Hey Guys ,
Another interesting article is here again, to some of us who has been asking what is Bitcoin? Well here comes your answer.
Due to my little idea & research have made, this post was made publishable 👊. Fun isn't it?
Now let's get Started :
What is bitcoin? A brief history
| BTC, XBT | 3 January, 2009 | SHA-256 | 21 million BTC |
Bitcoin started as a paper authored by bitcoin’s creator, Satoshi Nakamoto, titled: “A Peer-to-Peer Electronic Cash System” (2008). In it, Satoshi – whose real identity remains unknown at the time of writing in October 2017 – details a system for decentralizing the financial sector, with the aim of giving power back to the people via an entirely digital transaction system (which would later become known as the blockchain). In January 2009, the first block was mined by Satoshi for 50 bitcoin. While still directly involved in the development of bitcoin, Satoshi is rumored to have mined nearly 1 million bitcoin, an amount that would, just eight years later, be worth upwards of $5.8 billion.
How does bitcoin work?
Before getting started using bitcoin, it’s important to understand how the technology works and the reasoning behind it. This will not only save you a few headaches in the long run, but it will give you a greater appreciation of what’s going on behind the scenes.
The Blockchain
Satoshi’s vision for bitcoin began from a very simple concept: We don’t need a centralized agency controlling our money (i.e. the central bank). To accomplish this, bitcoin needs to be maintained by the people using the cryptocurrency, and it does so by using a public ledger, more commonly known as the blockchain. Understanding the blockchain will help you understand the finer points of the currency.
Imagine three people: Alice, Bob and Charlie. They often have to pay money to each other, but to avoid having to make a payment every time they need to, they decide to start keeping a ledger of money owed. At the end of the month, they work out who is owed what and pay them. To avoid having to trust each other with this ledger, they bring on Daryl, a third party who’s been entrusted with maintaining the ledger’s integrity. The ledger might look something like this:
| Alice > Bob | $10 |
| Bob > Charlie | $25 |
| Bob > Alice | $15 |
| Charlie > Alice | $55 |
| Charlie > Bob | $12 |
Every transaction made with bitcoin is stored in a digital ledger just like that one. Each line signals a sending address, a receiving address and an amount of bitcoin (BTC at the time of writing, but read our later comment about XBT). There is also some additional security information which ensures that the addresses are correct. Each set of transactions is stored on a “block”, like a page in a ledger. Once a block is filled with transactions, it can be mined by miners (we’ll talk about those in a later section too) and is then attached to the previous block to form a chain of such pages or “blocks”: a blockchain.
which ensures that the addresses are correct. Each set of transactions is stored on a “block”, like a page in a ledger. Once a block is filled with transactions, it can be mined by miners (we’ll talk about those in a later section too) and is then attached to the previous block to form a chain of such pages or “blocks”: a blockchain.
Public bitcoin wallet address
To instill some sense of anonymity in the blockchain, bitcoin does not hold the personal information of either sender or receiver in blockchain transactions. Instead, each user gets a
public address (a.k.a. wallet address), and these addresses are stored for the transaction instead.
Once a transaction is added to a block and a block is added to the blockchain, it is said to be immutable; it can neither be edited nor deleted. To understand why, let’s next take a look at decentralization.
Decentralization
The problem with this ledger system is readily apparent when we introduce some malice into the system. If Daryl were to cut a deal with, say, Charlie and put in a new transaction showing Alice and Bob owing Charlie money, Alice and Bob are now in a difficult situation. They either have to pay the owed money, trusting Daryl, or refute the idea of the ledger altogether.
Where can I use bitcoin?
Bitcoin is one of the most widely accepted cryptocurrencies on the market at the time of writing in October 2017. From online merchants to brick and mortar shops, many service providers have started accepting bitcoin along with fiat currency (i.e. regular currencies such as AUD, USD, and EUR).
You can use bitcoin to purchase various products and services such as the following:
- Electronics, software and gear.Microsoft, Newegg and Dell, for example, all accept bitcoin payments.
- Flights and travel amenities.Expedia, one of the biggest travel agencies in the world, allows users to pay with bitcoin.
- Casino. The bitcoin.com online casino launched in 2016, is completely anonymous and lets you play with bitcoin.
Apart from these big-name companies, lots of smaller merchants and service providers accept bitcoin.
How to get bitcoin
Bitcoin, like other crypto coins, is extremely volatile and the value of the currency remains unpredictable. News and seemingly unrelated events affect its price greatly, sometimes positively, sometimes negatively. However, if you’d like to take the plunge and get some bitcoin, here are two ways to do that:
The fastest way to grow your wallet – bitcoin or otherwise – is to start getting paid with bitcoin. If you have an online shop, add a “pay with bitcoin” button to your shopping cart. As an online service provider, you might consider asking your clients whether they’d like to use bitcoin for payment. However, if you have a brick and mortar shop, you could print out your bitcoin wallet’s address QR code and stick it next to the checkout so people will be able to scan it and send you bitcoin instantly. And if you’re an employee, why not ask your employers if they’d be interested in paying your salary in bitcoin instead of fiat?
Buy bitcoin
You can also buy bitcoin and hope that your wallet grows on its own. For example, if you had bought $10,000 worth of BTC on July 26, 2017, (3.92129183 BTC) and sold it three months later on October 21, 2017, you would have more than doubled your holdings.
When it comes to purchasing bitcoin, keep in mind that past performance is not always an indicator of future performance, and with cryptocurrencies still in their infancy large dips in value do occur.
How to get bitcoin
Sending and receiving bitcoin is a simple process as long as you’ve set up two things:
- An account on a digital currency exchange. There are many currency exchanges available online from which you can purchase bitcoin. Check out our currency exchange page for information on how to choose the best one for your needs.
- After you’ve created an account and exchanged some fiat currency for bitcoin, the next step is to set up a wallet.
- A bitcoin wallet. Again, there are many wallets you can use for bitcoin, and your best bet to choose one that fits your needs is to check out our guide here. Once you’re all set up you’re ready to start paying for products or services. Simply follow the instructions for your wallet of choice and you’ll be trading bitcoin in no time.
