Questions About Bitcoin And Our ATM

Trying to explain “Bitcoin” is difficult. We’ve explained it with power point and even beer mats but still not over the phone. You really do need to visualize the whole process, and YouTube (our fave vids) is the best learning ground.

Ue’ve archived some of the recent questions we’ve personally been asked.. including the whacky!

What Is Bitcoin?

It is a crypto-currency or alt currency short for “alternative currency”. It was developed by cryptographers (guys who encrypt information like emails, passwords and even internet connections). Bitcoins are broken up into small pieces (down to 8 decimal places) and sent to people as a form of payment. The open market dictates the price of each coin, in reality you’re just buying a serial number in the bitcoin network, but these “stupid” serial numbers have risen 10,000% in the last 2 years. The price of each coin goes up and down due to demand & mainly speculation. Good news pushes the price up and bad news creates panic sellers who drive the price back down.

As more people enter the bitcoin market it gets heavier and less volatile. Its popularity is largely down to its cool factor (Google Silk Road), exclusivity, tiny transaction fees, anonymity and ease of use. The people who are investing in Bitcoin or introducing to their business can see where it is going 5 years from now. Bitcoiners understand it has its flaws but because it is not governed by anyone and is an open source platform, it means we can adapt bitcoin to our needs. We are in the “what came first, the chicken or the egg?” stage, bitcoin is currently an egg and all the speculation is betting it’s going to be a mighty fine chicken!

Who Invented It?

It was invented by “Satoshi Nakamoto” (this wasn’t his real name though) in 2009. After releasing his code to a mailing list of cryptographers he helped it grow and then disappeared in 2010.

Because Bitcoin is an open source project and every string of code can be viewed, his identity is now irrelevant as he holds no key piece of information, just a wagon load of btc.

Who Makes Bitcoins?

Bitcoins are rewarded to miners. Miners are people who verify transactions. The Bitcoin network rewards the miners for their un-paid work. This key piece of genius keeps the network free to use.

Why Is It Called Mining?

Good question, it’s not really mining, there is no picks or shovels. The miners use advanced computer hardware called rigs to verify bitcoin transactions. They view bitcoin as digital gold, and they are the ones prospecting for more. The term miner has just stuck.

How Many Coins Is There?

The limit is 21 million, each coin can be broke down though into 8 decimal places – 0.00000001
The lowest value is called 1 satoshi. Only the linux foundation can create more in the event of an emergency. The number of coins is expected to last until 2140.

What Happens When We Run Out Of New Coins?

There is 2 possibilities out there -

A.) The network can be tweaked to allow the slow creation of new coins.
B.) The network can be adjusted to split coins into more than 8 decimal places.
C.) Increase the transaction fees so more bitcoins become available to mine.

B would be the ideal scenario but anything is possible. Anybody who says they know what will happen in 10-20 years time is more than likely a journalist trying to sell a story or a politician looking for a vote.

Who Runs Bitcoin?

The linux foundation operates the open source code and issues security updates. They’re based in Sweden and already distribute their own free to use open source operating system.

Bitcoin itself is cloud based and hosted by the “mining community” this is what makes it borderless.

Is It A Real Currency Or Just Fantasy?

It depends on the country you’re standing in. It’s a crypto-currency not a FIAT currency. The FIAT system which relies on physical paper (which can be counterfeited). Bitcoins can not be copied, and every single Bitcoin and Bitcoin wallet can be viewed. The history of every individual Bitcoin can be traced to IPs and wallets unlike conventional cash. This technology can only help law enforcement in years to come.

How Do I Know This Isn’t A Scam?

There is no con-artist behind Bitcoin. You put faith in euros / dollars every day even though there is less than 1% actual cash in existence. Yes the price of Bitcoin can rise and fall, but there is no affiliate scheme or ponzi setup behind Bitcoin. It is more open and honest than any paper currency (FIAT) known to man and this is a fact.

