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Tuesday, March 4, 2014

Bitcoin - Peer to Peer Electronic Money and Payment Network

BITCOIN

Peer-to-Peer Electronic Money
and Payment Network

A New Monetary System
for a New Generation

by Bruce Goldwell


(c) 2013 Bruce Goldwell
All Rights Reserved



The following is edited content that was in the Bitcoin book by Bruce Goldwell.  The following has been edited and updated for the blog.  

Disclaimer:

Of course there has to be a disclaimer.  Sooner or later, someone is going to make a choice that ends up being a wrong one for them and want to blame it on someone else. 

For that reason, readers should be aware that this book is for information purposes only.  The author offers the information in this book for readers to education them self on Bitcoins (BTCs) and how they can exchange them with others, use BTCs for shopping and accumulate BTCs in their BTC Wallet.

Nothing in the content of this book should be construed as advice to invest in stocks or invest ones money in anything. 

Readers should keep in mind that they should seek the advice of a legal investment counselor before making any investments with their money or other valuable assets.

The information in this book is for education purposes to help merchants, independent authors, home business owners and others whom offer products and/or services see how they can potentially use BTCs as a means of payment for their products/services.

Any and all independent business owners and others should seek the advice of business professionals before making any changes to their operating procedures pertaining to their business practices IE: acceptance of payments for goods and services. 



What Can You Accomplish?

After you complete reading this book, you will know how to create your own BTC Wallet using one or more Internet resources and/or programs.

You will be able to fund your Wallet with Coinbase which is an easy to use Internet based web site that allows you to create BTC Wallets, sell your own products and/or services and accept BTCs as payment and how to exchange BTCs into USD currency (or currency of your country) to deposit in your bank account.

You will learn that there are other ways (available to even young internet users) to acquire more BTCs (in small sums) for your Wallet.  Not necessarily for everyone, but useful for people looking for simple ways to increase the value of their Wallet.

You will find that there are literally thousands of stores (world wide) that accept BTCs in exchange for goods and services so you can be on the lookout for them when traveling. 

There are many BTC resources available on the Internet which can easily be found by searching on Google and other search engines.  The dollar is not the only currency available to exchange for goods and services and BTCs can be used anywhere in the world.


Bitcoin In A Nutshell

You probably should already know what Bitcoin is before having bought this book however, just in case this is your first contact with Bitcoin, here is a short explanation.  You will find this at the top of the Bitcoin.org web site.

Bitcoin is an innovative payment network and a new kind of money.

Again, on the very first page of Bitcoin.org you will read this...

Bitcoin uses peer-to-peer technology to operate with no central authority or banks; managing transactions and the issuing of bitcoins is carried out collectively by the network. Bitcoin is open-source; its design is public, nobody owns or controls Bitcoin and everyone can take part. Through many of its unique properties, Bitcoin allows exciting uses that could not be covered by any previous payment system.

I took a couple of days reading about Bitcoin on web sites, watching videos and researching Wiki pages etc. to find out about Bitcoin and how this new payment network can help me as an author to open more doors to acquire new readers for my books.

I was extremely excited about what I discovered and how easy it is to create a Bitcoin (BTC) Wallet, create Pay with Bitcoin buttons to accept payment for my books and ways I can increase the amount of BTCs in my Wallet.

It is in my nature to take useful information that I learn and pass it along to my fans and others whom can also benefit from the information. 

I even bought other books on Amazon.com about Bitcoin to see what kind of information that other authors were sharing.  These other books go a bit more into Mining (a way of increasing BTCs in one's wallet) and other technical information that I believe is not really necessary for the novice and others whom just want to know how they can accept BTCs in exchange for their goods and services.

There is a saying that goes, “Keep It Simple Stupid!”  So that is what I am going to do. I am going to keep it simple so that once you learn what I share in this book, you will be able to create your own BTC Wallet so that you can begin exchanging BTCs with friends and others, make purchases and a couple of ways you can get a few more BTCs in your Wallet.  The fastest and easiest way to build your Wallet is to offer your goods and/or services and accept BTCs as payment.

