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Baptism, as others say, is one of the two Biblical sacraments, and is held to be a sacrament by ALL Christian denominations. Some practice infant and some adult baptism. there are significant theological differences between these. Denominations that believe in adult baptism or being born again argue that an infant cannot understand and commit to acceptance of Christianity. In infant baptism, the efficacy is sometimes held to be independent of the infant's assent and in other cases held to be a promise made for the infant by the parents and later assented to in Confirmation. Theology aside, the main reason for infant baptism was worry that an unbaptized infant who died would end up in limbo rather than Heaven.
Evangelical Christian churches, in general, practice baptism as an outward sign of faith. Like post 3 says, it is something that was modeled by Jesus Christ first. In observance of his example, Evangelical Christians view baptism as a public display of their acceptance of Jesus' dying and "washing" away of their sin. It is not something that must be done in order to get into heaven, but instead, a tradition that is now more about celebration than anything else.
When Jesus was baptized, the Holy Spirit "descended on him, like a dove." Christians believe that when they repent of their sins and accept Christ's sacrifice as the payment for those sins, the Holy Spirit comes into their hearts and is with them always. Baptism does not "invite" this indwelling of the Holy Spirit, but celebrates that that is what has happened.
Larrygates makes a good point in correcting pohnpei. It is a sacrament in protestant religions, and it is observed with great formality. I don't know about the other denominations that do infant baptism, but the Lutheran church practices this. It later provides confirmation training in the early teens, so that the child may proclaim for himself or herself an association with the family of Christians. Other faiths baptize as adults, after salvation has been accepted, as a symbolic means of living life like Christ.
Actually, Protestant denominations do consider Baptism a Sacrament. It was one of two Sacraments which Martin Luther recognized when he challenged the authority of the Roman Catholic Church. Luther recognized only two Sacraments, Baptism and Eucharist (Communion) because these were the two Sacraments of which Christ partook while on earth. Baptism is a form of formal commitment; however not all Protestant denominations engage in "believer" (Adult) Baptism. Several denominations, including Lutheran, Methodist, and Episcopalian often baptize in infancy as a sign that the child is not a member of the household of the faithful. All Christians, Protestant and Catholic alike baptize because Christ himself was baptized by John the Baptist; and Paul advised the Philippian Jailer in Acts to "repent and be baptized" as a means of salvation.
The answer to this varies from one Protestant sect to another -- there is no one answer to this question.
In general, Protestants do not see baptism as a sacrament the way that Roman Catholics do. Catholics tend to see baptism as something that must be done in order for a person to be able to reach Heaven. Protestants, by contrast, tend to see baptism as less of a formal thing.
Protestants often see baptism as simply a statement of commitment (which is one reason why many Protestant churches do adult baptism). They see baptism as a ceremony in which a person officially associates themself with the community of believers.
Again, this is not valid for all Protestant sects.
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