Bitcoin is the world’s first and most popular cryptocurrency. It is a self-contained financial system that empowers people to be their own bank.

When you deposit your money into a bank account you trust that the bank will allow you to withdraw your funds when you need them. In the United States, the federal government insures most bank deposits. This is necessary because of events like the Great Depression where so many people rushed to withdraw their money at once that the banks ran out of cash. Governments regulate banks to protect consumers and manage their local economies. Because of this, banks and their local government are inextricably linked.

Bitcoin challenges this idea by allowing anyone with a computer or smartphone to manage their own funds without relying on a central authority. While this is an alluring idea, there are real risks involved with being your own bank. Bitcoin does not require you to trust a government or financial institution, but it does require you to trust the technology you are using to manage your digital funds.

Most of the hype surrounding Bitcoin is focused on the amount of money you can make trading and investing.

These types of activities require you to be active on an exchange. The most popular exchanges are Coinbase, Binance, and Crypto.com. These companies provide bank-like services and are subject to some government regulations like “Know Your Customer” laws. Regulated exchanges require you to verify your identity before you buy or sell cryptocurrency to prevent money laundering and ensure that you pay your local taxes. Cryptocurrency exchanges are an easy, user-friendly way to get started with cryptocurrency. Exchanges and their bank-like services offer high-risk investments that are a great entry into the world of Bitcoin and cryptocurrency.

In order to reap the full benefits of Bitcoin you will need a self-hosted wallet.

A self-hosted (aka non-custodial) wallet is an application you download to a computer or smartphone. I recommend Electrum. A self-hosted bitcoin wallet allows you to send and receive bitcoin. A self-hosted wallet requires no personal information to use and gives you full control of your “keys”. A bitcoin wallet key is a secret number that authenticates your transactions. The number is long and hard to remember so many services use a seed phrase instead to make your keys easier to manage.

The biggest risks to using Bitcoin are theft and loss.

If you deposit money into a bank and the bank gets robbed that’s the bank’s problem. You can still withdraw your money when you are ready. If you lose your debit card or forget the password to your online account the bank helps you recover access to your funds.

When you use Bitcoin you are acting as your own bank. If someone robs your bank, your money is gone. If you lose the keys to your Bitcoin wallet, you could lose access to your funds forever.

Bitcoin is a safe and effective payment method for e-commerce on a global scale.. if you do it right.

Bitcoin has a long way to go before it can compete with the benefits of the modern banking system. Financial institutions deem people and businesses as too high-risk for a bank account or access to digital payments. In those cases, Bitcoin is a great way to store, invest, buy, and sell.

Red Sunflower can help you start accepting Bitcoin on your website alongside traditional payment methods. For a free consultation, build a instant quote. You can also purchase items in our online store using bitcoin.