Cryptocurrency 101: Getting To Know Bitcoin

Ever since money became a huge issue in the world, people have been looking for investment opportunities, and business tycoons have been giving people ideas on how to use their money wisely. The investments we are fully aware of today include, life insurance and its varieties, real estate, stocks, bonds, savings account, and a lot more.

How would you feel if there’s a new kind of investment that will soon take the world by storm? The past few years, Bitcoins have been slowly getting attention and is making its way to the spotlight when it comes to investments. What makes Bitcoin standout from all other kinds of investment is that it’s solely online, taking modernization and advanced technology at a whole new level in the world of investments and money.

As soon as Bitcoin launched, more and more people have begun seeking cryptocurrency information and advice on how to get bitcoins and how to use them from investment experts. What is bitcoin? Is it worth risking? Is bitcoin safe? What’s so good about Bitcoin? Where did it come from? How did it start?

If you have the same questions, today’s your lucky day! This article is the ultimate guide you are looking for. We will discuss everything you need to know about Bitcoins including its history, popularity, characteristics, and a lot more.  

Block Chain, Bitcoin

What Is Bitcoin and How Does It Work?

To put it simply, Bitcoin is a form of electronic cash. It is considered as the world’s first cryptocurrency and is best described as a digital currency that only exists electronically. Guiding a new wave of anonymous transactions that we had no knowledge about before, Bitcoin is actually the biggest cryptocurrency in the market right now. That is why there’s always an ongoing debate on whether or not Bitcoin is safe and worth the investment.

How Did Bitcoin Start?

As you may know, Bitcoin is all about decentralization. With no government officials and particular institution controlling the network, Bitcoin aims to be completely independent of a central authority such as a bank, government, or country. With that said, anyone has access  to the software used to make Bitcoin work and has the power to help maintain it. Here lies the million dollar question: who invented Bitcoin and how did it start?

Hate to break it to you, but it seems like there is no straightforward answer. The only information that has been going around is that it was created by a person or a group under the pseudonym, Satoshi Nakamoto. In the hopes of revealing who the mastermind is, checking accounts and looking out for clues led only to a dead end. Accounts were no longer active and the coins in his wallet haven’t been spent. Some people might say that Satoshi Nakamoto has disappeared, or is really good at staying anonymous.

Gold and Silver Bitcoins

What is Bitcoin Used For?

Just like money, we use it when making a purchase. In order to ensure stability, currency must have value, and one way to judge its value is to see what it can be used on. There are a lot of businesses that have taken the plunge by accepting Bitcoin. Aside from being an early adapter to this new thing, it is also seen as a strategic decision for companies. It’s a good way to widen their market by reaching out to tech-savvy audiences.

How Does Bitcoin Work?

One thing to note about Bitcoin is that it’s a decentralized digital currency. This means that it doesn’t have a particular issuing authority or administrator behind all its work. Transacting with Bitcoins can be done by check, wiring, or cash. If none of that floats your boat, you may also use Bitcoin, or BTC. With this, you may refer the purchaser to your signature, which is a long line of security code encrypted with 16 distinct symbols. The purchaser then decodes the code to get your cryptocurrency.

In other words, cryptocurrency such as Bitcoin is an exchange of digital information online which allows you to buy or sell goods and services. Every transaction in this cryptocurrency/ bitcoin business gains its security and trust via a peer-to-peer network, tracked on the “blockchain” or also known as the shared public ledger or giant ledger.  

The ledger is where you can find all the records of every bitcoin transaction. Each block in a blockchain is made up of a certain data structure that’s based on a distinct encryption. This helps in detecting fraud or corrupted files and then preventing it from damaging the rest of the ledger.

bitcoin mining

What is Bitcoin Mining?

Bitcoin mining is the process of keeping the business secure by regularly verifying and adding transaction records to the public ledger or blockchain. It refers to the adding of new transactions or blocks to the chain and keeping them in queue. The blockchain is there to confirm transactions in the network. In addition to that, bitcoin nodes make use of the blockchain to identify authentic transactions from the attempts to re-spend coins that have already been used elsewhere.

How Bitcoin Mining Works

According to Bitcoin Mining, it’s a decentralized computational process that serves 2 purposes: (1) to confirm transactions in a trustful manner, and (2) creates or issues new bitcoins in each block. Mining goes like this — it verifies valid transactions, bundle transactions in a block, insert header of the recent block into the new block as a hash, solve the problem, adds new block to the local blockchain.

Just to remind you, Bitcoin does not have a central government or issuing authority. Unlike with paper money, the decision of when to print and distribute money is up to the officials. Bitcoin have volunteers, also known as “miners”, who constantly verify and update the blockchain by solving mathematical problems. This system of verification and updating minimizes the risk of fraud, helps issue the currency, and gives incentive for more people to mine.

Because of Bitcoin’s verification process, this impressive feature makes it safe and therefore worth considering for investments. When using bitcoin, every person on the network verifies each transaction instead of having just a single central server looking out on everything. Here, every move is being watched so your money is just as safe as everyone else’s.

Take note that there’s a special bitcoin mining hardware used to perform Bitcoin mining. Here’s a simplified explanation of how it works:

  • Miners have to solve a math problem presented by the server.
  • The first one to come up with a solution adds the verified block of transactions to the ledger.
  • Calculations are based on a Proof of Work (POW), which indicates that minimum energy was spent to get the correct answer.

Here’s a thorough presentation by Coin Central of a transaction example using Bitcoins and your bitcoin wallet for purchasing something.

With all that said, we’re barely just scratching the surface but here’s everything you need to know about Bitcoin Mining!

Benefits of Using Bitcoin

So, why bother using Bitcoin? Here’s 5 major reasons why Bitcoin is really good!

  • Convenient – The fact that it’s electronic means Bitcoin is ahead of the other modes of payment. Not only that, using Bitcoin makes payments faster and can process in a matter of minutes unlike wire transfers and checks which take days.

  • Lower Fees – Accepting Bitcoins costs lower than other payment methods like using a credit card. No need to wince at the pricey transaction fees!

  • Safe – Unlike credit card payments, there’s a risk of chargeback fraud. When Bitcoin is sent, there’s no charging back so there’s no need to worry so much. On top of that, Bitcoin has a fixed number of bitcoins which helps avoid inflation. So after all of it have been ‘mined’, no more Bitcoins will be created.

  • Independent – Bitcoin is decentralized. This means that you own it and no authority can touch your Bitcoin. Anyone who are not fond of the mainstream banking system like this about Bitcoin.

You’re in Control – Other forms of digital fiats hold your assets and might lock you out of your earnings. With Bitcoin, you own your coins and you control what you have.

bitcoin and other currencies

Conclusion

After all that’s been said, we go back to our questions at the beginning of this article. Is Bitcoin safe? Is Bitcoin worth the investment? Is Bitcoin really the new money? Well, the answer is all yes and so much more. It’s all a matter of deeply understanding what it is and how it works so that you will be able to make the most out of this cryptocurrency business.

To sum it all up, Bitcoin is like an electronic money with decentralized system with much lower fees, less risk for fraud and inflation; it helps us make transactions easier, faster and more convenient. Ain’t that a good start for those who are considering to try something new? For tech-savvy individuals, Bitcoin would be a hit. Once more people start understanding and accepting Bitcoins, it will surely change the game around the world. It’s just like Eric Schmidt once said: “Bitcoin is a remarkable cryptographic achievement and the ability to create something that is not duplicable in the digital world has enormous value.”



Add a comment

This website doesn't use cookies. Just to purchase token, your personal information will be received