You may have heard about Bitcoin and wondered what it really was. There is always a lot of news about this digital currency and especially how it rises and falls in price dramatically at times. Well here we will give you the complete 101 on Bitcoin.As we already mentioned, Bitcoin is a digital currency. You may think that there are actual coins available but there are not. These are just fabrications. The original intention of Bitcoin was to send payments anonymously and securely online. This is still true to a certain extent today.
A Decentralized Currency
A number of countries around the world are scared of Bitcoin. It is a totally decentralized currency not controlled by any governments or centralized banks. Some countries have actually banned Bitcoin.
A major advantage that Bitcoin has over conventional fiat currencies is that it is not affected by any inflationary of deflationary measures imposed by countries. There is a limited supply of Bitcoin which increases its value – similar to gold.
The Technology behind Bitcoin
Blockchain is the technology behind Bitcoin. This is a public ledger system which adds to a large chain of confirmed transactions which is where the name blockchain originated from. Anyone can see the entire blockchain for Bitcoin since it began in 2009. This is a lot of data and will grow even larger in the future.
With blockchain technology after verifying a financial transaction you cannot change it. It creates immutable records. This is excellent for security but not so good if you make a mistake with a Bitcoin transaction. There is no turning back after verification and confirmation.
Thousands of computers (nodes) in the blockchain network for Bitcoin validate it all of the time. This means that it is virtually impossible to hack a blockchain network as you would require more processing power than all of the computers that make up the network.
The process of verifying Bitcoin transactions falls to Bitcoin miners. These are individuals, groups or companies that use high powered computer equipment to solve the complex cryptographic codes needed to verify each transaction.
Bitcoin miners receive rewards for this work in the form of Bitcoins. With Bitcoins being very valuable these days, mining can be a very rewarding task. The problem is that with the creation of new Bitcoins the number of new ones available falls.
You need a great deal of computer processing power to participate in Bitcoin mining now. A powerful desktop computer is nowhere near good enough. So if you want o be a Bitcoin miner you need to invest in high spec computer equipment (and lots of it), and be prepared to run them 24/7 with the electrical costs that that brings.
Nowadays, mining is no really an option anymore. This takes time, efforts and energy resources. The return for a solo miner is no more interesting unless you can invest in hardware, energy costs or you can invest in mining contracts with bigger mining pools.
The best way now for an individual to make money with bitcoins is to buy some bitcoins and trade them. You can trade bitcoins, invest in them, exchange them to other currencies,… the strategies are multiple. Of course if you would like to be more informed there are plenty of good tools and courses to learn how to make profits with bitcoins. One I found really interesting is this one:
As I am not a professional financial advisor I can only recommend you to get courses, inform yourself and be smart in your investment. This is your responsibility as an investor and investing brings always risks. But investing done right can give you a lot of return which of course will bring benefits in your life.
Now here comes the time to start your journey and in the bitcoin world it starts by creating your wallet and buying some bitcoins. Let’s do it!
Setup your wallet
First of all you will nee a “wallet”. A cryptocurrency wallet stores your purchased Bitcoins. The cryptocurrency exchange will provide you with an online wallet and there are other forms of Bitcoin wallet such as a desktop wallet, a paper wallet and a hardware wallet.
The hardware wallet is the most secure because you do not leave it plugged into your computer or mobile device. An online wallet is the least secure because if you can access it online then so can hackers.
In order to setup your first wallet go to bitcoin.org and clik on “choose your wallet” from there you will be guided to setup your first wallet. When it is setup go back here to see how to use it and where to buy your first bitcoins.
Okay, your wallet is ready congratulations! Now, in you maybe ask yourself how to use it. No problem, I will explain it here.
In a wallet, you have different features:
- History: This is where you can track your transactions.
- Send: This is where you can send bitcoins to someone else. Like if you pay something with your bank account.
- Receive: This is where you setup your receiving addresses to receive bitcoins in you wallet.
Bitcoin works with “addresses” an address is something like “bc1q5hqd360p8tegafqltazqrfuyvxq8wp6qwgtym2”. (This is my address so later on if you liked this post and found it useful do not hesitate to send me some small money it is always welcome)
An address is important, before to buy some bitcoins you will need to setup an address. Log in your wallet, go to “receive” and from there find the option “New Address”. Then click on it and now you should see a new address is created. Given the wallet you can also setup your address to have an expiry date and other parameters. You can just setup your adress to never expire.
So at this point, you have a wallet and you have a receiving address it is time to go and buy some bitcoins.
Where can you get your first Bitcoins?
You can purchase Bitcoins in your native fiat currency e.g. US Dollar by using a cryptocurrency exchange. There are fees involved for buying and selling as you can imagine.
Here are some good places to start buying and selling bitcoins:
- Paxful: Paxful is a crypto marketplace where you can trade your currency with other people. This is great because as you buy bitcoins from other vendors you can find opportunities to buy bitcoins under its value which of course is good if later you would like to make extra benefits.
- Changelly: is another great exchange to start with. Changelly brings an ecosystem of products and services that allow customers to have a one-stop-shop experience for purchasing, selling, swapping, and trading cryptocurrencies. Since 2015, Changelly has been providing an intuitive platform for fast crypto exchanges. Driven by the goal to bring the day of mass adoption closer, Changelly is continuously developing to offer its users a flawless experience and new services.
Congratulations, now you have your first wallet and some bitcoins. Always remember to be careful when you invest money, the bitcoin world is wonderful for the investors and present great opportunities. On this blog I will extend the content to help you avoid scams, discuss points about what bitcoin can bring to your life and many other topics. So feel free to come back at any time. If you liked this article feel free to share it.