I don't know enough about investing to offer any information on how to do that.  I did find one way that I believe might be a resource for increasing the amount of BTCs in one's Wallet, but investing any BTCs in that resource is purely up to individuals and should only be done with the advice and counsel of a professional financial adviser. 

I believe that Bitcoin can offer people a way of diversifying their means of accepting payments for goods and services and open doors to new customers world wide.  Since Bitcoins are accepted in countries all around the world, it makes for an easy way to become an international business person without all the drudgery of how to exchange money across borders and money markets around the world.

Whether you are an author, home business owner, Independent business owner or even a business owner that has a brick and mortar store along the streets of any country around the world, I believe that Bitcoin is going to be something worth looking into. 

In doing my research about Bitcoin, I read an article about a Fast Food Restaurant that accepts Bitcoin using his cell phone to accept payments via Coinbase.  He exchanges the BTCs to have them deposited in the bank account for his business.  This is a huge opportunity for businesses in the USA to offer tourist from around the world to purchase their products and/or services without tourist needing to convert currencies.

Let's get started!


UNITS USED TO DESIGNATE BITCOINS

Let's take a look at the basic units used to designate Bitcoin values.  You do not need to be able to calculate to the penny what value is being shown by a value being given in BTC, mBTC or uBTC, but you should be able to recognize the difference between them.  Much like being able to tell the difference between a one dollar bill, a ten dollar bill and a hundred dollar bill.  Those decimal points and/or BTC units do mean something.  Just like the dollar and every other currency, Bitcoins have designated units. 

Units:

BTC = 1.000 Bitcoin
mBTC = milliBitcoin = 0.001 Bitcoin = 1 mBTC
μBTC = microBitcoin = 0.000001 Bitcoin = 1 uBTC
Satoshi = 0.00000001 Bitcoin, the smallest subdivision

An milliBitcoin (mBTC) is one thousandth the value of one Bitcoin.  At the time of the writing of this book, the value of a Bitcoin in US dollars is around 1,000 dollars.   So .001 would be about one dollar USD. 

A microBitcoin (μBTC) is one millionth the value of one Bitcoin and one thousandth the value of a milliBitcoin.  Again, at the time this book was written, the value of a milliBitcoin would be 1/10 of a penny.   When you see a value written like this, 5.000 μBTC, the value In dollars would be about ½ of a penny USD.

Initially, the only three Units you need to be aware of are:

BTC (1.000) = 1 BTC
mBTC (.001) = 1 milliBitcoin = 1 mBTC
μBTC (.000001) = 1 microBitcoin = 1  μBTC

When you visit Cointube.tv, they claim they pay a high rate of 5 uBTC (μBTC) which actually equates to ½ penny in US dollars for each video you watch.  More on Cointube.tv later in this book.

Let's take a number like .00913423 BTC

To estimate in ones head how much that is given the current market at the time of the writing of this book, we move the decimal point three places to the right.

.00913423 = 9.13423 which is somewhere just over $9 USD. 

Think of it this way.  If 1.000 BTC is worth about $1,000 USD then each number to the right of the number represents an increment of...

.1@ the number of each hundred dollars
.01@ the number of each ten dollars
.001@ the number of dollars
.0001@ the number of dimes
.00001@ the number of pennies

Again, this is only a way estimating in terms of the currency already being used (in this case US dollars) the amount in BTC is being represented.  For an exact amount, you would need to plug the value being shown into your Wallet to get the exact amount (in USD) at the time you are about to make a transaction.

There are shopping sites you can visit and by understanding a little bit about the units of BTC you can estimate what the price is being shown in BTC.

Let's try a couple of amounts.  Choose the amount closest to the value given.

A  .00912 BTC would be:

1.        9 cents
2.       9 hundred dollars
3.       9 dollars

The answer is 3.

B.  .089213

1.        89 cents
2.       8.90 cents
3.       89.00 cents

The answer is 3.

C.  .8991234

1.        89 cents
2.       8.90 cents
3.       899.00 dollars

The answer is 3.

D.  4.214329 BTC

1.        42.00 USD
2.       422.00 USD
3.       4,225.00 USD

The answer is 3.

E.  4.5467 mBTC

1.        4,546.00 USD
2.       454.00 USD
3.       4.54 USD

The answer is 3.

