Virtual currencies are on its way to take over the worldwide economy, and soon we will all be living in a world where tangible currencies no longer exist. Nevertheless, some of us are still trying hard to get on track with the digital currency concept.
To all those struggling to find a way in, we have tried to make your path easier.
So, what are cryptocurrencies?
The best way to explain that is by emphasizing their concept. Cryptocurrencies put forward a platform where decentralized trust could be formed, and we no longer need to be at the aid of centralized ledgers that impose charges arbitrarily for the mere transferal of funds.
Since their inception, virtual currencies have been gradually gaining attention, and more and more coins started surfacing. However, from the very beginning of the crypto era, one of the names that stood out of the hood of cryptocurrencies was Bitcoin.
Introduction to Bitcoin
Bitcoin is the most successful crypto to be ever conceived, dominating the crypto space with its blockchain technology and its deficiency.
BTC was developed in 2009 by the alias Satoshi Nakamoto as an alternative to the conventional banking system for the global masses.
It runs on a peer to peer network, where no mediators are involved. It is the digital currency, which aims to exclude interference of any third parties, while you are making transfers.
If you want to transfer an amount from your country to your friend in the United Kingdom, the money must go over a bank in your country. They take a fee for processing.
Once the money reaches the bank in the U.K, your friend’s bank debits a fee too. The issue here does not end with just the fee, it’s the data they store. Banks collect lots of private data about their customers. Many banks have been hacked over the last ten years, which is very dangerous for the people that use banks.
What Makes Bitcoin different?
Unlike fiat currency such as INR, US Dollar, Euro & other paper currencies, Bitcoin is not controlled by any country.
Its kind of like the authentic currency of the internet & anyone with an internet connection can control it. This makes it free of any corporate merger because the massive community of users administers everything about Bitcoin just like me, you, and all of the others who are using it.
To understand BTC at a more profound level, we need to separate it into two segments.
On the first hand, you have bitcoin-the-token, a fragment of code that describes possession of a digital concept, sort of like a virtual IOU.
On the second hand, you have bitcoin-the-protocol, a distributed network that maintains a ledger of balances of bitcoin-the-token. Both are designated as ‘Bitcoin.’
The BTC system allows payments to be sent among users without passing through a central authority, such as a bank or payment gateway. It is conceived and held electronically.
Bitcoins are not printed, like dollars or euros – they’re created by computers all around the world, using free software.
In many parts of the world, bitcoin is still a more practical and inexpensive way to transfer money across borders, and several payment startups make use of this feature.
Bitcoin’s cost and speed issues, though, are being dismantled as traditional channels improve, and the network’s fees continue to increase. However, liquidity does remain as an issue in many countries.
Many large and small retailers have begun to accept the cryptocurrency as a form of payment, many people feel more comfortable holding a part of their wealth in securely-saved Bitcoin where a central authority cannot prevent access or take a division.
Lately, bitcoin seems to have assumed the part of an investment asset, as dealers, institutional investors, and small savers have roused up to the potential gains from value appreciation of the coin.
The coin is increasing adoption, and a great many people have started using BTCs in real time, like purchasing an expensive automobile or getting a mansion. It’s simple as well as advanced.
Once you learn the technology behind it, you will embrace the superiority of this digital currency
How does Bitcoin work?
As a fresh and inexperienced user, you can get started with Bitcoin without getting to the technical details. Anyone can mine bitcoin by using a combination of advanced math and record-keeping.
Here’s how it works!
When someone sends a bitcoin to someone else, the network records that transaction, and all of the others made over a certain period, in a block.
On computers that run special software the “miners” — inscribe these transactions in a gigantic digital ledger. These blocks are known, collectively, as the “blockchain” — an eternal, openly accessible record of all the transactions that have ever been made.
Once you have installed a Bitcoin wallet on your computer or mobile phone, it will create your first Bitcoin address, and you can create more whenever you require one.
You can share your addresses with your friends so that they can pay you or vice versa
For a better understanding imagine your Bitcoin address as an email, however, keep in mind that unlike an email, people have many multiple Bitcoin addresses and a unique address must be used for each transaction made.
Most Bitcoin software and websites help with this by creating a brand new address each time you create a payment request.
Bitcoin uses a decentralized network, where the Bitcoin database is shared. This shared database is identified as a distributed ledger, and it is obtained using the blockchain.
