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What Is Bitcoin?

 What is bitcoin


What is bitcoin


Bitcoin is Decentralized Digital Currency (DDC) that functions similarly to virtual cash or gold. And it is transferred from person to person – which means there’s no Bank or Government control or prerequisites to be able to own or transfer bitcoin.

The symbol for bitcoin is a capital letter ‘B’ with two parallel vertical lines running through it. Another symbol for bitcoin is ‘BTC’ (kind of like how the symbol for the American dollar is ‘USD’).

Bitcoin is a Cryptocurrency – and Cryptocurrencies have been around since the 1980’s. But there was a major problem called ‘double spend’ that prior digital currencies or cryptocurrencies faced; where if somebody spends a unit of that currency, it was very difficult to tell if it’s already been spent – and that’s the biggest problem that bitcoin has solved, and it why it has gained so much popularity!

And the way bitcoin solved the problem of double spend is by its Distributed peer-to-peer network, which works kind of like bittorrents.

The first bitcoin was actually issued in 2009 by someone named Satoshi Nakamoto (this is believed to be his pseudo-name). So, no one actually knows who started bitcoin per se.

 


Quantity of Bitcoin in Circulation:

There will only ever be 21 million bitcoins in circulation! And in 2009, we had the first bitcoins that were released, and there’s a predetermined amount of bitcoin that are released every 10 minutes (more about that later – keep reading).

Bitcoins will gradually be released over the years – till the year 2140.

Bitcoin is divisible down the eighth decimal place (0.00000001) – just like the US Dollar is divisible to a Penny (0.01), you can almost infinitely breakdown bitcoin to a very very small amount.

 

Is It Possible To Hack The Bitcoin Network?

Since the bitcoin protocol or network (blockchain) is not controlled from any central location that’s governed by any specific country, it’s very difficult to hack the system! In fact, to even hack the bitcoin network for 10 minutes would cost around half a billion dollars ($500,000,000)! So, there’s a lot of trust and a lot of vetting of the protocol/blockchain.

Bitcoin is basically controlled by the consensus of market participants (no one government, no one person, and no one group actually controls the bitcoin network – which is why it’s gaining so much popularity).

 


Why Is Bitcoin So Important:

  • There’s some aspects of cryptocurrency that show huge prospects for really changing the world! Let’s look at these facts;

Out of the 7+ billion people that live on the planet, about 6.5 billion people don’t have access to basic financial and banking services, like Checking accounts, or credit cards. And in the US alone, it is estimated that about 18% of people don’t have access to these financial services.

Anyone (without government approval or supervision) can use Bitcoin to conduct virtual financial transactions! I think that’s really gonna change the world!

  • Bitcoin cannot be devalued like Fiat currencies can: Fiat currencies are currencies that are backed by nothing but the trust that people have in the government.

Since the 2008 financial crisis, fiat currencies like the US dollar, Nigerian naira, and Zimbabwean dollar, are gradually becoming devalued

So, the way that bitcoin handles this problem is that, there’s a pre-determined amount of bitcoins that are going to be released over the years – and what that does, is that it’s inherently designed to be deflationary (and really control inflation).

  • Bitcoin transaction fees are so inexpensive: Cross-currency purchases and transfers are expensive and have friction (a lot of government red-tape). If you wanna move millions of dollars, that costs a lot of money! But with bitcoin, it’s very inexpensive – there are stories of people moving millions and millions of dollars for just a few pennies!

Before we talk about how bitcoin actually has value, let’s talk about ‘what is money?’

Money is very simply, any means for exchanging goods and services. In the recent history we’ve used fiat currencies like Gold, USD, Naira, Pounds and so on (as widely accepted forms of ‘money’).

 


Four Properties of Money And Why Bitcoin Fits The Description:

  • It needs to be divisible (broken into small amounts): A form of money and payment such as Gold, can be broken into smaller units – like a bar, an ounce, 1 kilogram, etc. In the same way, the dollar can be broken down into pennies or quarters. Bitcoin is divisible into the eigth decimal places (0.00000001 btc – called satoshi.
  • It needs to be durable (stand the test of time): If you keep a bar of Gold on a desk and leave it for many years, odds are it’s not going to evaporate. Same thing with say a $10 note – it isn’t likely to just evaporate into the air. Bitcoin isn’t even real! It is a virtual/digital currency (so, it is very very durable)!
  • It needs to be Fungible (commoditization): 1 USD is equal to the value of another 1 USD (they’re interchangeable). Each unit is equal to the value of another unit – they’re all created equal in value! 1 BTC is equal to 1 BTC anywhere anytime!
  • It needs to be verifiable: There needs to be a way to verify that it’s real and not counterfeit. The bitcoin network (blockchain) does an excellent job of verifying each and every transaction carried out on the network (anywhere in the world)!

Why Bitcoin is So Attractive:

Bitcoin is limited and scarce (like gold): On planet earth, there’s only a set amount of gold (just like there’s a limited amount of bitcoins). There will only be 21 million bitcoins that are ever mined (like you can only ever mine a certain amount of gold).

  • Decentralized: There is no central government or location that controls or manipulates the bitcoin network. It is a peer-to-peer network (like torrents). The election of a politician for example, cannot have any real effect on the value of bitcoin (it is protected from inflation).
  • Can be anonymous:
  • Transparent (open source): The code and structure of how the cryptocurrency networking protocol is built to be transparent – anybody can go and evaluate and look at the code, and how the network works.
  • Trusted: Because the bitcoin network has been vetted for over 5 years by industry experts - it’s trusted! People place their trust in the bitcoin protocol (even more so than they’re putting their trust in their own governments)! It is virtually impossible to hack the bitcoin system – since it costs about half a billion dollars just to fool the networks for 10 minutes.
  • Easy to buy and sell: It’s actually quite easy to buy and sell bitcoin
  • Extremely low transaction fees:
  • Irreversible (no chargebacks): Merchants and online stores love it! Because bitcoin transactions cannot be reversed after they’re made (as opposed to credit card transactions).

