Both WordPress.com and WordPress.org share a similar name, but there are some very big differences between the two.
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Lets start with what exactly is FREE about WordPress. The code itself that makes up the WordPress core files is free. This code is found on the website WordPress.org (the term “open source” means that developers, or people who know how to write the code, can go to WordPress.org and download the files for free, modify those files any way they want, and also find information about the codex for free). However, in order to use those “free” files, you need to know what to do with them. The WordPress core files consist of hundreds, if not thousands of files of code that makes your website work.
In order for your website or blog to be up and running on the world wide web 24 hours a day 7 days a week, those files you got for ‘free’ need to be stored somewhere…and that is called hosting.
Hosting, or storing your website’s files, is not free, and neither is owning your domain name. However, hosting is very inexpensive, especially if you choose a reputable host such as BlueHost, so the benefit of setting up your website or blog through a registrar is of the utmost importance. BlueHost offers hosting for $3.95 per month along with a free domain name and free SSL Certificate, so it's really a no-brainer.
So what does all this talk about hosting actually mean?
If you want a WordPress website that has the ability to make money, in other words, if you want to sell something on your website or if you’re a blogger who wants to make money by blogging with affiliate marketing, then you absolutely need to purchase your website through a registrar such as BlueHost or GoDaddy (GoDaddy is also very reputable but much more expensive than BlueHost).
Back to the comparison. WordPress.com is free to use, however, there are some big disadvantages to using the free version:
You cannot pick a custom domain name (i.e. your URL will be yoursite.wordpress.com)
Very limited monetization options (in other words, you can’t sell anything on your website and ads are very limited, so there is little opportunity to make money with your blog if you opt for the “free” version
Limited use of plugins for such things as an email list
You have to pay anyway if you want to have the WordPress branding removed
There is very limited theme support and very basic design themes
Limited analytics and SEO capabilities
Fully customizable design
Unlimited plugin options
Your own branding
Powerful SEO features (so people can find your site easier on Google)
Capability for a membership site, or affiliate site
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