent and received. These addresses can be used by anybody, from single individuals to businesses to multiple people accessing the one address if desired.
It is also considered more secure not to re-use addresses but rather to use a unique address every time you send and receive bitcoins. This increases the privacy of your transactions to a degree and helps in avoiding public tracking of your funds.
How Do Bitcoin Transactions Work?
Bitcoin transactions are composed of an amount, an input (sending address), an output (receiving address) and private keys (the keys which allow you to spend your bitcoins).
A user simply enters a receiving address and if the person possesses the private key associated with the bitcoins they are trying to spend the transaction is sent and verified with the help of miners confirming blocks of exchanges (transactions) within the Bitcoin blockchain. The blockchain is a database of all recorded transactions since Bitcoin’s inception.
What Is A Public Key?
Every Bitcoin address contains both a public and a private key. The public key allows others to send bitcoins to your address, and verifies the signature of the transaction to ensure everything is in order and finalizes the transaction. The private key, on the other hand, allows you to ‘unlock’ and spend your bitcoins.
It does this by signing transactions, which tells the Bitcoin network that you are indeed the owner of the address in which the bitcoins are held and that the transaction is valid.
Whoever holds the private key for a Bitcoin address is able to spend the bitcoins which that address holds, so in a very fitting analogy your private key is essentially the key to the safe which is holding your bitcoins.
You can also use the private key of an address to sign a message, verifying that you are the owner of the bitcoins held at any given address. This is all secured through mathematics, using asymmetric cryptography.
How To Accept Bitcoin Payments For Your Store?
It is very easy for any merchant to accept Bitcoin, and most of the time preparing to add the feature to your payment services takes less than 10 minutes. Merchants can accept Bitcoin both online and at physical locations by using a merchant service payment provider like Bitpay, or even just using a simple wallet address generated on their own device.
Bitcoin has significantly lower fees than PayPal, credit card companies and bank services making it far more appealing to store owners than the legacy payment card processors.
The cryptocurrency is also irreversible so chargebacks are not possible, and this leaves the decision to refund fully within the hands of the store owner. Merchants can accept Bitcoin through a payment processor, through a Point-Of-Sale (POS) device or simply using their own tablet or smartphone.
Adding Bitcoin as a payment method for your store can also increase your customer base for those who like to pay with cryptocurrency as well as broadening your company’s reach into the global market.
What Are The Fees Involved?
There are fees involved with sending Bitcoin called the ‘Miner’s fee.’ Fees are paid to the miners in order for them to verify and secure Bitcoin transactions within the network. A website / developer’s solution named ‘21’ offers an online guide detailing the fees within the network for certain time frames. Typically, a larger fee will confirm faster than a relatively low one.
What Does “unconfirmed Transaction” Mean?
An unconfirmed transaction is a transaction in the network that the miners have yet to confirm. Typically, confirmations take roughly 10 minutes. However due to the increased popularity of the Bitcoin network confirmation times have increased quite a bit and can sometimes take op to an hour or more.
There are solutions in the works to deal with this issue, as well as a lot of discussion within the Bitcoin community around the best way to go about it. If a transaction fails to confirm after 72 hours, the funds will be sent back to the original sender’s wallet.
Is Bitcoin Legal?
Bitcoin is legal in most jurisdictions in the world but there are a small number nation states that have banned its use, such as Ecuador. Wikipedia has a great guide on how Bitcoin is treated in all the countries around the world and explains regulatory policies surrounding it. Regulations vary from one border to the next so you should always research your location’s laws before participating in the network.
Who Is Satoshi Nakamoto?
Satoshi Nakamoto is a pseudonym/name of a person or group of people who created the original Bitcoin client and author of the original reference white paper which details the protocol. Nakamoto participated in the network by helping with the code and mining until 2010 when he/they disappeared, never to be heard from again.
How To Make A Bitcoin Paper Wallet?
Paper wallets are a great way to keep Bitcoin offline and out of hacker’s reach. Creating paper wallets is easy but losing the paper also means the bitcoins are lost forever so be careful. Paper wallets contain both private and public keys which allow you to spend your bitcoins.
The most common way that people creates paper wallets is a website, BitAddress.org, where users can generate a fresh new Bitcoin address and related private key. The website will ask the person to initiate some steps and are then given both public and private keys after the process.
From there all one has to do is print the paper wallet using BitAddress.org’s website or another service. After printing a copy, you can load as much bitcoin as you want into your public QR-code.
This service, however, does come with a caveat. There are any number of technical reasons why generating a private key on a machine that you don’t control is a bad idea; these range from man-in-the-middle (MITM) attacks to untrustworthy site operators, and everything in between.
However, downloading the Bitaddress code and running it on your own machine offline can mitigate these risks. This can be further secured by doing so on a machine that is not (and has never been) connected to the internet.
How Does The Blockchain Work?
The blockchain records all of the newly minted bitcoins rewarded to miners who find blocks. Blocks are sets of sent/received transactions that miners confirm for the network. As these actions take place within the Bitcoin protocol the blockchain acts as a ledger of account for all transactions undertaken within the Bitcoin network.
What Is A Full Node?
Bitcoin transactions need more than just miners to validate and relay across the network. Full nodes are maintained by individuals, groups and organisations all around the world and broadcast all the messages within the protocol.
Full nodes are a second layer of security for the Bitcoin network and operate in an altruistic manner meaning they work without reward. The use of full nodes increases the networks vitality and reduces double spending immensely.
Who Created Bitcoin?
