When 3dcart v6.0 goes live on July 29th, those using the shopping cart solution will have the ability to accept Bitcoins as payment for goods and services. The coming is made possible by a recent partnership formed between 3dcart and BitPay, a startup with “PayPal-Like Ambitions,” according to an article published by TechCrunch.
To many, Bitcoins remain a foreign concept, one that begs clarification, practical use and further understanding. Therefore, in an attempt to introduce and educate the interested public, the rest of this article will examine Bitcoins on rudimentary level.
What are Bitcoins?
Bitcoins are a form of electronic currency that exists solely on the Internet. They are not dependent on any government or corporate entity and instead operate on a system maintained by thousands of computers. Bitcoins are then transferred through internet-connected computers, smartphones or tablets without the need of an intermediate financial institution.
Bitcoin transactions are processed and secured on the Bitcoin network by the implementation of what is known as the blockchain. In short, the blockchain is a public ledger of all transactions ever sent using Bitcoins. This record is kept to ensure transparency and prevent fraud by letting everyone know who owns each and every Bitcoin, or fraction thereof, in circulation.
Bitcoin supply is regulated by a preset generation algorithm that controls the creation of Bitcoins and at what rate. Any Bitcoin that's created fraudulently, which is noticed by not following the precise rules of the preset algorithm, will be flagged as invalid by the network and deemed worthless.
What are the advantages of using Bitcoins?
- Bitcoin payment processing costs next to nothing.
- Bitcoins are international and can be transferred to anyone, anytime, anywhere.
- Bitcoin transactions are, for the most part, instantaneous. If you’re an online merchant, you will see a Bitcoin transaction within seconds.
- Your Bitcoin Wallet can never be seized or frozen, and there is no way for anyone to reverse, block or hold transactions.
What is a Bitcoin Wallet?
Bitcoins are useless without a Bitcoin Wallet, an electronic storage unit of sorts that allows you to send, receive and house Bitcoins.
Although Bitcoin transactions are public, each time they're transferred a unique string of numbers and letters is generated to create what is known as a Bitcoin address (Example: 1NcqwujdxEdTKMpD2CoEGMzTYcd5xUvBCs5).
Those sending Bitcoins simply need to enter the supplied address, input a monetary amount and hit send. It’s as simple as sending an email.
Most Bitcoin Wallets generate a new address every time one accepts a Bitcoin transfer. And while these addresses are public, they remain anonymous, which makes it next to impossible to link past, current or future transactions.
Can you explain how Bitcoin transactions work?
Each Bitcoin transaction has three strings associated with it, the private key, the public key and the Bitcoin address.
The private key is required to validate all transactions. The public key is used to verify the transaction signature associated with the private key, and the Bitcoin address determines where transfers will be sent.
If you want to send Bitcoins, your Wallet will create a Bitcoin transaction file that will be published to the Bitcoin network via the blockchain. A transaction will then contain five basic parts including the previous transaction (where the Bitcoins came from), the public key, the destination address, the amount to be sent and a digital signature.
To verify legitimacy of transactions, the Bitcoin network checks the digital signature by authenticating both the private and public keys to make sure a transaction has not been tampered with. If both keys match the receiving address, the transaction will be approved by the network.
What is Bitcoin mining?
Bitcoin mining entails the process of adding transaction records to Bitcoin’s running public ledger (blockchain) of past transactions. This is done to ensure the legitimacy of all Bitcoin trades by confirming each to be valid and secure.
While more and more companies are getting involved in Bitcoin mining, much of it is completed by computers with specialized chips know as application-specific integrated circuits, which are far more powerful than your typical central processing units.
How does one mine Bitcoins?
Individuals and companies alike are starting to mine Bitcoins in an attempt to strike while the iron is hot. According to a simple Bitcoin converter, 1 Bitcoin (BTC) is worth $97.50 today, and if that value rises, Bitcoin miners could stand to make substantial profits.
Keep in mind that Bitcoin mining on your own is not recommended. Not only is it difficult, it takes a substantial amount of time, energy and resources in order to generate profits.
If you want to mine Bitcoins on your own, however, there are options available. First, you can join what is known as a Bitcoin pool. This will allow you to work with a group of miners on available blocks. A block is an individual unit of blockchain.
If you join a pool, keep in mind that larger pools make finding Bitcoin blocks easier but often lead to smaller payments. Pools with fewer miners make finding blocks more difficult but also lead to larger payments.
As more Bitcoins are found, they become increasingly difficult to find. Also, for every 210,000 blocks discovered, the Bitcoin reward for finding blocks is halved. The current bounty for completing a Bitcoin block is 25 Bitcoins, a number that will continue to reduce over time. This is done to not only control Bitcoin currency rates but also decrease the number of new Bitcoin miners that are allowed to work within a given block.
While some consider Bitcoin Mining to be a lucrative and worthwhile endeavor, others aren’t so sure. Finding Bitcoin blocks isn’t easy, and if you want to own Bitcoins, you may be better off buying them outright.
Can you tell me more about BitPay?
As mentioned in the beginning of this article, 3dcart and BitPay have formed a partnership that will allow online merchants to accept Bitcoin payments for goods and services. This new feature will be offered natively inside 3dcart v6.0, which is scheduled to be released on July 29, 2013.
For more information about BitPay, Bitcoins and the future of ecommerce, we invite you to watch the following video.