Bitcoin, also known by its shortened form BTC, doesn’t need much of an introduction. It is the first and currently the most successful blockchain based cryptocurrency in the world. It is basically a consensus network that enables digital currency and is the first decentralised peer-to-peer payment system network that is powered by its users with no central authority or middlemen [Source: Bitcoin.org]. Some people might call it money for the internet and in essence, that’s exactly what it is.
The identity of the creator or creators of BTC still remains unknown but we do know that the first proof of concept for Bitcoin surfaced in 2009 and it was published by Satoshi Nakamoto but just a year later, Satoshi left the project.
So who currently owns and controls it? Nobody. The technology behind it is not owned by any person or organisation. It is the Bitcoin users around the world that control it. As mentioned earlier, Bitcoin is a consensus network and it can only function properly if there is complete consensus among all users and because of that, developers and users are incentivized to protect it.
The whole concept of virtual currencies can seem complicated at first but let’s try to put it in simpler terms. It is similar to a regular online banking computer program or mobile app that allows users to send and receive bitcoins using a personal Bitcoin Wallet.
If we take a closer look under the hood, the Bitcoin Network runs on blockchain technology which is a public digital ledger containing all the transactions ever processed. This allows users to verify the validity of each transaction and makes it difficult to change, hack, and cheat the system.
If you’re new to Bitcoin, you can easily get started without going into the technical details. The first thing you’ll need is a Bitcoin Wallet on your computer or your mobile device. This wallet will be what you use to make transactions. It will generate a Bitcoin address for receiving and sending bitcoins. Although these addresses work like bank account numbers, it is important to remember that it should only be used once.
There are a few different types of digital wallets. As a new user, you’d be looking for a wallet that gives you full control over your bitcoin and also full control over the setting of fees to ensure that your bitcoin transactions are completed in a timely manner.
Bitcoin Core is a full Bitcoin client that offers high levels of security, privacy and stability. It gives you full control over your money which means that no third party will be able to affect your funds. You will also have full control over the fees and includes a feature for new users that provides fees suggestions based on current network conditions.
BitPay Wallet also provides you with full control over your funds as well as offers fees suggestions based on current network conditions which you can override. It’s user friendly and is available for both Android and iOS devices.
Electrum is similar to the earlier wallets and also provides you with full control over your funds and fees. It focuses on speed and simplicity, using a remote server to handle the most complex parts of the system. 2FA is also available and it allows you to recover your wallet using a secret phrase.
Now that you have your wallet all set up, the next step is to purchase Bitcoin. Next stop, a Bitcoin Exchange such as Coinbase or Binance. The availability of these exchanges vary from country to country, so be sure to check on what is available in your location.
You’ll have to create an account at the exchange of your choosing and with reputable exchanges, you’ll be asked to provide your personal information such as bank account number or debit/credit card details. You will also be asked to verify your identity and once the formalities are complete, you can start purchasing. You can choose to buy 1 BTC, 10 BTC or even just a fraction of BTC.
Once you’ve bought your Bitcoin, do remember to transfer them to your personal wallet which we mentioned earlier. Exchanges may be open to hacks and other issues so transferring your newly bought Bitcoin to your personal wallet will ensure that your funds are safe and secure.
Once you have everything set up and your bitcoin purchased, you can start making transactions. You can use it to purchase items online at stores that accept bitcoins, send it to friends and family, or deposit funds at your favourite online casino.
When sending funds, you’ll need to choose how much you’d like to send and input the wallet address that you’d like to send it to. Make sure all the details are accurate and hit Send. It’s really easy.
If you’re looking to receive funds, you can access your wallet and select receive to generate a wallet address. Provide the address to the person who is sending you the funds and wait for the funds to come in.
Don’t be intimidated by digital currencies. It’s really simple to use. Now that you have a better understanding of how it works, it’s time to start your journey into becoming a Bitcoin user and investor.