If you were asking me in January 2014 my opinion about Bitcoin, I would have told you that I knew very little of it.
It was a digital currency, which I didn’t really understand, but it sounded interesting. That was pretty much the end of the story.
The genesis of an idea
Around February, Daniel, a close friend of mine, asked me if I was interested in a project involving Bitcoin. The main goal was to make buying bitcoins in UK easier and safer. That’s when we came up with the idea of Coinduit.
Coinduit is a website where you can buy bitcoins at highly competitive rates, as you can see from bittybot. The design principle we followed when creating the website was to make the experience of buying bitcoins as smooth as possible, and to deliver the bitcoins from the seller to our buyers as soon as it is feasible.
To achieve that we have a quite complex stack of technology that powers the whole system, however this could be an argument for a different post.
So how can one buy these bitcoins?
First you need to have a wallet. There are several types of wallet, which are provided from different software. Wait wait… What it is a wallet again? How this bitcoin works anyway?
Explaining bitcoins super quick
I think I’ll write just a quick glossary, for more info you can always refer to the bitcoin FAQ.
Wallet: a program which has a collection of bitcoin addresses, and has the ability to send and receive bitcoins. The wallet can hold several bitcoin addresses. There are software wallet for mobile (my favourite is Mycelium), for pc and website that offer wallet hosting (blockchain.info for example). You can find a more extensive hand-picked selection here.
Bitcoin Address: Holds the bitcoins. It has two parts: a public key, and a private key. The public key is revealed to the world, and it is used by other people to send you bitcoins. The private key must be kept secret, because it’s the only one that can sign a transaction from your wallet to another one. Basically the person who knows the private key, has the power to move the bitcoins from that address.
Transaction: moving the bitcoins from one bitcoin address to another one. Each transaction gets confirmed by the miners and inserted in the blockchain. All the transactions are always present in the blockchain.
Unconfirmed balance: You can see an unconfirmed balance when you are receiving bitcoins. Due to the way the blockchain technology works, the bitcoins can be moved instantly from one address to another, however they need to be confirmed before you actually can spend them. The confirmation step ensures that the bitcoins have actually moved from address A to address B, and it is common to consider a transaction settled when there are 6 or more confirmations. It usually takes an average of 10 minutes to have up to 1 confirmation.
Confirmed balance: This is the amount of bitcoins that you have inside your wallet, which has more than 1 confirmation. Let’s say the more confirmation you have the more sure you are that the transaction has happened.
Who confirm these transactions? The Miners, which are people that run very powerful computers to crunch the numbers. Why they do this? Because in every transaction there is a small miners fee (which is not obligatory, but it has become normal to include, and it’s around 2p), and the possibility to create a new bitcoin, which they will own.
If you are still here, let’s go back to where we were left…
Buying bitcoins in UK
Ok, now that you know more and you have got your wallet, you can go on Coinduit and in three steps you’ll have your first bitcoins:
1. Pick how much you want to buy
2. Insert your bitcoin address in the form
3. Make a bank transfer using the seller’s account details and reference provided
4. You’re done :)
What are the next steps
As they say, the future is the future, however I can already tell you that we would like to increase the adoption of bitcoins also in a day to day basis. In order to do that we can tell you that Coinduit is used as gateway payment by the Cambridge MillRoad Butcher, which is the first merchant we subscribed. We even made it to the News.
So stay tuned, and let’s see what’s next!