I believe many of us must have heard of the first decentralized digital currency by the name “Bitcoin”? – Just in case you are among the few that is hearing about the bitcoin currency for the first time, welcome and read on because this post is specifically for you.
The first time I heard of bitcoin was late 2011, and I did my first bitcoin transaction in 2015 and I must say it was an exciting and new experience for me. But before my first transaction, I always thought the bitcoin currency might be one of those inventions that comes and goes. It never occurred to me and to many that this particular invention has come to stay for good.
Considering the value of bitcoin in 2011 and what it is worth now, you will agree with me that this might just be one of the best thing that has ever happened to humanity. The value of one bitcoin in 2011 is less than 100 USD but as at the time of writing this post, the value of one bitcoin is over 1000 USD. So imagine someone who invested 1000 USD on bitcoin in 2011 and now decides to sell them off now – do the math and you will know how much that investment will be worth now.
Just like the web has changed publishing over the years Bitcoin is changing finance that same way, it is opening a whole new platform for innovation. Bitcoin is a great way for business to minimize transaction fees, it cost nothing to start accepting them and its very easy to setup.
In this article I will be talking about the basics of Bitcoin currency and everything you need to know about bitcoin before using this awesome game changer, that is, either accepting it as a means of payment or using it to buy stuffs.
Points covered in this article are as follows :
- What is Bitcoin
- What is a Bitcoin Wallet
- How does it work
- Where to get Bitcoin
What is Bitcoin currency?
Just like paper money and gold before it, bitcoin is a currency that allows parties to exchange value. Unlike it’s predecessor, bitcoin is the first decentralized digital currency. The first Bitcoin was published in January 2009 by an unknown programmer or group of programmers under the name Satoshi Nakamoto.
Nobody actually know the real identity of this Satoshi Nakamoto even though many people have come forward claiming to be the mystery person behind the invention of Bitcoin. You can read more about Satoshi Nakamoto here.
Bitcoins are coins which you can send through the internet, compared to other alternatives bitcoin have so many advantages such as:
- Bitcoins can be transferred from person to person without the interference of a third party (middlemen) like a bank or clearing house, this simply means that the fees are much lower and you have greater control of your funds.
- You can use them in every country
- Your account cannot be frozen because it is not controlled by any government or agency.
- And there is absolute privacy, because the transactions can’t be spy on and there is no limit to how much you can send or receive
The value of the first bitcoin transactions were negotiated by individuals on the bitcointalk forums where 10,000 BTC was indirectly used to purchase two pizzas.
What is Bitcoin Wallet ?
A bitcoin wallet is software which enables users to store, send and receive bitcoins. That’s just the simple explanation for bitcoin wallet.
After creating a bitcoin wallet for the first time, a bitcoin wallet address will be generated for you automatically which you can give to people to send you bicoins. You can choose to change your bitcoin address after each transactions for security purposes.
There are several types of bitcoin wallets which I will list bellow and I will also be giving a brief explanation about them
• Software wallet: This type of wallet is a type that requires you to download software clients on a mobile phone, PC or a Tablet.
• Online bitcoin wallets: This type of wallet is the type you can access from the web using any internet connected device such as a mobile phone, computer or a tablet. It is the easiest kind of wallet and simple to setup that is why it is the first choice for majority of the beginners who just entered into the bitcoin community.
• Paper wallets: This is just a fancy name for printing out your bitcoin private and public keys on a piece of paper.
• Hardware wallets : Like the name suggest, it is a physical device that secures your bitcoin.
You can find a detailed post about the various types of bitcoin wallets out there here. You can easily get a bitcoin wallet by going to Blockchain.info and sign-up for a bitcoin wallet. It’s that easy.
How does it work?
There are several currency exchangers in the world where you can buy or sell bitcoin for Euro, Dollar, Pounds etc.
Your Bitcoins are kept in your digital wallet on your computer or mobile device known as the Bitcoin Wallet. If you can send an email, then you can send a bitcoin because it is that simple. You can purchase anything with bitcoin, ranging from a house, car, PC, recharge cards to even a cup of coffee.
Several online stores are now accepting it and gradually more and more merchants and vendors are beginning to accept it.
The Bitcoin network is secured by individuals called miners. Miners are rewarded with newly generated bitcoins for verifying transactions. After transactions has been verified, they are recorded in a transparent public ledger called the “block chain”. The software is completely open source and anyone can review the code.
Checkout this self explanatory infographic:
Thanks to weusecoins.com for this awesome infographic.
Where to get Bitcoin currency?
There are several ways in which you can get bitcoin, you can either get bitcoin from several bitcoin exchangers online or in your communities by giving them your local currency in exchange for bitcoin.
You can also get free bitcoin from several bitcoin faucets out there where you can get free bitcoin for completing one simple task or the other (In fact this is how I got my first 20 USD worth of bitcoin ) but the problem with bitcoin faucets is that they run out of bitcoins to give.
The goal of bitcoin faucets is to spread bitcoin and encourage new users to embrace it. That is why they give free bitcoin to their users for performing just simple tasks.
Another way to get bitcoin is to join the ever growing list of bitcoin miners and mine some bitcoin for yourself. I know it sounds like fun, well it is, but I must warn you that this particular procedure will cost you some money in acquiring mining machines or setting up a mining rig.
Gone are the days you can use your PC to mine bitcoin and actually get some coins. With the rate of difficulty in the pool increasing day by day before you can get a bitcoin through mining you will need to cough out some thousands of Dollars to acquire the necessary equipments.
If you are yet to get into bitcoin, I will advice you do so now and don’t wait until the price skyrocket over the roof. If you miss the earliest opportunity try not to miss this one. This is the time to invest in bitcoin currency and make a fortune out of your investment. If you are already a bitcoin investor, we would love to hear your experience and when you started.
Don’t forget to share this post with your friends so they can also learn one or two things from it.