Bitcoin to make it simple for beginners is a global digital currency that is entirely computerized that doesn’t have a physical form.
It is the first-ever decentralized digital currency all you need is an internet connection to send Bitcoin securely anywhere in the world. Because it is a decentralized coin, its price is determined in the free market which is subject to supply and demand.
Bitcoin is kept in various digital addresses which are spread across the internet — it is a cryptographic coin which is based on the blockchain technology also known as an encrypted technology. Since it is decentralized, its currency is not controlled by central authorities like financial institutions or the government.
What is Bitcoin?
As stated above, Bitcoin is a digital currency that operates in a decentralized network — this means every transaction is recorded in a public log and users can remain their anonymity within the network using encrypted keys. In addition, this also means there is no need for identifying features like names or account numbers that connect Bitcoins to its owners.
People can either sell or buy anything without it being traced back to them.
What is behind Bitcoin’s blockchain technology?
Bitcoin’s protocol is built on the blockchain technology — the blockchain is considered a digital ledger that houses all of the transactions in Bitcoin’s history and these transactions are divided into blocks. It derives its strength from the nodes that are scattered across the globe and anyone can create a node to help the blockchain’s preservation and continuously grow.
Anyone can create a Bitcoin wallet account which brings numerous benefits such as censorship-resistance and accessibility. While banks create policies to which its account holders must comply — if they won’t, these banks can freeze transactions and accounts. On the other hand, this can’t happen with Bitcoin account holders, because there is no central authority that controls it.
What is Bitcoin mining?
Bitcoin mining is the process which makes the function of its network possible while creating new coins — this is considered the heart of the Bitcoin network.
When a user wants to send Bitcoin to someone, the transaction created is signed by the user with his private key and broadcasts it within the network — the user then becomes a miner. Basically, miners are the ones who validate and verify each transaction and place them into the next blocks, then broadcast them into the blockchain.
How and where to store Bitcoin?
Bitcoin is stored inside a dedicated digital wallet, you can think of it as an ordinary coin where you place inside your coin purse. Each wallet has a public digital address where the coins can be received.
The digital address is a string of English alphabets (about 30 characters long) and numbers — there is no cost in creating a new wallet or the limit on the number of wallets a Bitcoin account holders could have. There are different types of digital wallets that differ in security level.
What is the benefit of using Bitcoin?
Bitcoin is highly volatile, its price is highly speculative and at the same time, the cryptocurrency market is largely unregulated. This would mean that those who wish to invest must be prepared to face the ups and downs of the market. On the other hand, the benefit of using Bitcoin is that transactions can be made anywhere in the world.