What is Bitcoin
and how does it work?
If you want to know what is Bitcoin, how you can get it, and how it can help you, without floundering into technical details, this guide is for you.
What Is Bitcoin?
Definition: Bitcoin is a cryptocurrency, a form of electronic money. It is a decentralized digital currency without is independent of banks and can be sent from user to user on the peer-to-peer bitcoin blockchain network without the need for intermediaries.
What is a Bitcoin and how does it work?
Small wonder that Bitcoin emerged in 2008 just after Occupy Wall Street accused big banks of misusing borrowers’ money, duping clients, rigging the system, and charging boggling fees. Bitcoin pioneers wanted to put the seller in charge, eliminate the middleman, cancel interest fees, and make transactions transparent, to hack corruption, create organic network value, and cut fees. They created a decentralized system, where you could control your money and know what was going on without depending on banks.
Bitcoin has come far in a relatively short time. All over the world, companies, from REEDS Jewelers, a large jewelry chain in the US, to a private hospital in Warsaw, Poland, accept its currency. Billion dollar businesses such as Dell, Expedia, PayPal, and Microsoft do, too. Websites promote it, publications such as Bitcoin Magazine publish its news and price actions, forums discuss cryptocurrency and trade its coins. It has its application programming interface (API), price index, and exchange rate.
Problems include thieves hacking accounts, high volatility, and transaction delays. On the other hand, people in third world countries may find Bitcoin their most reliable channel yet for giving or receiving money.
Understanding Bitcoin – What is Bitcoin in-depth?
At its simplest, Bitcoin is either virtual currency or reference to the technology. You can make transactions by check, wiring, or cash. You can also use Bitcoin (or BTC), where you refer the purchaser to your signature, which is a long line of security code encrypted with 16 distinct symbols. The purchaser decodes the code with his smartphone to get your cryptocurrency. Put another way; cryptocurrency is an exchange of digital information that allows you to buy or sell goods and services. The transaction gains its security and trust by running on a peer-to-peer computer network that is similar to Skype, or BitTorrent, a file-sharing system. Satoshi Nakamoto leveraged blockchain technology to allow bitcoin to gain decentralization, complete transparency, and immutability.
Bitcoin Transactional properties:
1.) Irreversible: After confirmation, a transaction can‘t be reversed. By nobody. And nobody means nobody. Not you, not your banks, not the president of the US, not Satoshi, not your miner. Nobody. If you send money, you send it. Period. No one can help you, if you sent your funds to a scammer or if a hacker stole them from your computer. There is no safety net.
2.) Pseudonymous: Neither transactions or accounts are connected to real-world identities. You receive Bitcoins on so-called addresses, which are randomly seeming chains of around 30 characters. While it is usually possible to analyze the transaction flow, it is not necessarily possible to connect the real-world identity of users with those addresses.
3.) Fast and global: Transaction is propagated nearly instantly in the network and are confirmed in a couple of minutes. Since they happen in a global network of computers they are completely indifferent to your physical location. It doesn‘t matter if I send Bitcoin to my neighbor or to someone on the other side of the world.
4.) Secure: Bitcoin funds are locked in a public key cryptography system. Only the owner of the private key can send cryptocurrency. Strong cryptographic technology and the magic of big numbers make it impossible to break this scheme. A Bitcoin address is more secure than Fort Knox.
5.) Permissionless: You don‘t have to ask anybody to use cryptocurrency. It‘s just a software that everybody can download for free. After you installed it, you can receive and send Bitcoins or other cryptocurrencies. No one can prevent you from transacting with your own money. There is no gatekeeper.
Where can I find Bitcoins?
You can get your first bitcoins from any of these four places.
A cryptocurrency exchange where you can exchange ‘regular’ coins for bitcoins, or for satoshis, which are like the BTC-type of cents. Resources: Coinbase and Coinsquare in the US & Canada, and BitBargain UK and Bittylicious in the UK.
