And here… your going to find the best Bitcoin guide put together by the team at Block Discover!
So….Bitcoin, but why?
The (short) story of Bitcoin starts on 3rd January 2009 shortly after the devastating economic meltdown that saw some major players in finance at the time close shop.
The meltdown was blamed on system rigging, absence payouts to workers in the finance industry and mismanagement of customer funds among other issues.
Bitcoin was developed to put the users of the financial services in control of their money.
Whilst nobody knows who he/she/they are, the developer of Bitcoin, Satoshi Nakamoto has become a household name across the globe.
What is Bitcoin?
Simply put, Bitcoin is a form of currency like dollars, euros, shillings or pounds.
However, Bitcoin is different from these conventional currencies in the sense that it is a digital currency. Nonetheless, one can transact with Bitcoin as with other currencies such as purchasing goods and trading bitcoin on the forex market among others.
Bitcoins run on blockchain technology whose security is enhanced through a peer-to-peer computer network. This kind of network can be compared to common networks such as Skype or Torrent Sharing platforms.
How does Bitcoin work?
Bitcoin runs on blockchain technology, which is synonymous with what is referred to as shared ledger. All confirmed transactions are recorded as blocks, which are then broadcasted to other nodes on the peer-to-peer computer network for validation.
This unique characteristic of the blockchain technology enhances the security of the transactions besides preventing the expenditure of the same currency twice. Noteworthy is the fact that unlike conventional currency, Bitcoin runs on a decentralized system.
This means that no centralized body determines how much Bitcoin is in supply or undertakes measures to make access to Bitcoin difficult.
I’ve heard of Bitcoin mining, what is it?
Bitcoins are generated through a complex process known as mining. This complex mathematical procedure is normally executed by computers. Real mining requires the integration of high-powered computers with sophisticated software, which prevents a lot of people from taking part in it.
However, individuals who lack the technical know-how and or the financial ability to engage in real mining can get a share of the action through cloud mining.
The coding of the mining process is set in such a way that the mining process becomes difficult over time. This could be for the reason that the number of bitcoins that can ever be mined is limited to 21million.
What makes Bitcoin special?
Decentralized– this means that bitcoin is not subject to control but any real world institution. While conventional currencies are transferred from bank account to bank account or a mobile money transfer system, Bitcoin is sent from one address to another address. These addresses are a series of random characters.
Non-Reversible– once a transaction has been confirmed on the blockchain it cannot be reversed. This means that before sending any Bitcoin, one must double check or even better triple check to confirm the amount to send.
Speed– transferring conventional currency through conventional financial institutions is often a painfully slow process. With Bitcoin, however, transactions are immediate. This is because the blockchain technology eliminates the need for clearing houses, which are often the cause for slow processing in banks.
Secure– Bitcoins are secured through a cryptography system. Additionally, a Bitcoin holder gets a private key, which gives them the sole permission to access the bitcoins in their wallet.
How do I get hold of bitcoins?
There are several places through which one can get bitcoins but as in any transaction buying and selling bitcoins is subject to the rule of ‘caveat emptor.’
One can get bitcoins through one of these places:
- Bitcoin ATM’s– yes, there are ATMs for bitcoins. Through these ATMs, one can change their cash for bitcoins or any other cryptocurrency of choice.
- Cryptocurrency Exchanges– this is probably the safest and most convenient way to get bitcoins or any other cryptocurrency. However, one must perform their due diligence to ensure that they settle for a credible exchange. A good example of a cryptocurrency exchange is Coinbase.
- One can trade their cash for Bitcoins through Classified Service Providers. One provider of such services is LocalBitcoins.
How Do I Store my Bitcoins?
There are various options that one can exploit for Bitcoin storage.
The most common form of storage for Bitcoin is a
- Exchange Wallet– Most cryptocurrency exchanges provide the users with a wallet that allows them to buy or sell their Bitcoin as they please (It is not recommended to keep your crypto coins on an exchange for long periods)
- Hot Storage– This form of storage allows users to receive and send Bitcoin at their discretion, but it is susceptible to hacking since it is an online form of storage.
- Cold Storage– This is an offline form of storage, which limits the users spending habit. However, it is considered more secure for holding bitcoins in comparison to hot storage.
- Ledger USB Wallet– This is a hardware wallet that makes use of smart card. The ledger USB wallet boasts two layers of security, which makes it an optimal device for storage and here at Block Discover we recommend this option for being the most secure!
Bitcoin is undoubtedly a fascinating phenomenon, but it does have some shortcomings that one must be aware of. One disadvantage is that one can lose their entire Bitcoin holding by simply formatting their computer.
Additionally, the irreversible nature of Bitcoin transaction qualifies as another one of its demerits. Considering how prone to error humans are, this is a significant shortcoming.
Besides these two disadvantages, the fact that the developer of Bitcoin is not known is in a way another disadvantage.
What’s so great about Bitcoins?
It is safe to say that the merits of Bitcoin outweigh the weaknesses.
First, transacting with Bitcoin is much faster than transacting with conventional currencies. Additionally, the fees incurred for Bitcoin transactions are minimal compared to those charged by banks for similar transactions.
Additionally, Bitcoin gives the consumers to transact freely thus eliminating the need to seek permissions from any institution.
Bill Gates, the co-founder of Microsoft acknowledged that:
“Bitcoin is better than currency in that you don’t have to be physically in the same place and, of course, for large transactions, currency can get pretty inconvenient.”
The founder of Virgin America, Richard Branson, admitted that:
“Blockchain is an economic revolution.”