Bitcoin is the first implementation of a concept called “crypto-currency”, which was first described in 1998 by Wei Dai on the cypherpunks mailing list, suggesting the idea of a new form of money that uses cryptography to control its creation and transactions, rather than a central authority.
The first Bitcoin specification and proof of concept was published in 2009 in a cryptography mailing list by Satoshi Nakamoto. Satoshi left the project in late 2010 without revealing much about himself. The community has since grown exponentially with many developers working on Bitcoin.
Satoshi’s anonymity often raised unjustified concerns, many of which are linked to misunderstanding of the open-source nature of Bitcoin. The Bitcoin protocol and software are published openly and any developer around the world can review the code or make their own modified version of the Bitcoin software.
Just like current developers, Satoshi’s influence was limited to the changes he made being adopted by others and therefore he did not control Bitcoin. As such, the identity of Bitcoin’s inventor is probably as relevant today as the identity of the person who invented paper.
Who Controls The Bitcoin Network?
Nobody owns the Bitcoin network much like no one owns the technology behind email. Bitcoin is controlled by all Bitcoin users around the world. While developers are improving the software, they can’t force a change in the Bitcoin protocol because all users are free to choose what software and version they use.
In order to stay compatible with each other, all users need to use software complying with the same rules. Bitcoin can only work correctly with a complete consensus among all users. Therefore, all users and developers have a strong incentive to protect this consensus.
How Does Bitcoin Work?
From a user perspective, Bitcoin is nothing more than a mobile app or computer program that provides a personal Bitcoin wallet and allows a user to send and receive bitcoins with them. This is how Bitcoin works for most users.
Behind the scenes, the Bitcoin network is sharing a public ledger called the “block chain”. This ledger contains every transaction ever processed, allowing a user’s computer to verify the validity of each transaction.
The authenticity of each transaction is protected by digital signatures corresponding to the sending addresses, allowing all users to have full control over sending bitcoins from their own Bitcoin addresses.
In addition, anyone can process transactions using the computing power of specialized hardware and earn a reward in bitcoins for this service. This is often called “mining”. To learn more about Bitcoin, you can consult the original whitepaper.
Is Bitcoin Really Used By People?
Yes. There is a growing number of businesses and individuals using Bitcoin. This includes brick and mortar businesses like restaurants, apartments, law firms, and popular online services such as Microsoft, Dell, and Newegg.
While Bitcoin remains a relatively new phenomenon, it is growing fast. At the end of March 2016, the value of all bitcoins in circulation exceeded US$ 6.5 billion with millions of dollars worth of bitcoins exchanged daily.
How Does One Acquire Bitcoins?
As payment for goods or services.
Purchase bitcoins at a Bitcoin exchange.
Exchange bitcoins with someone near you.
Earn bitcoins through competitive bitcoin mining.
While it may be possible to find individuals who wish to sell bitcoins in exchange for a credit card or PayPal payment, most exchanges do not allow funding via these payment methods. This is due to cases where someone buys bitcoins with PayPal, and then reverses their half of the transaction. This is commonly referred to as a chargeback.
How Difficult Is It To Make A Bitcoin Payment?
Bitcoin payments are easier to make than debit or credit card purchases, and can be received without a merchant account. Payments are made from a wallet application, either on your computer or smartphone, by entering the recipient’s address, the payment amount, and pressing send.
To make it easier to enter a recipient’s address, many wallets can obtain the address by scanning a QR code or touching two phones together with NFC technology.
What Are The Advantages Of Bitcoin?
Payment freedom:
It is possible to send and receive any amount of money instantly anywhere in the world at any time. No bank holidays. No borders. No imposed limits. Bitcoin allows its users to be in full control of their money.
Very low fees:
Bitcoin payments are currently processed with either no fees or extremely small fees. Users may include fees with transactions to receive priority processing, which results in faster confirmation of transactions by the network.
Additionally, merchant processors exist to assist merchants in processing transactions, converting bitcoins to fiat currency and depositing funds directly into merchants’ bank accounts daily. As these services are based on Bitcoin, they can be offered for much lower fees than with PayPal or credit card networks.
Fewer risks for merchants:
Bitcoin transactions are secure, irreversible, and do not contain customers’ sensitive or personal information. This protects merchants from losses caused by fraud or fraudulent chargebacks, and there is no need for PCI compliance.
Merchants can easily expand to new markets where either credit cards are not available or fraud rates are unacceptably high. The net results are lower fees, larger markets, and fewer administrative costs.
Security and control:
Bitcoin users are in full control of their transactions; it is impossible for merchants to force unwanted or unnoticed charges as can happen with other payment methods. Bitcoin payments can be made without personal information tied to the transaction. This offers strong protection against identity theft. Bitcoin users can also protect their money with backup and encryption.
Transparent and neutral:
All information concerning the Bitcoin money supply itself is readily available on the block chain for anybody to verify and use in real-time. No individual or organization can control or manipulate the Bitcoin protocol because it is cryptographically secure. This allows the core of Bitcoin to be trusted for being completely neutral, transparent and predictable.
Is Bitcoin Fully Virtual And Immaterial?
Bitcoin is as virtual as the credit cards and online banking networks people use everyday. Bitcoin can be used to pay online and in physical stores just like any other form of money. Bitcoins can also be exchanged in physical form such as the Open Dime, but paying with a mobile phone usually remains more convenient.
Bitcoin balances are stored in a large distributed network, and they cannot be fraudulently altered by anybody. In other words, Bitcoin users have exclusive control over their funds and bitcoins cannot vanish just because they are virtual.