Bitcoin is a type of digital currency that is created and managed electrically. In a more technical term, it’s called “A Peer to Peer Electronic Cash System” – as described by its Inventor, Satoshi Nakamoto in his original 2009 Bitcoin Whitepaper.
Bitcoin is a network allowing its users a new payment method to pay for goods or services online – completely through digital money. It is the first peer to peer payment network that is powered by its users having no central authority or middleman. For you to understand it better we can describe Bitcoin as “Cash for the Internet”. It’s managed like a library of books having many copies of each book around the world, managed by people may or may not be related to each other.
Bitcoin gives you the freedom of easy and quick transactions over the internet as it does not require any central servers or any third party authentications. All payments are peer to peer means – unlike credit card payments for huge orders that take several days or even months to complete.
Interesting Fact: The First Bitcoin Transaction was for buying a Pizza.
How Bitcoin Works?
A user purchases something from a website and wants to pay through his Bitcoins. He then makes a payment that is then transferred to the website owner Bitcoin account. It’s just like how you buy things online.
All Bitcoin transactions are permanently recorded on to an electronic ledger called a “BlockChain” – this ledger is then distributed to all others Bitcoin “Miners” and “nodes” around the world to keep as a copy and manage, and is viewable publically.
Miners and nodes are the people who verify Bitcoin transactions and secure them. As a reward for their effort, they are rewarded with new Bitcoins with each 10-minute block.
A number of Bitcoins in the world are hard-limited to 21 million Bitcoins. Meaning no government, Bank or individual can print more Bitcoins.
Interesting Fact: Bitcoin’s first significant use was On the Silk Road – Silk Road was a website served as a way for anonymous Internet buyers to order illegal drugs.
How do Bitcoin Transactions work?
Bitcoin transactions are messages that are digitally marked using cryptography. Then these are sent to the entire Bitcoin network for verifications. As you know that all the transactions on Bitcoin are public and can be found on the Ledgers called the Blockchain. Every Bitcoin transaction can lead back to the point where the Bitcoin was produced.
When we say someone has Bitcoins what we refer to is that person has access to a key-pair comprised of:
- a public key to which some amount Bitcoin was previously sent
- the corresponding unique private key which authorizes the BTC previously sent to the above pub-key to be sent elsewhere
Public keys, also called bitcoin addresses, are random sequences of numbers and letters that function similarly to an email address or a social-media site username – in short, they are a unique name. They are public so you are safe sharing it with others. In fact, you must give your bitcoin address to someone if they want to send you BTC.
The private key is also a random sequence of letters and numbers. But Unlike public keys, private keys are to be kept secret. Never Share your Private key with anyone, ever. Also, remember to have a hard copy of your private key and store it somewhere safe.
Interesting Fact: There is not even a Single Physical Bitcoin in the world – it’s all digital.
How to get started with Bitcoin?
Bitcoin is the world’s largest and leading digital currency. It continues to grow as many people get to know about it. It has already become a breakthrough in peer to peer payment system.
After all, you would like to get an online wallet where you can keep money and get things on discounts and purchase stuff online. Well here are 3 steps to help you how you can start using Bitcoin.
Step 1: Download a Bitcoin Wallet
In order to keep manage and keep track of your Bitcoins, you need a wallet. A Bitcoin wallet is an app that allows you to send and receive bitcoins. It keeps the record of your transactions and Bitcoins throughout the network.
There are many Bitcoin Wallet apps that allow you to do different functionalities but you may read there select the one you like.
Step 2: Add Bitcoin to your Wallet
Now that you have a bitcoin wallet you need to put some bitcoins in it. It is not really necessary; your account can be empty as well. You can go to bitcoins Official website and Buy Coins using a Credit card or Bank Account.
Always remember to make a backup of your private key because without it you cannot access your wallet with it. And in case your device gets stolen you cannot access your account without your private key.
Step 3: Using a Bitcoin Wallet to Send and Receive Bitcoin
Receiving a Bitcoin payment is very easy you just need to give your Public Key to the payee. But sending a payment is a little complicated and should be done carefully as it’s irreversible. The process for sending bitcoin is actually easy:
- Copy the receiver’s public Bitcoin address (or scan QR code)
- Open your wallet and navigate to its “Send” feature, paste the receiver’s address into the appropriate field
- Specify the amount you want to send (for help converting fiat currency into bitcoin visitBitcoin Tools )
- Confirm that the address and amount are both correct
Congratulations! You have bought your first bitcoin and know the basics of receiving and sending—you are now a full-fledged Bitcoiner!
Now after all this you’ve learned what Bitcoin is and how can you create an account and use it. You’ll like to know how to start earning some bitcoins –
let’s get the mining started. “What is Bitcoin Mining?”, I’ll explain in the next article, how can you do mining of Bitcoin and how can you EARN $160,00 currency while working at home.