Bitcoin Explained

The crypto industry now represents incredible technological advances. It experienced a massive boom in the past years and now plays a vital role in the world’s financial systems. If you are familiar with cryptocurrencies, then you’ve probably heard about Bitcoin.

Understanding Bitcoin

Bitcoins

Bitcoin is a popular digital currency, which became extremely popular since it started in 2009. It is decentralized, which means there is no institution like banks, government or any authority that controls it. It is a type of cryptocurrency that works just like any other currencies you can use to purchase goods and service from merchants that accept bitcoins.
Bitcoins are managed by a network of volunteers from around the world that maintains computers that run specialized software. So long as people are running bitcoin software, this will keep working, as everything necessary to keep it working successfully is stored in a distributed ledger known as the blockchain. Although it is digital, it is important to note that bitcoin is actually scarce.

What are the Benefits of Using Bitcoins?

Physical Bitcoin Illustration

The proponents of Bitcoin believe that the decentralized, cryptographic approach of Bitcoin to currency can bring a host of benefits to users and the economy. Such benefits include:
• Eliminating potential credit card scams and fraud
• Limiting the ability of central banks to damage economies through printing too much money
• Providing people within unstable economies a safe and secure place to place their money
• Bringing the growing unbanked masses into the advanced economy
• Allowing the transfer of funds to become easier and cheaper than ever before
Although bitcoin has seen great success in the financial market, it has yet to realize such goals and many critics argue that it may not be able to live up to the hype. But, with its increasing popularity and growing success, it is safe to say that this cryptocurrency has a bright future ahead of it.

The Creator of Bitcoin

Bitcoin Explained
The blockchain technology and Bitcoin was created by someone who uses the name Satoshi Nakamoto. In 2008, Satoshi sent an email to a cryptography mailing list that contains a link to a study or academic paper regarding peer-to-peer currency. During that time, it did not make much f a splash.
Many other cryptographers had already proposed the same schemes before and Nakamoto was not known the in circles of cryptography. However, after two months, Nakamoto announced the very first release of bitcoin software. This proves that bitcoin was more than just a simple idea. Any person could download the software, which people did, and start using it.
During the early days, bitcoins were used mainly by cryptography geeks. One bitcoin is only sold for less than a dollar. It finally emerged after the financial crisis in 2008 when some people worried that the attempts of Federal Reserve to increase the supply of money would result in runaway inflation. Nakamoto then disappeared from the web before bitcoin gained much attention. The control of the project was handed in December 2010 to Gavin Andersen and stopped posting to the public forum of bitcoin. Up to this day, the identity of Nakamoto is still a mystery. No one really knows who really the creator of bitcoin is, but there are some suspects.

Where can you Buy Bitcoins?
With the massive popularity of this digital currency today, it can be easy to find a provider that sells Bitcoin. You can purchase bitcoins using fiat currencies from online exchanges or create brand new bitcoins. This is possible through the process called Mining. In this process, bitcoins are automatically created by the software, but the catch is, the mining process utilizes an enormous amount of electricity.
Bitcoins can now be mined as a part of a whole or solo. However, even then, bitcoins or the fractions of the coin you get will more likely not be sufficient to cover the entire cost of electricity. Mining bitcoin was particularly easy in the beginning, but it is currently out of the reality of many home computers. Because of the way the cryptocurrency was coded, there’s a limit of only under twenty-one million bitcoins that can be made.

Storing and Sending Bitcoin

Bitcoin's Blockchain
Storing and sending bitcoins are possible with an encrypted virtual wallet, which operates as a program on the computer. It works with a public key and a private key, which can look like random strings of letters and numbers.
You keep the private key secret. It serves as a password that unchains the wallet and allows you to send bitcoins that are associated with it. If there is anyone else who gets access to the key, they could easily steal your money.
With the public key, this acts just the same as bank account number. You can just give it to others, so that they know which address to send the bitcoins to. There are many programs or websites you can use if you like to start using bitcoin. Such programs and sites allow you generate a public and private key for a new wallet.
Are Bitcoins Safe?
Because it concerns funds, many people who become interested with bitcoins or digital currencies often wonder whether or not it is safe. Well, the truth is, Bitcoins have never been hacked, but the online exchanges that allow you to purchase digital currencies have been plundered and hacked.
These sites allow users to sign up & login to purchase bitcoin and some other altcoins. They even allow you to keep the bitcoins stored on their site, so you do not need to worry about private and public keys or digital wallets.
This is not a smart idea. Once the site gets hacked or someone obtains your login information, they could easily access and take your funds. The transactions cannot be recovered or reversed once a thief sends your bitcoin to their wallet. Therefore, after you purchase bitcoins, it is important that you transfer them to your created secure digital wallet and not hosted on the internet.
With proper usage, Bitcoins can bring great opportunities to users and investors.

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