The news channel Bloomerberg once laughed at Bitcoin, now they’re putting the price of it on their price ticker! Bitcoin is being backed by Spotify, Baidu (Chinas Google), WordPress, Reddit, OverStock and 40,000 more merchants.

Will Governments Not Just Ban This Or Make Bitcoin Illegal?

It’s possible, but as of yet not one country has done it. If a government tried to make Bitcoin illegal it wouldn’t achieve anything by it. Bitcoins are stored in wallets, either kept by yourself on USB keys or by online companies that mind them for a fee. They would need to know where the coins are to confiscate them. The transfer of cash into Bitcoins would just be driven underground through brokers but never stopped.

Because it’s not a FIAT currency there is no regulation or taxation currently in place for it. As the Chief Scientist of the Bitcoin Foundation Gavin Andresen once said -
“You can try and stop Bitcoin but something else will just replace it”.

The general consensus is that Bitcoin will be treated like shares in companies. You simply declare any capital gains made on the buying and selling. To make Bitcoin illegal would be dangerous and counter productive for business in a country.

Why Should I Buy Bitcoin?

The main incentive behind Bitcoin is to have no transaction fees. There is no taxation behind it and there is nobody monitoring your money. You do have a degree of privacy and flexibility never seen before.

BTC is in a stage of “what came first, the chicken or the egg?”. For Bitcoin to succeed it needs people to adopt early, stabilize the price and educate the rest. Then the real day to day benefits of Bitcoin will be seen i.e speed and cost effective.

Currently the main reason to buy them is as an investment. You can view the price graphs here and the future gains should be massive. There is no guarantee however so please don’t invest anymore than you can risk.

Is My Money Safe In Bitcoin?

If you keep your wallet safe then your coin collection is safe. If you mean is my investment then that is another question. The price fluctuates and its ups to the buyer to understand the basic economics behind Bitcoin before buying.

What Happens If I Don’t Buy Bitcoin?

Nothing will happen, you can continue to use cash. You will notice over time though that financial services want a paperless society. Lidl has for example just installed NFC technology into 600 UK stores because they believe cash is creating queues. Mc Donalds, 02 and Subway now also use the same technology in Ireland.

What Happens If Nobody Will Let You Place Your ATM?

We already have rent free offers from small businesses so if premier locations don’t support us then we will take their offers. Our other option is to create the worlds first mobile Bitcoin ATM and drive the device around on a scheduled basis.

Can Somebody Hack Your ATM?

They can try but they won’t succeed. Our ATM does all transactions over an open or closed wireless connection, but our data is encrypted (and certified) so all information is obfuscated and un-readable. Wireless networks can all be broken so we rely on our own security measures.

To hack this machine would be an ugly waste of time. The only person who could do this is the manufacturer or the secret key holder. When we say “secret key” we mean a specially made and totally unique USB style key that is coded especially for this ATM.

Can Anybody Break Into Your ATM?

It’s bolted to a wall or pillar. The cash box inside is extremely thick. So to rob the cash inside you really need to take the entire ATM which is GPS tracked, alarmed and intentionally needs 2 people to lift. The cash inside also has another security measure which will make the notes useless. On top of this there might be very little cash inside the machine at the time of the robbery. In any case the robbery will be BitVendo’s problem and not our customers. The ATM does not log any sensitive data.

Will This Kill PayPal?

PayPal have now admitted that they might need to start accepting Bitcoin, because its a huge threat to their business model. PayPal offers a dispute system for transactions, something Bitcoin currently doesn’t support (but is quite possible to add in later) so for now PayPal will survive in that light.

For trusted transfers between friends, families or long term business partners then Bitcoin is the answer. The transfers are instant, unlike PayPal who can delay payments. There is no fees and you won’t see your account being frozen anytime soon either.

You also don’t need to send the Bitcoin network utility bills or passport scans to create an account/wallet. The 2 systems however will live side by side, both for different purposes.

