How Bitcoin Works And What Is Blockchain

How Bitcoin Works And What Is Blockchain

For the end user, Bitcoin is one more means of payment, such as the euro and an asset to invest in, such as a stock or oil. So is it safe to invest in bitcoin or not? Given this question, it is worth knowing that behind all this market there is a technology that allows the system to be reliable. It is the blockchain or blockchain technology that, among other things, prevents double spending of the currency, that is, that someone can spend the same bitcoin again.

In short, the Bitcoin network is a public accounting system of which each user keeps a copy. Every time someone performs a transaction, it is stored on the users' computers, so that what is known as double spending is avoided.

What is the blockchain

The block chain is the technology behind bitcoin that acts at the same time as a database and system backup. As we have just seen, in a traditional financial system, any transaction is entrusted to a third person (bank, credit card ...). With block technology, users are the ones who do it.

The blockchain is like a great book of digital events (transactions in the case of Bitcoin) shared and distributed among many people. It can only be updated based on the consensus of the majority of users and, once updated, the information cannot be deleted.

In this sense, each blockchain that is added contains verifiable information of all the transactions that have been carried out in the history of bitcoin.

Is bitcoin safe

The Bitcoin as payment is completely safe, as for any transaction needs the approval of the majority of users.

The security of bitcoin is also based on the fact that in order to access your bitcoins, you will need to provide your private key. Without that key, no one will be able to access your bitcoins. In the wallets section we explain in more detail what this private key consists of and the difference with the public address, it is something like your user of bitcoins and that will serve so that they can send you and you can send coins. How to invest in bitcoins.

Another formula to get Bitcoin Pro is to invest in virtual currencies. In other words, speculate with the cryptocurrency as we would do with gold, oil or any stock.

How to buy bitcoins

To buy bitcoins, just go to one of the bitcoin trading platforms. Those who already invest in the stock market will find its operation similar, although somewhat different from that of a broker.

These platforms are called bitcoin wallets and it is where the virtual currencies are stored. There are different types of bitcoin wallets depending on issues such as security and usability.

The former are bitcoin wallets for PC, which you can download as a program for your computer. The second are the online virtual currency wallets, which can be for mobile phones or computers, it does not matter. The latter are the safest and are the hardware wallets. In other words, a physical device that will store the virtual codes of your cryptocurrencies.

As a user you can use one or more virtual wallets that will have their backup passwords and their encryption system. In this sense, it is common for online wallets to request double confirmation of keys via SMS.

Which bitcoin wallet to choose

The market for bitcoin wallets is broad. The Bitcoin Wallet you choose will depend on the use you want to make and the number of bitcoins you have associated with your user address. Virtual wallets are suitable for small amounts because they are much faster to operate. Rather, they are not as recommended for storing large quantities. Of course, when operating with these purses it is essential to keep the private key that they will give us, since it will be the one that will allow us to later recover the bitcoins.

As a general rule, the higher the number of bitcoins in your possession, the more recommended a physical wallet will be and not constantly connected to the network. The danger at this point is what can happen if the device breaks. Again, the solution is to write down on paper and have located the private key or private address of the account.

When choosing cryptocurrency wallet there is a difference between those who are wallets to use, with their public and private key, and the bitcoin platforms, where in the end it is the web that guards the money and not you with your own keys.

Among the best known wallets is Coinbase , very easy to use and intuitive, but it will also charge significant commissions every time you buy, sell or transfer bitcoins. Also, being a platform or exchanger, the security of your bitcoins will depend on their encryption and not on what you do. That is, you will be including a third party that is the one that will have all the data of your bitcoins.

On the opposite side, Kraken is slower in executing orders and income, which must be carried out by transfer for large amounts, but has lower commissions. If you have invested in a stock market, it is not much different from choosing a stock broker or an investment fund supermarket.