Bitcoin 101 what is bitcoin

Bitcoin 101: Getting Started

Have you been hearing about this “bitcoin” thing a lot lately? Want to know what it is and how you get some?

Well luckily for you, in this article you will learn:

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How to buy and sell bitcoin

How to store bitcoin

What Is Bitcoin?

To put it most simply, bitcoin is a cryptocurrency, which is a type of digital currency. Unlike regular currencies (for example: dollar, euro, pound), cryptocurrencies are not controlled by a government or individual, and exist only on the internet (they do not have a physical form). Bitcoin is the first and most popular cryptocurrency. It can be purchased with regular currency – as well as stored and traded – anywhere in the world with an internet connection.

What Does Bitcoin Do?

Bitcoin allows anybody with a computer, phone, or tablet to make transactions with one another. The transactions are made quickly, dependably, and independently of 3 rd parties. Started in 2009, the bitcoin network has yet to be hacked, proving it to be reliable and secure, as far as computer networks are concerned. The driving technology behind bitcoin – known as the blockchain – has been imitated thousands of times since its initial launch, resulting in the creation of a huge “altcoin” market. Blockchain technology is now being applied in countless other ways as a solution to traditional record-keeping problems.

Why Should I Care?

Blockchain technology is thought to be the future of finance and perhaps even the global economy. Wall Street is pouring millions of dollars into bitcoin- and blockchain-related investments every day, causing the price of bitcoin and several altcoins to skyrocket. With a 30,000%+ rise in price from 2012 to 2017 and a feverishly-active trading market spread on all corners of the earth, it’s evident that bitcoin has grabbed the world’s attention, and will continue to be on the radar of major news outlets for quite some time.

Over the last 5 years, the world of cryptocurrency existed inside of a microscopic pocket on the internet. Interest crossed over into the mainstream considerably in 2017, with platforms like Ethereum making it possible for software developers to create applications on the network. Some of these applications have received millions of dollars in funding from both public and private investors. Regardless of whether you are an investor or not, you will likely hear the words “bitcoin,” “blockchain” and “cryptocurrency” even more in the future.

Why Is Bitcoin Cool?

Bitcoin offers solutions to some of the problem with traditional currencies. Instead of relying on a trusted third party to conduct a transaction on a user’s behalf – like banks, money wire services or PayPal – bitcoin allows users to send money to each other directly. Each transaction is one-way and secured by computer cryptography. Bitcoins cannot be duplicated or spent twice. The programming rules that govern the bitcoin network cannot be easily influenced or changed on a whim, and the number of bitcoins that will ever be created is capped at 21 million. Thus, bitcoin is regarded as highly incorruptible and often referred to as “the future of money.”

Where Do I Buy Bitcoin?

Regardless of where you live, if you have the internet, there’s a good chance you can buy bitcoin.

Coinbase is our favorite place to buy and sell bitcoin for newbies. It has been around a long time and is extremely easy to use. Setting up a Coinbase account and buying bitcoin is about as easy as setting up a Paypal account.

How Coinbase Works

How To Get Started At Coinbase

There are 3 basic steps to signing up for any exchange.

Step 1: Register

Enter your name, email address, and password to begin the registration process. You will have to set up a 2-Factor Authentication method so that you account is harder to hack into, so have your cell phone handy.

Step 2: Attach Payment Method

Coinbase accepts a wide variety of payment methods, including debit and credit cards. The fastest transfer method is credit card, though the fee is slightly higher than if you purchase bitcoin with money from your bank account. Don’t be frustrated if Coinbase wants a week or longer to verify your information; this is the standard amount of time it takes them to clear the red tape necessary to set up a new user account. You can also link your PayPal account to your Coinbase account, allowing you to use PayPal money to buy or sell bitcoin.

Step 3: Buy Some Bitcoin

Now that your payment method has been activated, you can decide how much bitcoin you want to buy. You can buy much less than 1 full bitcoin. Simply type in the decimal value of the amount you want to buy, as low as 0.001 BTC (that would be 1/1000 th of 1 bitcoin, or 1 mBTC). You will pay the rate shown on your screen. Because bitcoin price is volatile and may drop or rise tremendously in a period of just a few minutes, be sure to check that the price you are paying is acceptable before clicking “Continue.”

Ready To Get Started?

