Hi Guys,
Though Bitcoin is not a new name on the internet but still some of us know very little about it(including my some friends).So , i have decided to write a post about those late bloomers ;)
In this post you will get to know pretty much about everything a bitcoin newbie should know.
So , without further ado , let's enter into the world of this cryptocurrency which has taken the world by storm :)
What is Bitcoin?
Bitcoin was the first of what have become known as "cryptocurencies".
These are forms of digital money that use encryption to secure transactions and control the creation of new units.
The popularity of Bitcoin has spawned many copycats - sometimes called "altcoins".
To make things more confusing, there are also "second generation" virtual currencies like Ethereum, which has been in the news recently following the hack of the Distributed Autonomous Organisation (DAO) investment platform.
Where did Bitcoin come from?
Created by a mysterious developer who uses the pseudonym Satoshi Nakamoto, Bitcoins exploded on to the financial scene in 2013, following enormous increases in their value.
In the original Bitcoin white paper, Nakamoto describes his creation as a "peer-to-peer version of electronic cash", allowing "online payments to be sent directly from one party to another without going through a financial institution".
How does Bitcoin work?
Nakamoto wrote that such a currency uses "cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party".
This sort of stateless, bank-free currency uses a distributed, cryptographically secure "blockchain" to record payment transactions.
How to get Bitcoin
Bitcoins can be obtained in a number of different ways. It's possible to accept them as payment for goods or services.
You can also buy them directly from individuals or special websites called 'exchanges' that will swap Bitcoins for regular currency.
Bitcoin wallets
Bitcoin wallets are simply specially-designed programs that store your Bitcoin, the same way a regular wallet would store your cash.
There are several different types of Bitcoin wallets, but the most important distinction is in relation to who is in control of the private keys required to spend the bitcoins. Some Bitcoin “wallets” actually act more like banks because they are holding the user’s private keys on behalf. If you choose to use one of these services, be aware that you are completely at their mercy regarding the security of your bitcoins. Most wallets, however, allow the user to be in charge of their own private keys. This means that no one in the entire world can access your account without your permission.
It also means that no one can help you if you forget your password or otherwise lose access to your private keys. If you decide you want to own a lot of Bitcoin it would be a good idea to divide them among several different wallets. As they saying goes, don’t put all your eggs in one basket.
What is a Bitcoin miner?
A Bitcoin miner can be anyone that simply does it for fun right up to someone with the latest equipment who is attempting to mine for profit.
Bitcoin miners also join into pools that split the workload and gives each of them a share of the profits.
No Central Command
Bitcoin isn’t owned by anyone. Think of it like email. Anyone can use it, but there isn’t a single company that is in charge of it. Bitcoin transactions are irreversible. This means that no one, including banks, or governments can block you from sending or receiving bitcoins with anyone else, anywhere in the world. With this freedom comes the great responsibility of not having any central authority to complain to if something goes wrong. Just like physical cash, don’t let strangers hold your bitcoins for you, and don’t send them to untrustworthy people on the internet.
Bitcoin Price
Like everything, Bitcoin’s price is determined by the laws of supply and demand. Because the supply is limited to 21 million bitcoins, as more people use Bitcoin the increased demand, combined with the fixed supply, will force the price to go up. Because the number of people using Bitcoin in the world is still relatively small, the price of Bitcoin in terms of traditional currency can fluctuate significantly on a daily basis, but will continue to increase as more people start to use it. For example, in early 2011 one Bitcoin was worth less than one USD, but in 2015 one Bitcoin is worth hundreds of USD. In the future, if Bitcoin becomes truly popular, each single Bitcoin will have to be worth at least hundreds of thousands of dollars in order to accommodate this additional demand.
Bitcoin Exchanges
There are several ways to buy Bitcoin, but trusted exchanges are a great way to acquire Bitcoin. Because there are inefficiencies in the traditional banking system, exchanges will sometimes have slightly different prices. If the difference is too great, traders will buy low on one an exchange and sell high on another and close the gap. If an exchange constantly has substantially different prices than others, it is a sign of trouble and that exchange should be avoided. As with everything else, do your research and find an exchange you can trust. It’s also a good idea not to use an exchange as a wallet. Move your Bitcoin to your personal wallet so that you have control over your funds at all times. You can view our list of Bitcoin exchanges here.
Bitcoin Isn't Completely Anonymous
Because all Bitcoin transactions are stored on a public ledger known as the blockchain, people might be able to link your identity to a transaction over time. Some companies offer various tools such as Bitcoin mixers to help achieve greater privacy, but it takes a huge amount of effort to use Bitcoin anonymously. You may want to follow your country’s tax regulations regarding Bitcoin in order to avoid trouble with the law, but you have the power not to should you choose to take that risk. To improve privacy, most newer Bitcoin wallets will use a new Bitcoin address each time someone sends bitcoins to you.
Unconfirmed Transactions
Bitcoin transactions are seen by the entire network within a few seconds and are usually recorded into Bitcoin's world wide ledger called the blockchain, in the next block. While it’s possible that a transaction won’t be confirmed in the next block, in the vast majority of circumstances it is fine to accept a transaction as soon as it has been seen by the network. Unlike traditional payment systems, Bitcoin transactions are lightning fast and can be sent globally. Bitcoin is still relatively new, but with each passing day the technology becomes more reliable. It is more and more unlikely that a major bug will emerge in the system as time goes by, and people can trust the technology more with the passing of time. Each month people transact hundreds of millions of dollars worth of Bitcoin.
Bitcoin is the need of the hour and it will surely gonna make a big impact in shaping the tomorrow's future.
I have tried to touch every aspect of bitcoin as much as i can but still there is always room for improvement.
Do share your thoughts about the post in comments and upvote it , if you found something useful and new here.
Peace Out!!!