And let's try one more just to see if you are paying attention.

F.  10.1234 uBTC (μBTC) 

1.        10,000.00 USD
2.       10.00 USD
3.       1 Penny USD

The answer is 3.

The designation you will probably deal with most is that of BTC.  I will share a few links of sites that exchange in Bitcoins and that offer bitcoins in exchange for views of websites, watching videos etc., and it is a good idea that you are able to at least recognize the basic designation of units to understand what you are exchanging bitcoins and/or your time for.

Again, for a precise value of what the exchange rate at the time you are about to make a transaction, you will be able to get that information via your Bitcoin Wallet.


First Set Up A Bitcoin Wallet

To begin using Bitcoins to trade for products and services, you must first set up a Wallet which is very easy to do.  It is much easier than setting up a bank account at your local bank.

My recommendation for setting up a Bitcoin Wallet is CoinBase which is a web based international digital wallet that allows you to securely buy/sell, accept/send and sell products via Bitcoin.  With CoinBase, you can also exchange bitcoins to other currencies and have funds transferred to your bank account in US funds or other currency you designate.

CoinBase
         http://goo.gl/N5FnvL

Once you have created a Bitcoin wallet, it means you are ready to receive bitcoins, give bitcoins and trade bitcoins for products and services. 


Get FREE Bitcoins Daily (QoinPro)

From the website: QoinPro was conceptualized in December 2013 and launched on January 29, 2014. We are based in Hong Kong and work from different time zones (Hong Kong and the Netherlands) to offer near 24 / 7 support.

QoinPro is a multi-coin faucet with wallet-like features giving different free coins (Bitcoin, Litecoin, Feathercoin, etc) on a daily basis to all subscribed members. The multi-coin faucet functionality is step one of a much larger plan to eventually become a leading cryptocurrency platform.
Our primary objective in step one is to educate people and making it (very) easy for them to get started with cryptocurrencies.

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Click here for more information on how to enroll for Free and start earning free Bitcoins daily.. http://goo.gl/B7Sc0B

As Seen On Facebook:  Bruce Goldwell (I,.me, myself0 is offering a free copy of Mastery of Abundant Living to those that enroll via my sponsorship.  Contact me at bruce.goldwell on Facebook after clicking the link above and enrolling. Be sure to include your username when you send a PM to so I can verify your enrollment.  Once you receive a copy of this book, you can offer a free copy of the book to others an an incentive for them to enroll with you as their sponsor.  Let's do this! 



Bitcoin Mining

Some people may consider mining for bitcoins.  This means having to purchase the electronic equipment that will allow you to mine for bitcoins. 

There are three different levels of mining speeds. 

Mh/s - Mega Hash per second
Gh/s - Giga Hash per second
Th/s -  Tera Hash per second

Th/s, of course, being the fastest of the processing speeds.  I am not going to go in depth about bitcoin mining here other than point out what the investment looks like for the equipment and how long it will take to get a return on the investment.

I, myself, purchased an ASICMiner Block Erupter USB 336MH/s Sapphire Miner which is a USB device for the computer that allows one to mine for BTC.  I went to Bitminer and joined that miners pool.  Much to my dismay, I found that my earnings per day with the Block Erupter would be 2 cents per day.  I paid $60 for the device so it will only take 8.2 years to recoup my investment.  So, I don't suggest going to Amazon and doing a search on Bitcoin mining and purchasing a Block Erupter USB 336 MH/s.

I did a few calculations based on the speed of my ASICMiner and the rate of 2 cents per day to see what the return would be on other mining equipment at different processing speeds and here is what I came up with.

I found a system on Amazon that is a 2.2 – 2.7 GH/s system with cost being $449.00.  Since this system would be processing at about 6-7 times the rate of my USB Block Erupter, I estimate that the daily income would be 12 cents per day or more.   That would mean a yearly income of as much as $43.80 or more which means it would take 10.44 years to get a return on the investment.

Here are a few more systems I found and the estimates daily earnings and time till return on the investment.