Visit coinbase.com and get $10 free bitcoin if you buy $100 or more.

Where Do I Store Bitcoin?

After your first purchase, your bitcoin will be transferred to and stored in a bitcoin wallet that Coinbase has created for you. Coinbase takes their security very seriously, so this is a recommended place to store your bitcoin if you are not doing much with it. There are several types of bitcoin wallets, with the most popular being web-based and mobile wallets.

If you plan on spending your bitcoin at real life shops, or sending some in person, the Mycelium mobile wallet app is highly recommended. If you plan on keeping your bitcoin for a long time, it is recommended that you keep it in a paper wallet, or in Coinbase’s vault account feature. Pictured below is the Android app screen for Mycelium, showing the user bitcoin address, current balance, price of bitcoin and a QR code that represents the user’s address and is scannable by another mobile wallet for the transaction of bitcoin, phone-to-phone.

How Do I Send And Receive Bitcoin?

First, familiarize yourself with the bitcoin address associated with your bitcoin wallet, which is a string of numbers and letters 34 characters in length. This is the bitcoin equivalent of your email address. The address will always be associated with your account, so you can use it repeatedly if you’d like. Let’s say you want to send some bitcoin using Coinbase. Click the “Send/Request” button in your main account screen to bring up the following menu.

Copy the address to which you wish to send bitcoin. Paste it in the “Recipient” field, then simply enter in the amount of bitcoin you wish to send. You can toggle between bitcoin and dollar values by clicking on the “BTC” box next to the amount to be sent. Double-check you are sending your bitcoin to the right place, that you copied the whole address, and that there aren’t any extra characters in the field. Unlike traditional currency transactions, there is no real chance of recovering bitcoin sent to a wrong recipient. After you are sure the address is correct, click “Send Funds.”

What Can I Do With Bitcoin?

Bitcoin is becoming more accepted by merchants around the globe daily. Here is an extensive list of retailers who will accept bitcoin for payment. Some of the major online merchants to accept bitcoin for payment include:

• Microsoft – add money to your Microsoft account with bitcoin, which you can then use to download games, movies and apps from the Windows and Xbox stores.
• Overstock.com – daily discounts on many household, electronic and gift items, accepts bitcoin for payment of purchases outright.
• eGifter.com – buy and sell gift cards with bitcoin online with hundreds of popular merchants to choose from, effectively exchanging your bitcoin for a “cash” value.

Conclusion

In this article, we explored the basics of bitcoin: what bitcoin is, how to buy bitcoin, and where to store bitcoin. There is a lot more to learn than what we covered here. If you would like to know more about bitcoin and how to use it, along with prices, view our bitcoin coin profile. There are also several good YouTube tutorials that quickly outline the essentials of bitcoin through an animated graphical presentation.

In summary, bitcoin is revolutionizing online payment systems and attracting Wall Street-sized investments through its continued success as a legitimate currency. Though only the first of thousands of blockchain-based software experiments and cryptocurrencies to follow since, bitcoin’s durability has earned it trust among users and investors, paving the way for blockchain technology’s continued upheaval and disruption of pre-existing financial systems.

Bitcoin achieves this through its principal tenet of decentralization, which offers financial empowerment of the individual and the disempowerment of domineering third-party money transactors like Western Union, PayPal and the banking system in large.

The bottom line: Bitcoin’s ability to help level the financial playing field for all is no longer going unnoticed, and we may very well be witnessing the birth of a revolutionary new system of monetary governance, where people can be their own banks, bankers and businesses, simply by maintaining complete control over their own bitcoin.

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Bitcoin 101 what is bitcoin

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Bitcoin (BTC)

Recent Bitcoin Price Predictions

Recent Bitcoin News

Table of Contents

The Backstory

In this article, we’ll answer the question: What is Bitcoin? Bitcoin emerged as a consequence of the 2008 financial meltdown, created by a person or group who called himself Satoshi Nakamoto. In the original whitepaper, the stated goal was to create “a new electronic cash system” that was “completely decentralised with no server or central authority”.

