You probably hear the word ‘Bitcoin’ at least once every day
Your friends who invested in Bitcoin, earlier have probably been making fun of you, and you’re really regretting not buying earlier. You also may not really understand what Bitcoin is all about, so this article explains the basic things to know about bitcoin.
1. What is bitcoin?
Bitcoin is a digital coin that has value. It is decentralised, so it is not controlled by any central entity such as government or a central authority. This means transactions with Bitcoin take place between one Bitcoin owner and another Bitcoin owner. Bitcoin is one of many digital money systems today and can be called a cryptocurrency. It is often referred to as BTC. Bitcoin was invented in 2009 by a programmer who called himself Satoshi Nakamoto.
2. How does Bitcoin work?
Bitcoin comes into the world through a process called mining. It’s an analogy to gold mining, but instead of actual mining, new Bitcoins are created using computer power. Bitcoin can be likened to a computer program that gives users a wallet to store value. This wallet enables users to send and receive money within the bitcoin network. A bitcoin wallet is like a bank account with its own specific number. You can create as many bitcoin wallets as you want.
3. How does bitcoin keep track of all transactions?
To keep track of all transactions, Bitcoin uses a tool called a Blockchain. A Blockchain is a ledger that contains details of all transactions on the Bitcoin network. For every transaction, the ledger stores important information. The transactions cannot be forged due to a digital signature that authenticates the transaction.
4. How is the price of Bitcoin determined?
The value of Bitcoin is determined based on supply and demand and its perceived value. At the time of this writing, the value of a Bitcoin is $17,438. You don’t need a whole Bitcoin, Bitcoins can be broken down into smaller units. The smallest unit is called a Satoshi, after the anonymous founder of Bitcoin.
5. Where can you buy/sell Bitcoin
You can buy or sell your Bitcoin on any Bitcoin exchange. To do so, you have to register, verify yourself as a real person and post a trade. After verification, you then commence trading.
6. What can you use Bitcoin for?
Bitcoin is a cheaper and better alternative to traditional money. You can pay for goods and services online using Bitcoin. It is a lot cheaper and you don’t have to worry about foreign exchange fees and security of your personal information. You can also invest your money in bitcoin and trade. It’s a great investment opportunity because the value of bitcoin increases as the market fluctuates.