GH/s                    Daily Earnings        Cost           Yearly Income              ROI
2.01                      0.12                       $449.00        $43.80                        10.44 years
7.00                      $0.42                     $1,200.00      $153.30                       7.8 years
60.00                    $3.60                     $3,295.00       $1,314.00                     2.5 years
192.00                   $11.52                   $2,299.00      $4,204.80                      @ 200 days
                                                       
TH/s                           
1.2                      $72.00                    $5,999.00        $26,280.00                83 days

Based on these estimates, it appears that if you want to make some serious coin bitcoin mining that you will need to invest some serious coin to get a return on your investment in any timely manner.  You will see equipment that offers various speeds in processing, but until you get to the TH/s operating speed or at least into the hundreds at GH/s, making money at mining may be just a pipedream. 

If I were going to recommend a system for the beginner miner it would be the AMT 192 GHs Bitcoin Miner offered by www.advancedminers.com/.  It is the one above for $2,299 (current cost) and the return on investment should be within the first year.  That is if the estimate based on speed in relationship to the daily pay for the 336 MH/s USB I purchased is correct.

My plan was to take my daily earnings for mining and move it into the Wallet I have for Bitcoinera (see Bitcoinera chapter below) and earn the 6% monthly interest.  Since my meager investment into bitcoin mining equipment is only going to earn me 60 cents a month, I am going to find a new way to get my bitcoin. 

For the record, I want to be sure that those looking to become miners for bitcoin that you are going to want to invest some serious coin for the equipment if you want to earn serious coin.  Otherwise making a small investment in equipment means you are just a hobbyist and you just want to do it for fun.


Accepting BTC as Payment for Products and/or Services

The easiest way to add BTCs to your Wallet is to offer products and/or services and accept Bitcoin as payment.  There is a very easy way to do this using Coinbase.  Everyone that creates a Coinbase Wallet has access to the tools to create Pay with Bitcoin buttons.

In your Coinbase account, you will see a selection for TOOLS.  You will see all the checkbox options and text boxes needed to set up a Pay with Bitcoin button that you can use in email or on a web site. 

Click on Advance options if you need to gather information so as to provide buyers with your product or service.  Example: Shipping address and/or email address.

Once you complete the information, Coinbase creates the code for you to copy/paste to your web site.  All you do is click on Generate Button Code.

Coinbase is very user friendly and with very little study of the web site, even the most novice user will be able to figure out how to complete the process to set up their Wallet, create Pay with Bitcoin buttons and exchange Bitcoins for regular currencies and have them deposited in their Bank account.

CoinBase  Rating:  5+ STARS

         http://goo.gl/N5FnvL

Shopping with Bitcoin

Good for you, good for merchants!

The easiest thing to do once you have created your Wallet and funded it is to find places to spend your Bitcoins.  By doing a search on Google on “shopping with bitcoins,” you can begin your search for web sites where you can shop using BTCs.  I am sure you will be surprised how many merchants already accept Bitcoins as payment. 

Keep in mind, there is no conversion needed from one country to another country to use bitcoins.  The value of BTCs is the same around the world at any given moment. The only difference is how much BTCs can be exchanged for in given currencies around the world. 

If a place in China has a product I want to buy and they accept bitcoins, I can purchase the product and have it shipped to me in the USA.  I don't need to go through a currency conversion process  to make the payment.  I don't need to have a cashiers check made out to send the overseas merchant or anything like that.

When I sell my books and accept Bitcoins for payment, the money (BTCs) is transferred into my Wallet from any country in the world.  I simply ship/mail the product to buyers as soon as payment is made via BTC wallets (their wallet to mine). Merchants are discovering that they can open their doors to markets world wide expanding their customer base by simply creating their Bitcoin Wallet then accepting BTCs as payment. 

Here are a few of places just to wet your appetite:

         https://www.bitcoinstore.com/

This is a list of 75 online stores that accept BTCs.


Like I Said, “Keep It Simple”

There are lots of things you can learn about Bitcoin and what you can do with this world wide peer-to-peer electronic money and payment network.  If all you have is a few minutes a day to invest in time to research about Bitcoin, I would highly recommend you investing some of that time in doing more research.  With the way the world economies are doing these days, another way to be able to exchange for goods and services may just come in handy.

I wish you well in your quest for financial freedom and security.


Bruce Goldwell, author
         www.BruceGoldwell.com