Why On Earth Would A Business Leave PayPal For Bitcoin?

Have you ever sold anything on eBay or DoneDeal and used PayPal? Ever been in that situation when you post out the item and then the buyer says “I never got it, give me my money back”.

It’s not nice, and established businesses are using Bitcoin to ensure they get paid. A chargeback from a credit card company costs on average $35-50 per transaction plus the cost of shipping and the product itself being lost.

Will This Kill Visa Or Mastercard?

Credit card companies offer credit, Bitcoin is not involved in the practice of money lending. Like PayPal, the credit companies will have to learn to live beside Bitcoin and start sharing a piece of their pie. They don’t have any say in the matter.

Will This Kill Off Western Union?

Hopefully it will, Western Union doesn’t offer any payment protection, charges a lot of money for transactions and can be difficult to find a location to withdraw or send transfers. If Bitcoin succeeds then Western Unions’ current business model may die. Hopefully its employees will find work with a company that accepts Bitcoin.

Will This Kill Our Banks?

Banks make their money by issuing loans and mortgages. The money customers leave on deposit is loaned out (by up to 10 times) and then interest is applied. The Bitcoin network doesn’t support any form of money lending. Banks will just lose out on transaction fees and a certain amount of lending power will be reduced because local/smaller banks will have less on deposit.

What Happens If Someone Buys Up All The Bitcoins?

It’s a question I love answering. Picture in your mind somebody buying all the coins. They will need to spend BILLIONS of dollars using the exchanges buying slowly, driving the price up. They can only buy so many coins because not all the coins are in circulation yet and not everybody has their coins up for sale.

So now they’ve bought huge quantities of coins at inflated prices. If they sell them all at once the price will crash and nobody will buy them. Their collection will then be worthless.

If they sell them off over time then the price will slowly go down. In theory they will just get their money back and the whole thing will be a pointless exercise.

Can Bitcoin Be Replaced By A Better System?

We live in a free world so the answer is yes. But any improvements seen in another crypto-currency can be applied to Bitcoin in an update. An update like that would render the new currency useless.

Will This Replace Cash?

Bitcoin is tied to a currency, without real money it’s kind of useless and hard to gauge its value. We believe it will live beside it happily and probably take a lot of pressure off the broken fiat banking system.

A few minutes on Google / YouTube will illustrate to you how paper money came about and it’s current day issues such as shadow banking, fractional banking and fiscal policy (how the government decides to spend and make money).

BitVendo provides bitcoin services, we’re not economic advisers. Educate yourself about the money that’s in your pocket, some day it may just help you to make the right investment choice or spot a worry before it arises.

I Heard The NSA Is Behind Bitcoin

Maybe it was, maybe Satoshi Nakamoto was really an American government employee. But the fact remains Bitcoin is open source and totally transparent. Whoever made the system is irrelevant really. You may enjoy reading this – NSA Behind Bitcoin

I Still Believe This Won’t Work, It’s Going To Fail

The same was said about PayPal, Mastercard and even paper money when it first came out. Now everybody uses them without question.

PayPal has a flawed system where it generally weighs 80% in favor of the buyer. One look on PayPalSucks.com will prove that. Credit card companies will chargeback any transaction screwing the vendor, while charging the buyer extortionate interest and transaction fees for the luxury of it.

Cash used to be backed by gold now it’s backed by faith… and you think Bitcoin is a scam? It’s the most honest payment system the world has ever seen.

Irish people are generally slow to react to change compared to countries in Asia and America. Every one of our team members has spent extensive time living in Asian countries and see the stark differences in willing to adapth. We want Irish citizens one step ahead in the game, by providing honest information and useful tools and services.

Please do your own research on the subject of Bitcoin before judging it. We’re not the final say on the subject and for all we know our light hearted view on things may paint it in a bad light.

Useful Links:

Bitcoin.org FAQs
Bitcoin Official Wiki
European Banking Authority Warning 

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