Bitcoin for Beginners – What is Bitcoin?

Guides

Bitcoin (BTC) is the most valuable cryptocurrency in the world and it was designed with the aim of providing peer-to-peer transactions without involving any third parties such as a bank or payment gateway. Bitcoin is regarded as one of the major inventions of the 21st century but many people still know very little about it. In this comprehensive guide, we will tell you what Bitcoin is, how it was invented, how you can buy it and how to securely store it. Let’s get started!

What is Bitcoin? How was it Invented?

It all started in 2008 when a pseudonymous software developer named Satoshi Nakamoto published a whitepaper where he discussed the electronic payment system. The idea was to create a system which doesn’t need any central authority and that’s secure and immutable. One year later, in 2009, Satoshi Nakamoto implemented his idea and named it “Bitcoin”.

Soon after the invention of Bitcoin, Satoshi Nakamoto disappeared from the scene and to this day no-one knows his real identity. The total Supply of Bitcoin is 21 million coins and out of these coins, 1 million coins are held by Satoshi Nakamoto.

How Bitcoin is Different from Traditional Currencies?

Bitcoin is a digital currency which you can use to buy goods online, just like traditional currencies, but it is also fundamentally different from traditional currencies in many ways.

  • It is decentralized which means there is no single institution which controls the bitcoin network. On the other hand, traditional currencies are controlled by the central authorities.
  • Bitcoin and other cryptocurrencies have limited supply, for example, BTC has a 21 million coin supply. Where traditional currencies have an unlimited supply and central authorities can issue as much money as they want.
  • Transactions on traditional electronic payment networks are traceable but the transactions on the Bitcoin network are semi-anonymous. When one sends Bitcoin on the bitcoin network, the protocol validates the transaction and it does not need to know the real identity of the sender.
  • The blockchain is the technology behind this cryptocurrency and it is basically a digital ledger which keeps records of the transactions. The blockchain is immutable and every node on the network keeps a copy of the whole blockchain which makes it impossible for anyone to manipulate it.

How to Buy Bitcoins?

Now you’ve learned what Bitcoin is, now let’s get to the practical part where you will learn how to buy it. You can buy BTC directly from other users via marketplaces or Bitcoin Exchanges with your traditional currency. However, you will need to make sure to follow these steps before purchasing.

Set Up your Bitcoin Wallet

  • Bitcoin Wallet is the software where you store your bitcoins and picking a secure wallet is very important. There are different types of wallets available on the market, each type of wallet offers different security and accessibility features.
  • Desktop wallets are the wallets which you can directly install on your computer. Desktop wallets allow you to store your keys on your computer but if you lose access to your computer you will also lose your cryptocurrency funds. If you want to use Desktop Wallets then make sure to install good Anti-Virus and Anti-Malware software on your computer.
  • Mobile wallets are smartphone applications which you can directly install from an App Store. Mobile wallets offer great accessibility but make sure to enable the 2-Factor Authentication and other security features on your application.
  • Online wallets are cloud-based wallets which allow you to access your keys from anywhere. However, the disadvantages of online wallets are their lower security and susceptibility to hacker attacks.
  • Hardware wallets are small physical devices which you can use to store your keys. Hardware wallets offer top of the line security as they are offline and they also come with physical buttons which are used to approve transactions. If you want the best possible security then you should pick a Hardware wallet.
  • Paper wallets are the simplest of all the wallets and you can simply print your keys on a piece of paper. A paper wallet isn’t very secure and if someone gets access to it, you will lose your bitcoins. Paper wallets are ideal for long-term storage but make sure to keep it in a place which is protected.

You can pick any wallet type which suits your needs and set up your wallet.

Open an Account on an Exchange

There are hundreds of Bitcoin Exchanges operating around the world, some of them are strictly regulated and some of them are partially regulated. We would recommend you buy BTC from reputable exchanges like CEX.IO, Coinbase, Changelly, and Coinmama.

You can easily open an account on these exchanges. Some Exchanges allow you to buy a small number of coins without verification but if you want to buy a large number of Bitcoins then you will have to verify your identity. You can verify with your Official ID Card or Passport.

Choosing a Payment Method

Payment Methods also vary from exchange to exchange. Most Exchanges accept Debit/Credit Cards as payment options. Some Exchanges also accept Bank Transfers but if you opt for a Bank Transfer then it will take 3-5 working days to transfer the funds to your account.

Once the funds are transferred to your account, you can buy Bitcoins with your funds and transfer the Bitcoins to your Bitcoin Wallets.

Conclusion

Bitcoin is relatively new but it has shown enormous potential. Tech Giants like Microsoft accept Bitcoin in their app stores. You can use BTC to buy hosting or a domain with certain providers. Similarly, you can book accommodation or a flight with the popular booking service Expedia. There are also many other online stores which accept BTC as a payment option, and the main purpose of our website is to help you find the best places to buy and spend your Bitcoins. Let us know what you think about Bitcoin in the comment section below.

Lost Password