Until the year 2016, only a small number of people used to talk about Bitcoin. As soon as the year 2017, Bitcoin became talk of the town. Almost every tech user started interacting with the Bitcoin. Right now, in the year 2018, Bitcoin is the most discussed term over the internet. If you still don’t know what is a Bitcoin, how it was created, what does it do and how it’s changing the world, then here are answers to all of your questions.
What is a Bitcoin?
In the literal terms, Bitcoin is internet money. Bitcoin is a digital asset, more commonly known as a Cryptocurrency. Bitcoin was founded back in the year 2008 by a mysterious internet user named Satoshi Nakamoto. At that time, Bitcoin was highly undervalued and highly underrated. Bitcoin did not only lay down the foundation of Cryptocurrencies, it brought into existence a whole new technology called Blockchain.
In the earlier days, Bitcoin was most widely used on the Dark Web. Bitcoin has become the most widely used Cryptocurrency to perform any kind of money transaction over the internet. Big companies now accept Bitcoin as a form of payment. Microsoft, Dell and Newegg are the ones to name a few.
Bitcoin’s original price was only $1 when it was launched a decade ago. Right now, as of writing this post, one bitcoin is worth over $14,000. Bitcoin has already hit the benchmark of $20,000. There are speculations that Bitcoin is a bubble and it will burst some day. The speculations have remained speculations so far. Bitcoin is only growing bigger and it has over 1400 competitors in the market right now.
Satoshi Nakamoto is unknown till date.
What makes Bitcoin so amazing and popular?
Bitcoin is a decentralized currency. It’s not regulated by any bank. It’s not controlled by any country. Bitcoin transactions are recorded in a public ledger called Blockchain. This public ledger is governed by millions of users. Anyone can access and save this ledger which means the record of a transaction is there in the hands of millions of users.
Another reason for Bitcoin to be more than popular is the transaction fee. You can transfer money from one corner of the world to another corner spending the least amount of money on the fees. Bitcoin transactions are fast as compared to the traditional transfer of money. You can transfer a huge amount of money in a matter of a few hours if not days.
How Bitcoins are stored?
A Bitcoin is stored in a wallet which can be a web-wallet, a desktop wallet or a hardware wallet. When you setup a wallet for the first time, the wallet generates a private key.
The private key is used to sign a transaction whenever you want to perform one. The private key is also a way to access your wallet. You are never supposed to share this private key with anyone or write it down somewhere online.
Bitcoin in Layman’s Terms – What it is and how it works?
Let’s try to understand Bitcoin, the internet money with the help of a few examples now.
Suppose you want to send Fiat Money from one country to another country. You will either use a bank or a currency exchange. When you process a payment through a bank or a currency exchanger, the money is then handled by middlemen, which costs you extra fee and a lot of time as well. In the end, the receiver gets the money after going through a lot of hiccups.
With Bitcoin, sending money is as easy as blinking your eye. A sender initiates a transaction to transfer money from one Bitcoin Wallet to another. The transaction is valid by a number of miners who are continuously recording transactions on a public ledger [Blockchain]. After validation, the money is received in the receiver’s Bitcoin Wallet.
There’s no involvement of middleman in a BTC transaction. The purpose of miners is to validate all the transactions for a successful transfer. It is highly unlikely that a transaction will fail as a result of validation.
Most importantly, once a transaction occurs, it is automatically updated in the Blockchain for millions of users accessing it. It means no one in the world can wipe off the record of a transaction that you just made. A transaction is recorded against a unique Wallet address.
The anonymity offered by Bitcoin
Another use of this cryptocurrency is the anonymity that it offers. On the Blockchain, only your wallet address, the time and the amount of Bitcoin is recorded. No one knows the name behind that wallet address. This is how the Bitcoin transactions become extremely safe and secure.
Let’s take a look at another example to better understand Bitcoin. Suppose you are buying some property. The record of your property is stored on a piece of paper in the land department of your area.
Now the only way to prove that it’s your property is that piece of paper. What if someone plucks off that piece of paper? How are you going to prove your ownership?
Well, that’s how Blockchain and Bitcoin are transforming the world now. You can wipe off the transaction record from one computer, 2 computers or maybe even 3 computers, but how are you going to wipe off the record of a transaction from the computers of millions of users who have already acknowledged a transaction?
Bitcoin is not just about the internet money. Bitcoin is more about the technology that it brought into existence. We will discuss Blockchain in detail in the upcoming guides as well.
How can one buy a Bitcoin?
It can be bought using exchanges like Coinbase, Binance, Kucoin, CEX.io, Bitfinex and many other sources like this. The aforementioned exchanges do not work in all the countries. The easiest way to get Bitcoin is through Localbitcoins. The drawback of Localbitcoins is the higher price as compared to exchanges.
Here are a few resources that you can use to know more about Bitcoin, buying, selling it or trading it.
While becoming a cryptocurrency trader, you will come across a number of terms that you will be unable to understand in the first go. On our website, you can find a glossary of all the cryptocurrency terms. Here are all the cryptocurrency terms explained.
- Bitcoin.org – Community supported bitcoin website.
- Bitcoin on Reddit – Stay updated with the latest happenings of the crypto-world.
- Blockchain Explorer – Blockchain interface to check the transactions.
- Coinbase – The most popular source to buy/sell Bitcoins.
- Binance – The most popular exchange to trade cryptocurrencies.
- Localbitcoins.com – Source to buy Bitcoins locally.
Still didn’t get what is a Bitcoin? Watch this video..
That’s all for now. In case you still have an issue understanding something, feel free to reach me out through the comments section below. Don’t forget to subscribe to our site using email. Get in touch with us through our social media handles as well.