Frequently Asked Questions (FAQs) About Bitcoin: Important Points To Note

Leon Louw, a Nobel Peace Prize nominee, said:

“Every informed person needs to know about Bitcoin because it might be one of the world’s most important developments.”

Since Bitcoin was made available for trading in 2009, it is undisputed that bitcoin is indeed one of the most important developments of the 21st century.

So it’s very important you know what bitcoin is and start using it.

To keep you wholly informed, I provided answers to most of the frequently asked questions (FAQs) about Bitcoin.

Read and learn!

What is Bitcoin?


Bitcoin is a form of digital currency.

It is the first decentralized digital currency created and held electronically.

No one controls it, be it government or organizations.

BTC are not printed, like dollars or the Nigerian naira.

Anyone can produce them using powerful computers that solve complex mathematical problems.

It is the first example of a growing category of money known as cryptocurrency.

What differentiates BTC from other currencies?

Bitcoin can be used to buy things online or in shops that accept it.

So, it is like conventional currencies like dollars, euros, or naira, which are also traded digitally.

However, Bitcoin is different from conventional money because it is decentralized – this means that any political system, government, or institution cannot control it.

So it is not vulnerable to any of their failings or devaluation.

This puts some people at ease because it means that a large bank can’t control their money.

Who created Bitcoin?

An unknown software developer, Satoshi Nakamoto, proposed Bitcoin, an electronic payment system based on mathematical proof.

The idea was to produce a currency independent of any central authority, transferable electronically, more or less instantly, with very low transaction fees.

Who prints BTC?

Bitcoin has no physical representation; it is not printed.

Conventional money is printed in the shadow of its central banks, which can produce more money to cover the national debt.

Thus devaluing their currency.

Instead, BTC is created (mined) digitally by a community of people that anyone can join.

It is mined using computing power in a distributed network.

Is there unlimited BTC?

No, BTC mimics real-world limited resources like gold.

The Bitcoin protocol (the rules that make Bitcoin work) says that only 21 million BTC can ever be created by miners.

However, these coins can be divided into smaller parts.

The smallest divisible amount is one hundred millionth of a bitcoin and is called a ‘Satoshi,’ after the founder of Bitcoin.

(0.00000001 = Satoshi)

But the value of Bitcoin is steadily rising against every other currency.

What is Bitcoin based on?

Conventional currencies like naira and dollar are based on gold and silver.

Theoretically, if you take your naira to the bank, you can exchange it for gold or silver.

Though, in reality, this is not the case.

BTC is not based on gold or silver but on mathematics.

Around the world, people are using software programs that follow a mathematical formula to produce bitcoins.

The mathematical formula is freely available so that anyone can check it.

The software is also open-source, meaning anyone can look at it to ensure it does what it is supposed to.

What are the Characteristics of BTC?

Bitcoin has several favorable characteristics that set it apart from government-owned currencies.

1. It is decentralized

The Bitcoin network cannot be controlled by one central authority.

Every machine that mines BTC and processes transactions is part of the network, and the machines work together.

Theoretically, if it was one central authority, it could influence the monetary policy and cause a meltdown.

They can decide to take people’s coins away from them, as the Central European Bank decided to do in Cyprus in early 2013.

And if some part of the network goes offline for some reason, the money keeps on flowing.

2. It is easy to set up

You pass through a lot of processes in opening an account with conventional banks.

You have to stand in long queues and provide a regulatory ID card, utility bill, a passport-sized photograph, and sometimes your birth certificate.

However, you can set up a Bitcoin address in seconds, no questions asked, and no fees payable.

3. It is anonymous

You can have as many Bitcoin addresses as you want.

The BTC address is not linked to you in any way – no names, addresses, or personal information.

You are the only one that knows it belongs to you.

4. It is completely transparent

BTC stores details of every single transaction in the network in a massive version of a general ledger called the blockchain.

The blockchain tells all.

If you have a publicly used Bitcoin address, anyone can tell how many Bitcoins are stored there. 

But they don’t know who it belongs to.

There are measures that people can take to make their activities more opaque on the Bitcoin network.

Such activities include not using the same Bitcoin addresses consistently and not transferring lots of Bitcoin to a single address.

5. Transaction fees are minuscule

In Nigeria, the bank will charge you as much as 105NGN for interbank transfers and as much as $20 for international transfers.

But the charges on BTC transactions are minimal, about 30NGN, no matter the size of the transaction anywhere in the world.

6. It is fast

You can send money anywhere, and it will arrive minutes later, as soon as the Bitcoin network processes the payment.

7. It is non-refundable

When you send coins to the wrong wallet address, your coins are lost forever.

It will only take a miracle to get them back.

Click here to learn how to start using Bitcoin.

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