Understanding the coin
Bitcoin has indeed come a long way to change the currency sector. Today, companies all over the world accept this coin from jewelry chains to schools and hospitals.
I had a very interesting experience with this particular coin. So being a cryptocurrency enthusiast, I set out to find out as much as I could about the coin as soon as I heard of it. I read so many articles on the internet, unfortunately, I still didn’t fully understand the coin. How is it made? Is it possible for the average person to use it? From the articles I read, it sounded like you required a computer science degree or a degree in engineering just to access them. This is not the case at all, as I later came to learn. I know that someone out there has had a similar experience, don’t worry that is where I come in.
Over the years, I have carried out intensive research on the on and gotten to learn a few more things along the way. So below is a comprehensive guide on everything I believe a beginner should know explained in the simplest language.
What is Bitcoin (BTC)?
Bitcoins are a virtual digital currency, what this essentially means is that they do not take a physical form. The coin relies heavily on the Blockchains technology which is essentially an online distributed ledger that records transactions permanently, it cannot be changed or altered. Bitcoin was the first coin of its kind and it was invented in 2009 by Satoshi Nakamoto. To this day, nobody knows who Satoshi is it could be an individual or a group of coders, I guess we will never find out.
The bitcoin currency is stored locally between peers, and transferred from computer to computer.
Being that there is so much information out there about the coin, it is common to come across false information. So here are a few helpful facts that will help you decide for yourself what is true and what is not.
-Bitcoins are 100% virtual
-They are decentralized, this means that they are not under the control of any central authority
-Bitcoins are stored in a wallet
-You can buy and sell Bitcoin for traditional currencies
-Bitcoins are acquired either through purchasing or through mining, I will explain everything about mining shortly.
-The coin relies strongly on the internet
Characteristics of Bitcoin transactions
After you have confirmed a Bitcoin transaction, it is impossible to reverse it. This is why no one can help you if you send money to a scammer or if a hacker stole your money.
Bitcoin transactions and accounts are usually not connected to real-world identities. You receive Bitcoins on an address, which is usually a chain of characters, you will understand this in the course of the article. It is not necessarily possible to connect the real-world identity of a user to their address.
Bitcoin transactions are propagated almost instantly in the network. They are confirmed in a matter of minutes.
Bitcoin is not affected by the geographical location of its users. It doesn’t matter if you send money to your neighbor or someone in another continent, both transactions will be successful.
Bitcoins use a cryptographic system for protection, only the owners of the private key can send the cryptocurrency. Strong cryptography combined with big numbers makes it impossible to beak the scheme.
You don’t need anybody’s permission to use cryptocurrencies, you simply download a software and install it for free. After that, you can send and receive your bitcoin seamlessly and no one will be able to prevent you.
Acquisition of Bitcoins
You have two main options, and they are purchase and mining. Here is a list of those two and more
-The purchase involves buying Bitcoin from an exchange platform, it is an elaborate process that varies from one exchange platform to the other. However, the general idea is paying traditional money or any other form in exchange for Bitcoin.
-Alternatively, you can use a Bitcoin ATM where you exchange Bitcoins or cash for another cryptocurrency.
-The third option involves selling a product or a service for Bitcoin
-Lastly, we have the mining process which entails people all over the world trying to solve a complicated mathematical sum. Whoever solves the sum first gets a reward in the form of a Bitcoin, after which all the participants verify the coin before it is added to the Blockchain. Miners use special software to solve these cryptographic problems. I believe that the mining process is a smart way to issue the currency and provide incentives to the miners at the same time. The mining process is a lot more detailed than that, so if you would like to learn more about it, there is plenty of information on the internet.
How the Bitcoin works
The system as you are about to find put is very simple. The first thing you will need to do is sign up for a cryptocurrency wallet to help you will the storage of your publican ad private keys. These two keys are critical for Bitcoin transactions. There five main types of wallets and each varies in terms of advantages and disadvantages. Therefore, carry out enough research first before settling on your wallet of choice.
Bitcoin transactions do not leave any physical traces. All that happens is a trading exchange is made, then it is followed by a credit in the accounts of those involved.
Protecting your Bitcoins
-Backup your wallet regularly and encrypt it with a strong password to protect it from thieves
-Store some of your Bitcoin in an offline wallet for added security
-Update your software as regularly as you can. Hackers can only infiltrate software that has been around for so long.
-Do not share/disclose your address or other private information
-You can use multiple wallets for a different purpose
-Trust issues, its founder is not known
-Prone to hacking and theft
-Prone to transaction delays
-Unreliable for people in third world countries due to lack of access to the internet
-Transactions can be painfully slow
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The History of Bitcoin
As I mentioned before, Bitcoin was invented in 2008 by Satoshi Nakamoto who to this day remains anonymous. This was around the global financial crisis of 2008 where banks were being bailed out by their respective governments. People needed a stable form of currency that was independent of the government and banks thus the idea behind Bitcoin was widely accepted.
Shortly after inventing Bitcoin, Satoshi Nakamoto disappeared and the lead development of Bitcoin’s protocol was handed over to a group of developers. Gavin Anderson was the lead developer and he created the Bitcoin foundation in 2012 to support the development of the network.
Over the years, Bitcoin has received innumerable contributions from the open-source community and members.
Bitcoin adoption has been slow and gradual. WikiLeaks was the first to adopt this coin in 2011, Satoshi was against it because it would draw unwanted attention from the government. Between 2012 and 2013, Bitcoin was adopted by Bit Pay and WordPress. 2013 was an eventful year for the coin since Coinbase was just beginning to gain traction at the time. Some of the notable events of that year include China banning the use of Bitcoin by financial institutions, the FBI seized thousands of Bitcoin from the dark market and also the US government started taking note of the coin.
In 2014, Mt.Gox which was the largest Bitcoin exchange shut down due to technical issues. Soon the exchange filed for bankruptcy having been hacked and experienced major losses. In 2016, there was another bog hack and this time the recipient was the Bitfinex exchange, a lot of funds were stolen.
Ever since then, Bitcoin has continued to be adopted by more people. And there have been several developments such as the launch of smart contracts. As of today, has been largely adopted into various sectors of the economy as an alternative payment means. The general awareness about the coin is quite impressive today considering its humble beginning.