GUIDE TO BITCOIN ( Everything you need to know about bitcoins before starting your journey)
What is a bitcoin
Bitcoin, commonly known as BTC, is a digital currency which acquires the electronic distribution. Bitcoin was created back in 2009. Bitcoin is a form of cryptocurrency that directly allows people to buy or sell bitcoins by using various currencies. Bitcoin is a decentralized one to one network, which means that a transaction is done by having no negotiators. Moreover, no institution or person owns and controls BTC. Bitcoins are a limited cryptocurrency; as per estimates, only 21 million bitcoins could ever be created. Bitcoins were generally used to book hotels, buy a gift card, furniture, or any electronic gadget ranging from iPhones to Xbox. Later on, bitcoin got exceptionally renowned for its trading abilities and USP.
Who created bitcoin?
In 2009, under the alias Satoshi Nakamoto by a group of some programmers or an anonymous programmer, bitcoin was first ever introduced as open-source software. From that time till now, there have been several rumors about the real creator of bitcoin. Even once, a piece of news broke worldwide about Satoshi Nakamoto that the person is a 35-37 year Japanese male. A few years later, some of the Bitcoin software's prominent faces broke the news that Nakamoto left BTS by naming Gavin Andersen, the lead developer of BTS. Therefore the question which arises now is, who owns bitcoin? According to Gavin Andersen, the first of his motives was to make bitcoin more decentralized. Andersen wanted to keep the existence autonomous.
Key features of bitcoin
- Today, banks are virtually capable of knowing everything about their clients/ customers. Even their spending habits, credit history, phone numbers, current locations, and many more. On the contrary, with bitcoin, it is entirely different. One does not need to link any personal information or credentials to a bitcoin wallet. Another important aspect of bitcoin is that your finances could not be tracked or governed by any institution or authority.
- One of the main focuses and aims of developers while creating bitcoin was the freedom of any governing authority. They wanted to create a platform to survive on providing immunity of space to its customers. There is an extensive network of anonymous chains behind this whole idea of decentralization that, if the system gets disrupted, money flow will keep on moving. Another critical feature of bitcoin, which made this cryptocurrency a massive success in the trading business, was no mediator feature. You do not need any mediator or intermediary power to buy, sell, or invest using bitcoin.
- Nakamoto creates bitcoin by merging it with blockchain technology, thus maintaining anonymity. Every transaction ever is done with bitcoin gets store and encrypted in the blockchain. Suppose your online bank details are used somewhere; those details could be recovered by making an extra effort but in the case of bitcoin, tracing a particular bitcoin transaction address is next to impossible. Some of the bitcoin users, who strive to stay under the radar, can easily access money transfer. You need to use multiple addresses and transfer money in small amounts.
- With bitcoin, you can make transfers from one part of the world to another just in few minutes without paying any transaction fees. Whereas banks will charge you about 2% of your amount, plus take 2-3 working days to make your transfer.
- Do you ever wonder how do banks get to know about your location? It is all due to PCI, which stands for the payment card industry. Every credit, debit, forex card has a PCI chip inside it, which transfers the cardholder's data. Today, almost every international bank has a PCI policy, making us more prone to online fraud. On the other hand, bitcoin does not comply with the standard PCI policies.
Safest firewall protection and protocols
- By using bitcoin, you are solely in control of your transactions. No one can withdraw money from your account unless you agree to it. Bitcoin’s blockchain technology offers the highest level of firewall protection. Bitcoin users do not have to share any personal or account information while transferring money; their details are encrypted for once. Therefore none of them needs to be shared in the future.
There are some interesting hidden features of bitcoin, which the platform does not disclose at initial stages.
How does Bitcoin Work?
As a new user, many people get confused and leave it without completing it. There are minor technical details that a new user needs to keep in mind while working. Bitcoins are virtually designed coins that have their value with no bank interference, and it's working. Here is the guide to how it works to understand and think of buying it then.
Before starting anything, you need to install a bitcoin wallet on your phone or computer. After that, you will get the first bitcoin address you can share with whomever you want. This bitcoin address will help you get paid or when you will pay someone. This bitcoin address is similar to an email address; the only difference is only one bitcoin address is used one time for the transaction. You will need a new lesson every time you pay or get paid.
As suggested by the chain, the Bitcoin blockchain is like every other chain; all the parts depend on and connect. Every time a person makes an actual transaction, it is shown in the blockchain. What is the significance of blockchain? With blockchain's help, the bitcoin wallet can calculate the transitions spent by the user or spender and verify the balance. It is so that new transactions can be verified, thereby ensuring that they have executed the trade himself.
A transaction is a proof that value is an exchange between the parties through a bitcoin wallet and blockchain. Bitcoin wallet always stores a secret piece of data called a private key to ensure the utmost safety. This private key uses to sign the transaction between the parties, providing mathematical proof that the owner does the marketing. It can be understood as an OTP that is generated when the owner of the bank account wants to transfer money to another party. The money doesn't move unless the OTP is submitted; the same is the case with the private key. The signatures help the transactions from being misused or altered by anyone. Therefore, when the marketing is successful, it is broadcasting to the network for confirmation that usually takes ten to twenty minutes.
Processing comes in handy when there are translations left pending due to technical issues. It uses to confirm the pending transactions by including them in the blockchain. All the pending transactions are arranged in chronological order so that the system can identify the true ones and update the status accordingly. The transactions are confirmed only when they are packed in a block, verified by the network. All these rules and steps help the previous blocks get mixed with the new ones because if all the blocks are not modified from time to time as per need, it will invalidate all other blocks. Another importance of processing is that it helps to prevent lottery and more transactions than required by an individual. It is so that no one has control over the blocks and the value of the bitcoins.
Pros & Cons of Bitcoins
Bitcoins are becoming a healthy alternative to existing electronic transaction systems, and in no time, it will spread and be known by every person.
- Protection from digital fraud: Bitcoins are the safest digital transaction method that cannot be counterfeit.
- Lower fees: There is no transaction fee involved in Bitcoin because newly issued coins compensate the bitcoin miner
- Helpful in immediate settlements: when purchasing real property or land, it involves third parties for the payments and approval. It has said that bitcoin contracts have been designed to avoid these third-party factors and make direct purchases.
With some advantages, many concerns are seen as obstacles to the current online system.
- High risk of loss: Even when bitcoin is safe from frauds, but there is no solution to human error and technical glitches like hardware failures, etc.
- Limited scaling: The bitcoin system is not the fastest known electronic system. It allows a little no of transactions and speed, making it unlikely to compete with banking transactions.
- No applications have developed for smooth and quick transactions of bitcoins.
In short speculation of time, bitcoin has captured the attention of many people and financial agencies. The only advice one can give while buying bitcoins is limiting your risk in the initial stage because no one will compensate for your loss, and it is no one’s liability than yours. If you wish to study and research more about bitcoins, you can search the bitcoin code official website.