To transfer Bitcoin to someone, you need to digitally assign a message that states, “I am sending 60 Bitcoins to Someone”. The message would be then broadcasted to all the computers in the network. They store your message on the database/ledger.
How to Buy Your First Bitcoin?
If you’re willing to take the risk associated with buying bitcoin, there is an increasing number of digital currency exchanges such as Coinmama, CEX, Kraken and Coinbase — the largest and most established of them — where you can buy, sell and store bitcoins.
Bitcoin can be bought on exchanges, or immediately from other people via marketplaces.
You can pay for them in a variety of ways, varying from hard cash to credit and debit cards to wire transfers, or even with other cryptocurrencies, depending on whom you are purchasing them from and where you live.
Set up Your Wallet
The initial step is to set up a Bitcoin wallet to store your bitcoin – you will need one, no matter what method you prefer to make the purchase.
This could be an online wallet, which can either be part of an exchange platform or an independent trader, a desktop wallet, a mobile wallet or even an offline one, such as a hardware device or a paper wallet.
Even among these categories of wallets, there is still a wide class of services to choose from, so do a little research before settling on which version best suits your needs.
The most significant part of any wallet is keeping your keys, which are a string of characters, and passwords safe. Which if misplaced or lost, could lose you your access to the bitcoins stored in the wallet.
Make an Online Purchase
Cryptocurrency exchanges will purchase and trade bitcoin on your behalf. Currently, there are hundreds of exchanges operating, each varying regarding liquidity and safety, and new ones proceed to emerge while others end up closing down.
However, before picking wallets, it would be beneficial to do some research on them – Depending on your geographical area, you could be lucky enough to have several reputable exchanges to choose from, or your access may be restricted to just one or two.
The greatest bitcoin exchange in the world at the moment concerning US$ volume is Bitfinex, although it is largely aimed at spot traders.
Other high-volume exchanges include Coinbase, Bitstamp, and Poloniex, but for small amounts, most reputable exchanges should work well.
Every exchange has a different approach concerning both setup and transaction. Nevertheless, they should be able to give you adequate details on how to perform the purchase. If not, consider switching the service provider.
Once the exchange has collected payment, it will purchase the equal amount of bitcoin on your behalf, and store them in an automatically created wallet on the exchange.
This can take minutes, or sometimes hours depending on network bottlenecks. Even though it’s your choice, it is highly recommended that you move the funds to your off-exchange wallet.
Making Cash Purchases
Platforms such as LocalBitcoins will assist you in finding people near you who are looking to trade bitcoin for cash.
Also in counties like the United States, there are several retail outlets within which you can swap cash for bitcoin. And WallofCoins, Paxfuland BitQuick will lead you to a bank branch near you that will allow you to make a cash deposit and receive bitcoin a few hours later.
Also, with the help of ATMs, you will be able to transfer bitcoin to your wallet in return for cash. They work in a similar way to bank ATMs, that is you feed in the bills, hold your wallet’s QR code up to a screen, and the equal amount of bitcoin are beamed to your account.
Websites like Coinatmradar can help you to find a bitcoin ATM near you.
How to Use Your Bitcoins?
Within the past few years, more and more companies have begun accepting Bitcoins. Overstock, Virgin Galactic, Microsoft, and Subway are just some of the companies you can use Bitcoin to pay for their assistance.
Also, if you wish to use Bitcoin to purchase virtually anything you can apply for a Bitcoin debit card. These debit cards are distributed by 3rd party companies that take charge for their service.
With a Bitcoin debit card, you can purchase at any store that accepts debit cards, and the amount will be reduced from your Bitcoin balance.
If you are not looking to make any purchases, you can also invest your Bitcoins in numerous ways such as holding on to them, trading them or getting mining equipment.
Keep in mind that most of the Bitcoin investments hold a risk factor and you should do adequate research and educate yourself about this topic before entrusting your money.
Another way to use Bitcoin is by transferring money to your friends, family, and business partners. All you need to do is get their Bitcoin address, and you can transfer Bitcoins from your wallet to theirs. A use case for this can be paying back a friend who bought you dinner, paying a loan or even compensating a bet.
With all that being explained we can easily say that there’s a risk as well as a great shot with Bitcoin.
While it has been more appealing to criminals due to its anonymity and lack of regulation, there are lots of benefits to all of us if you’re willing to accept some risk to jump into the Bitcoin marketplace.
Meanwhile, the technology working behind Bitcoin has sparked a revolution in the economic industry, and beyond, which is only just getting started.
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