What is Bitcoin?
Bitcoin is the oldest and most popular Cryptocurrency. Since its launch in 2009, the virtual currency has grown to become the largest by market capitalization. The coin was created with the aim of facilitating financial transactions in the absence of a central authority such as the government. Furthermore, it provided a means to send money electronically through a secure, verifiable, and immutable process.
A pseudonymous person or group of people called Satoshi Nakamoto created Bitcoin. The identity of this software developer has remained unknown to this day. As a decentralized currency, no central authority controls the amount of this currency in circulation.
The process of creating and producing new coins is controlled by Bitcoin’s blockchain programming. The system keeps tracks and checks the accuracy of Bitcoin transactions. This eliminates the need for a government to print new coins. The maximum number of coins is capped at 21 million coins.
How It Works
Bitcoins are created through a process called mining. The process involves solving a mathematical problem based on a Proof of Work (POW) using hardware. The most popular hardware systems used in this process today is ASICS–Application-Specific Integrated Circuits. Bitcoin mining is set in such a way that it becomes harder as the number of coins in circulation increases. This means that the process of mining new Bitcoins a few years ago was easier (consumed less energy and required less powerful machines) than today and will only get harder with time.
How To Acquire Your First Coin
• Mining your own BTC (although this has become very difficult to achieve profitably these days unless you have some serious money and scale behind your mining operation)
• As a gift from family or friend – Huh wouldn’t that be nice. There’s a lot of Twitter accounts out there promising free coins and that’s only ever ended in misery for the poor souls duped by the scammers. Anyway, maybe you might get given some crypto by someone one day.
• You can ask your customers to pay in Bitcoin if you run a business. There’s a bunch of services and products like Bitpay that make this easy.
• You can buy with fiat currencies or other Cryptocurrencies from Bitcoin ATMs or exchanges such as Bithumb, Bittrex, Huobi, and Binance, among others.
How To Store Bitcoin
Bitcoins, like most of the other Cryptocurrencies, are stored in wallets. However, given that these currencies are not physical like fiat currencies, their wallets are also different. Mobile wallets are the most convenient for those who use the coins to buy goods regularly. However, they are not very secure as they are connected to the internet hence you should only keep a small amount of coins here. Desktop wallets are also good although you can only use your funds when you are near the machine. Hardware wallets and paper wallets are secure and ideal when storing a large number of coins.
Benefits Of Using Bitcoin
• Bitcoin transaction fees are much lower than the charges by banks and other companies in the money transfer businesses.
• Bitcoin payments do not necessarily need your personal information thereby offering some privacy.
• Bitcoin gives its users the freedom to walk in different countries and use the currency to make payments. Although not all countries and businesses accept Cryptocurrencies, they offer a lot of convenience in places they are allowed.
Precautions When Using Bitcoin
• Bitcoin is volatile. Therefore, you should be careful when you want to store a certain amount for future use.
• Bitcoin is not legal in all countries. The messy and bureaucratic world of politics and law has been a thorn in the crypto industry’s side from day 1 however progress is being made!
• Although Cryptocurrency exchanges are the most popular places where people buy and sell Bitcoin and other altcoins, they are prone to hacking. Consequently, you probably shouldn’t hold the majority of your crypto stash on an exchange if you are planning to hold for a long time. This is debatable in the industry with some of the larger more established exchanges offering insurance and innovating continuously with security so it’s up to you!
Thanks for reading this summary of Bitcoin and if you’d like to learn about other fascinating cryptocurrencies like this one, why not browse our Coins and Tokens series? 🙂