Are you wondering what Cryptocurrency and Bitcoin is all about? These two words must have been making rounds among friends, families, and relatives in homes and on the internet, and you must be like- what’s the fuss about? In this article, I will try my best to gratify your curiosity within the confines of my knowledge about the subject topic.
Introduction to Bitcoin
Bitcoin is a digital currency that exists only on the internet. It was invented in 2009 by Someone called Satoshi Nakamoto. Nobody knows who that is. Thus, Bitcoin is not owned by anybody. It was designed to have no specific owner to allow freedom of use. There is only 21 million Bitcoin (BTC) in total. 19 million in circulation and 3 million yet to be released. Bitcoin was the first cryptocurrency but now there are more different types, we explain this below.
Introduction to Cryptocurrency
Cryptocurrency can be described as an online-based currency developed to operate as a medium of exchange. It is secured by and utilizes cryptography to execute financial transactions as well as manage the production of new Cryptocurrencies.
The cryptography functions help to prevent the issues of double-spending and counterfeiting, which is quite common in the traditional banking systems.
All Cryptocurrency is decentralized in nature, thanks to the blockchain technology- which is a decentralized, distributed ledger that takes record of the copy history of a virtual asset.
Currently, there are several cryptocurrencies in circulation. However, by the mention of Crypto among people who are quite familiar with it, the first thing that comes to mind is Bitcoin.
What do you need to know about Bitcoin?
Bitcoin was started in 2009 by a person or people under the alias Satoshi Nakamoto, and it is the first Cryptocurrency to have emerged successfully. The identity of the person who invented it remains unknown to date. It is presently the most accepted and most traded decentralized digital currency in the world, followed by Ethereum. Every other Cryptocurrency that emerged after Bitcoin is referred to as Altcoins, of which Ethereum, Litecoin, Ripple, Dogecoin, Coonye are typical examples.
This Cryptocurrency was developed to save people from the excess transactions fee charged and the limitations imposed by traditional banks. Hence the reason for its decentralization- i.e., it is neither issued nor within the control of any federal authority. Life is indeed good with Cryptocurrency.
Bitcoin does not have a physical existence. It only exists in the form of balances saved on a transparent public ledger, which is accessible by anybody. Its transactions are verified through a series of processes involving an enormous amount of computing power. Hence, the reason why it usually takes longer to be completed.
How is Bitcoin stored?
The private and public keys are the means through which Bitcoin balances are stored in a Bitcoin wallet– which is a software that allows peer to peer trading and ownership tracking of Bitcoin.
These keys are elongated strings of letters and numbers, which are linked via some mathematical encryption with which they were created.
The Public Key can be likened to a regular bank account number with which a user can receive Bitcoin, whereas the Private Key is similar to an ATM pin, which is used to authorize transactions.
How does Bitcoin Work?
The first Cryptocurrency to employ a peer to peer technology to promote quick transactions or payments for Bitcoin.
The decentralized individuals who are in charge of the computing power to generate new Bitcoin (Bitcoin Mining), as well as process blockchain transactions of Bitcoin, are referred to as Miners.
BTC is released to miners at a fixed price. However, it declines occasionally. Every 10 minutes, these miners get Bitcoin rewards. On average, a typical home miner makes about $1348 annually all things being equal.
Usually, mining involves solving some problematic, computational puzzles to finally unravel a new block that will be added to the blockchain. It is at this point that miners get rewarded with a limited number of bitcoin, which is usually halved at every 210,000 blocks. It was 50 bitcoins way back in 2009, and currently, it is at 6.25 bitcoin.
Moreover, Bitcoin can be divided into eight decimal places which are its smallest unit. The smallest unit of Bitcoin is known as Satoshi. According to Coinbase, presently, 1BTC is worth $9,158.
How to buy Bitcoin?
- Buy Bitcoin online through trusted Cryptocurrency Exchanges. (check cryptonews.com.au for more information).
- Once you have an account with the exchange you can use the Bitcoin wallet to send and receive Bitcoin or trade it with other cryptos.
What is a Cryptocurrency Exchange?
A Cryptocurrency Exchange is a website where you can buy and sell Bitcoin and other cryptocurrencies. Most crypto exchanges allow you to deposit in USD into your online exchange account, and most Worldwide based exchanges also support deposit Bitcoin into your account directly. Most crypto exchanges need to verify your identity in order for you to start using your account, so the exchange can abide by regulation KYC rules.
A common use of Bitcoin
Bitcoin can be used for virtually everything a fiat currency is used for. The significant difference that exists between BTC and Fiat currency is that Bitcoin does not have a physical existence, whereas the fiat currency does.
A common use of Cryptocurrency
At the moment most cryptocurrency is used purely to invest in innovative early-stage tech startups (called Initial coin offerings – ICOs). Other common uses include trading, loyalty programs, crypto token exchanges and crypto airdrops (free cryptos offered in exchange for services or exposure). Another common use is through Ethereum which is a decentralized software platform that enables Smart Contracts and Decentralized Applications (DApps).
Bitcoin can be used as a medium of exchange on a worldwide basis. Cryptocurrencies are actually trying to improve Bitcoin’s code and develop new features. However, many of these new cryptos are meaningless and have no value, some are even known and proved to be scams. So be cautious when you’re buying them.