A Bitcoin ATM (or cryptocurrency exchange) where you can change bitcoins or cash for another cryptocurrency. Resources: Your best bets are Bitregal and CoinCorner
A classified service where you can find a seller who will help you trade bitcoins for cash. Resources: The definitive site is LocalBitcoins.
You could sell a product or service for bitcoins. Resources: Sites like Purse.
Is Bitcoin safe and legal?
To see how the system works, imagine someone called Clarice who’s trying out Bitcoins. She’d sign up for a cryptocurrency wallet to put her bitcoins in.
The Bitcoin Wallets
There are three different applications that Clarice could use.
Full client – This is like a standalone email server that handles all aspects of the process without relying on third-party servers. Clarice would control her whole transaction from beginning to end by herself. Understandably, this is not for beginners.
Lightweight client – This is a standalone email client that connects to a mail server for access to a mailbox. It would store Clarice’s bitcoins, but it needs a third-party-owned server to access the network and make the transaction.
Web client – This is the opposite of “full client” and resembles webmail in that it totally relies on a third-party server. The third party replaces Alice and operates her entire transaction.
You’ll find wallet technology that comes in five main types: Desktop, mobile, web, paper and hardware. Each of these have its advantages and disadvantages.
How to Earn Bitcoins
Bitcoins can be used in just about anything. There are many ways a user can earn or accumulate the amount of Bitcoins in his Bitcoin wallet. Bitcoin exchange is now beginning to be recognized as a safer way to carry around ones money. Here are the many ways a user can earn more Bitcoins:
1) Accept Bitcoins as payment these days, there are more and more businesses that accept Bitcoin as a form of payment. Online shopping is very prevalent and a lot of people find convenience in doing so. Online shopping is usually tax free and some even offer free shipping within ones country.
There are even more choices when doing online shopping. An online shopper has the option to pay in Bitcoins, thus, a businessman can earn Bitcoins through payment. More merchants are now giving their customers an option to pay using this currency.
2) Purchasing Bitcoins a user can find a Bitcoin exchange platform in his area. Though it may not be an easy task, there are individuals who are open for a Bitcoin exchange. A user can exchange his dollars or euros to be able to earn Bitcoins.
There is a site called localbitcoins.com where a user can search for people who are looking to exchange their Bitcoins with dollars or euros. If a user cannot find one in his local area, there are multiple international Bitcoin exchange where you can buy, sell and trade Bitcoins quickly and easily.
3) Bitcoin paying jobs there are online paying jobs for individuals who prefer to be paid in Bitcoins. An employer can offer an option for an employee if he prefers to be paid in dollars or in euros or he prefers to be paid in Bitcoins. You will be surprised with the many available jobs that pay in Bitcoins. There are positions for those who are knowledgeable about the ins and outs of Bitcoins. For example, there are writing jobs that will require you to write and talk about the various topics such as Bitcoin exchange.
4) Mining this is another way as to how a user can earn Bitcoins. Here, a user is asked to solve an extremely difficult math problem that involves unlocking the codes or mathematical algorithms. If solved successfully, a Bitcoin user is rewarded as a form of incentive. Users can pool together and discuss among themselves on how to solve the problem or how to unlock the algorithm code. You can find a complete guide on Mining Bitcoins Here.
Where to Use Bitcoins
Bitcoins, just like ordinary money, can be used in many ways. There are more and more merchants who are now accepting Bitcoins as a form of payment. You can use it to purchase stuff online and you can use it in some restaurants around the city. There is a Bitcoin merchant directory that is available online so a user can have an easier time finding out which establishments accept Bitcoin exchange for goods and services. A user can also use it to purchase gift cards. For that reason, Bitcoin exchange can be a good idea for someone who wants to have many paying options, aside from credit or debit cards. If you trying to compare the prices of Bitcoins from the various exchanges. We found this as a easy way to calculate Bitcoin Value.
Additionally, Bitcoins can also be used in a number of charitable institutions. There is the Bitcoin Foundation which aims to standardize and further improve the Bitcoin system so as to protect the public from fraud. Then a user can also use Bitcoin exchange in programs that accept Bitcoins for a program designed to help improve the lives of the less fortunate people.