HOW DO YOU BUY A BITCOIN?

1. Before a bitcoin can be purchased, a user must install a virtual “wallet” onto a personal computer or mobile device. The wallet, which is similar to personal finance software, keeps track of your bitcoin balanceand all transactions.

2. To buy a bitcoin, real money must either be deposited through an online payment company or transferred directly from a bank account into an account on a third-party Web site that connects bitcoin buyers and sellers.

3. Once the funds are available, a buyer can place an order for a bitcoin, similar to trading stocks, through an exchange such as Bitstamp.

4. Bitcoins can also be purchased from third parties such as BitInstant, which sends the coins directly into the virtual wallet.

WHAT CAN YOU DO WITH A BITCOIN?

Bitcoins can be used to buy from online vendors, such as George‚Äôs Famous Baklava in New Hampshire, which sold a dark chocolate pastry for 14 bitcoins in 2011 — worth over $7,600 on Feb. 24. Bitcoins are also being bought and traded as investments.

BITCOIN HISTORY

In 2008, “Satoshi
Nakamoto” (a pseudonym
for a person or group whose
identity is a mystery) wrote a paper outlining Bitcoin’s design. The rules state that the number of bitcoins in circulation will grow at a decreasing rate toward a maximum of
21 million coins.
The currency is now maintainedby an open-source community that has no centralized authority that regulators can target. Currently, nearly
12 million bitcoins are in circulation.

SOURCE: bitcoin.org; blockchain.info; MIT Technology Review. GRAPHIC: Bill Webster and Todd Lindeman - The Washington Post. Published Nov. 14, 2013.