The technology and concept were cultivated right up until 2011, where Nakamoto turned over the source code and domains to others in the space and subsequently vanished from the scene. What is bitcoin? In layman’s terms, bitcoin is a digital currency with no physical representation, unlike fiat. There are no bills to print or coins to mint. It is a decentralised payments network with no government, institution, bank or otherwise in control. Owners of the coin are pseudonymous, which means that a user’s identity isn’t readily available for all to see. So, Instead of names, tax IDs or social security numbers, bitcoin enables buyers and sellers to connect through encryption keys. Unlike traditional currencies, coins are not issued from a top-down structure, but rather are “mined” by thousands of computer participants in the network connected through the internet.

What is bitcoin mining?

In order to mine new bitcoin, a series of computers must solve a series of math and cryptographic problems, which mint coins, record transactions on the bitcoin ledger, and secure the network. When someone sends bitcoin to another user, the network records the transaction, and all of the others made over a certain period of time in what is called a “block”. Miners (i.e. computers running specific software) inscribe these transactions on a massive ledger, where all transactions are visible since the inception of the currency. Collectively, these blocks are what make up the “blockchain” – an eternal, openly accessible record of all transactions.

With their specialised software and hardware – and no small amount of electricity – miners convert these blocks into sequences of code, called a “hash”. Producing a hash carries more weight than it sounds, as producing a hash requires serious computational power, wherein thousands of miners compete simultaneously to do it. In layman’s terms, it’s as if a thousand chefs are feverishly racing to prepare an extremely complicated dish, and the first one to serve the perfect version ends up getting paid.

The newly created hash is placed at the end of the public blockchain. Miners are rewarded for their work, earning as much as 12.5 bitcoin’s, which back in February 2018 was worth around $100,000. From a more technical perspective, bitcoin’s monetary policy dictates that every 210,000 blocks (or approximately every 4 years), this miner reward is slashed in half in an event called the halving. Find out more about the halving here.

What determines the value of a bitcoin?

At the end of the day, bitcoin’s value is determined by the free market and whatever people will pay for it. This is similar to how foreign exchange fiat currencies are meant to be priced, but with a completely public, decentralised and unalterable monetary policy.

The protocol ensures that only 21 million bitcoins will ever be minted, with over 18 million having been mined thus far. In effect, the limited supply is similar to gold and other precious metals with a tweaked intrinsic value-proposition that’s based on unstoppable and immediate transactions, among other things.

Given the relatively early stages bitcoin has existed in relation to gold, bitcoin is still undergoing volatile process of price discovery, which speculators, traders and investors are well-aware of – at least for the most part. The coin has minted plenty of millionaires among the tech pioneers and early bitcoiners, the Winklevoss twins being two of the most well-known bitcoin billionaires in the crypto playground.

How do I purchase bitcoin?

If you’re willing to assume that buying and selling bitcoin and other cryptocurrencies carries risk, there are many regular and margin exchanges available to enter the marketplace. Regular exchanges are typically used for new beginners and allow simple purchasing of cryptocurrencies. For those who are more advanced traders familiar with margin trading like those from FX and other traditional markets, there’s also the possibility to trade on margin using bitcoin as collateral. The latter is riskier and should only be used by highly experienced traders and investors. That said, there are plenty of tutorials which show users the ropes on how to trade bitcoin.

What can I do with bitcoin?

Believe it or not, bitcoin can be used to buy things from over 100,000 merchants worldwide. A recent survey showed that over 36% of American businesses accept crypto payments, indicating a growing retail demand for bitcoin and other virtual currencies.

Is this legal?

Bitcoin is accepted legal tender. In fact, bitcoin has just recently been given the go-ahead by major financial organisations and watchdogs to be used as a legal financial instrument, among other things. A series of regulatory developments in early 2020 are now also serving to boost on-ramps into the space as bitcoin and other cryptocurrencies surge in popularity in South Korea, India, Europe and throughout America.

Are there other cryptocurrencies?

There are over a thousand cryptocurrencies, each with their own claimed use-case and world-changing solution. Of course, it’s vital to note that these assets exist in a highly entrepreneurial space which has only existed for a little over 10 years. Serious observers and market participants operate with the knowledge that any number of these projects can and will probably go to zero. Needless to say, bitcoin and a handful of other early cryptocurrency projects have stood the test of time and are unlikely to fail given their resilience.

The future is decentralised

That being said, recent events surrounding the corona virus epidemic continue to emphasize the importance and need for a currency that exists outside what might be called an interchangeable system of fiat currencies. As government printers work on overdrive to the sound of trillions of dollars in stimulus, the need for an alternative currency system has never been greater.

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