Bitcoin is not backed by anything tangible: Bitcoin is not backed by anything, except for the trust that people have in the bitcoin system.

The real value of bitcoin is determined by what people are willing to pay for it (which is why we’ve seen the value of bitcoin go up so much within the past couple of years) – because so much of the demand is increased.

Anonymity: The cryptic nature of cryptocurrency transactions make it possible for people to carry out transactions anonymously – this freedom is beneficial in a lot f cases (but unfortunately, fraudulent transactions can also exploit the anonymous nature of bitcoin transactions).

 


How Does Bitcoin Work?

Let’s say you take some money (somebody gives you cash or writes you a check), and you take that money to a bank and you deposited into your bank account.

Well bitcoin kind of works like this – where if someone gives you bitcoins, they are stored in a Public ledger; and everybody has access to this ledger – every transaction is actually recorded in this public ledger, and sending and receiving bitcoins is as easy as sending and receiving an email.

Your coins are actually stored in wallets. There are 3 ways to store your bitcoin;

1.     Local hard drive wallet: Your coins are actually stored on your computer

2.     Paper wallet: Here, you physically write down the codes that are associated to your bitcoin, and keep it away from the network

3.     Hosted online wallet: There are companies that help you host your bitcoins online on their hosted wallets – so you can access your wallet from anywhere in the world (this type of wallet has the biggest security risk), but there are companies with strong security measures that I recommend;

 

The Two Parts of A Bitcoin Account:

  • Public Key: This is kind of like your account number, or your email address. A bitcoin key is actually made up of 27-34 alphanumeric characters like so;

172Etxighk1XQsNVrMirCk7isfGDQpZG3a

Your public key is what you actually give out to anyone that is supposed to send you some bitcoin (the same way you’d have to give out your account number to someone that’s meant to send you money).

  • Private Key: Private key is the protection tool/mechanism of your wallet. It is kind of like your password (like in online banking, you need to know your password log into your bank app or website).

A Private key is the password (also alphanumeric) you need in order to access your bitcoin wallet/account in the public ledger.

 

How Do You Get or Buy Bitcoins?

There are 3 ways to acquire bitcoins;

Buy bitcoin from a person or exchange: You can acquire bitcoin by purchasing it from an individual or a bitcoin exchange. Bitcoin exchanges are online websites where people meet to buy from and sell bitcoin to one another (kind of like the stock market).

Here are some few online exchanges that I personally use and recommend;

 

Barter (sell product or service): You can provide products and services in exchange for bitcoin.

Mine bitcoin (run software to find bitcoins): Bitcoins are released into the system every 10 minutes or so – and miners actually mine for these bitcoins (using their computers of course, not diggers). Bitcoin mining works kind of like the lottery system, where the CPU power that you have, and the more that you mine, the better your odds are of getting some bitcoin for free (for your efforts).

Bitcoin mining requires a mining software and powerful computers.

If you want to dabble into bitcoin mining as a beginner, I’d strongly recommend you Sign Up with GENESIS MINING.



How To Make Money With Bitcoin in 2021:

You can make money with bitcoin in 2020 straight from your phone.

If you want to get started with crypto, my top recommendation would be to use the Coinbase cryptoexchange.

I've been using this app for five plus years…. it's actually what I got started with and I'm still using it to this day.

Bitcoin is the most popular coin on the app (obviously). But there are a lot of other coins out there like XRP,,,,,,,

If you're looking to invest your hard-earned money into a Crypto wallet or trading, just know that coin base is very reputable they've been around since 2012.

They've got over 30 million members, and have done billions in transactions.

Let's talk about some of the different ways that you can make money with Bitcoin and trading.

There's basically three different ways you can trade;

  • You can day trade:  Day trading, involves buying and selling crypto throughout the day (i.e., buy when it’s lowest during the day, and sell when the value of the crypto goes very high). For example, you can buy bitcoin in the morning, and then you sell late in the afternoon or maybe you buy the coin for a couple hours. It goes up a few percent and then you sell it right away

So, day trading is one way that you can make money with you know Bitcoin you can

  • Swing trading: Swing trading, is when an amount of coins, HODL it for about a week to a few months, then sell.
  • Long-Term Trading: Here, you buy big portions of Bitcoin or Altcoin, then HODL them for like between 12 months to 18 months.

Sometimes, this strategy may not be advisable. Unless you’re an expert in reading and analyzing trading price charts.

The cool thing about Coinbase, is that, it's very easy to buy and sell crypto on the app/website.

So like for example, if you wanted to buy some Bitcoin on Coinbase,… You could connect your local checking account to the app, deposit some money, then buy a portion of any coin of your choice. Then, when Bitcoin price goes up a certain amount, you can sell, and take your profit. Or you could just buy a big chunk, HODL it for a while (just, whatever strategy you want to go for)…

It’s very easy to get money in and out of your Local account attached to Coinbase.

The beauty of this strategy, is that it can be done with pretty much any other Crypto Trading, or Crypto exchange platform out there.

Here are some other highly Recommended Crypto Trading, and Crypto Exchange websites for you: 

 

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