Bitcoin has so far become the most inconclusive discussion that can be had in the “financial” sector of any economy. As much as it is approved by some and disapproved by others, it is here with us and we need to know something about it.
If you are a beginner in Bitcoin, here are the basics:
What is Bitcoin?
Bitcoin is a digital/virtual currency also known as Cryptocurrency. It was created in 2009 following ideas of an unknown developer using the pseudonym Satoshi Nakamoto. Currently, Bitcoin is the largest cryptocurrency globally by market cap. Other well known cryprocurrencies include: Litecoin (LTC), Ethereum (ETH), Zcash (ZEC) among others.
How is Bitcoin Different from normal currencies?
Bitcoin is a virtual currency and thus can only be exchanged electronically. There is no physical currency of Bitcoin. Other differences are listed below.
Differences between Bitcoin and traditional currency
Bitcoin is decentralized
Bitcoin is decentralized. It is not controlled by any government or central bank or institution in the world. It is however maintained by a group of volunteer coders and run by a network of dedicated computers spread around the world.
Bitcoin has limited supply
Unlike normal currency which has unlimited supply as it can be printed by governments, Bitcoin’s supply on the other hand, is controlled by an underlying algorithm and can only reach a maximum of 21 million.
Transactions are semi-anonymous
Whereas traditional currency has to be verified and validated to identify the sender and receiver, Bitcoin does not have a verification mechanism. The Bitcoin protocol only confirms the ability and authorization of a person to send Bitcoins but not their identity.
Bitcoin is Irreversible
Bitcoin transactions cannot be reversed. This is because there is no government authority or organization governing Bitcoin transactions.
Where are Bitcoins sold?
Bitcoins are bought and sold in Marketplaces called “bitcoin exchanges”. You can transact bitcoin using different currencies on bitcoin exchange platforms. Some well known Bitcoin exchanges include Coinbase is, Bitstamp and Bitfinex.
How to start buying Bitcoin?
As we mentioned earlier, you can buy Bitcoin from Bitcoin exchanges. Getting started however, needs you to have a Bitcoin wallet from which you will transact using Bitcoin.
Getting started with Bitcoin: Step by Step
Get a Secure Bitcoin Wallet
A bitcoin wallet is a form of account used to send, receive and store Bitcoin as well as make payments using Bitcoin. There are free Bitcoin wallets available for all major Operating Systems and devices.
The difference between Bitcoin wallets is who is in control of the private keys required to spend the bitcoins. If you do not have control over the private keys, then the person who has control has all power to spend Bitcoin from the wallet.
Buy Bitcoin from a Bitcoin Exchange
After getting a secure Bitcoin wallet, you can now buy Bitcoin. You can get Bitcoin from Bitcoin Exchanges such as Coinbase which are available online.
Send, Save and Make Payments Using Bitcoin
Once you have gotten some Bitcoin, you can now start spending it on goods and services from merchants around the world who accept Bitcoin. You can also transfer Bitcoin from your wallet to another wallet.
All confirmed Bitcoin transactions are included in a public log called the block chain. This is used to confirm the Botcoin wallet’s balances so as to verify new transactions.
This is just a beginners guide to Bitcoin. We will be sharing more information about Bitcoin in future posts to make you know enough about Bitcoin and other Block chain technology. More documentation on Bitcoin can be found on the Bitcoin Wiki