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Bitcoin

What is Bitcoin? A simple tutorial of a complex concept

  • 22 February 2021
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As the world slowly adopts Bitcoin and other cryptocurrencies, many people around the world are investing in this market. If you want to invest in the cryptocurrency market or get information about it, in this article, in a simple way, get acquainted with the first and most important cryptocurrency “Bitcoin.”

We will first talk about the reasons for the formation of bitcoin. Then we will examine the nature of bitcoin, its features, and how it is produced.

Bitcoin

What is Bitcoin

Why was Bitcoin formed?

There are many ways to understand the philosophy of Bitcoin formation. Let’s start with an example:
Suppose today you need to transfer money from one country to another. You need bank transfer services and finally, you have to pay a lot of money for such money transfers. These costs include the following:

  • The cost of converting money into the currency
  • The cost of services to the bank to record the history of money and ensure safety
  • Transaction fee if you use payment gateways such as PayPal

Therefore, for domestic and international transfers, you have to pay a large amount of the transfer fee (between 2 and 10% and sometimes more) as a “service” fee to intermediaries such as banks. For example, if you want to transfer $ 100 from one country to another, you have to pay between $ 2 and $ 10 for that transfer.

All bank records are checked in one ledger, and money is only transferred digitally from one account to another.

Bitcoin

Philosophy of BTC

Why lose so much money to make a deal?

Everything will indeed done digitally, but the presence of intermediaries such as banks and payment gateways increases the cost of transactions, which is a significant amount in large transactions.

On the other hand, paper currencies such as the dollar or centralized cryptocurrencies such as PayPal are controlled by a specific group of people. For example, the US government can print dollars without borders and dominate the global market.

Bitcoin formed to create a decentralized and public system, eliminating intermediaries and, consequently, eliminating additional transaction costs. No one can control this cryptocurrency, and it is not possible to produce it arbitrarily.

Bitcoin

Pay Fee

What is Bitcoin?

Bitcoin, or BTC for short, is an encrypted cryptocurrency that operates independently of any country or geographic area and anyone can use it with Internet access. Bitcoin created as a peer-to-peer network for online payments that does not require a centralized answering system, and transactions between individuals will done without intermediaries.

Unlike Fiat such as the dollar, the euro, and other paper currencies, any country does not regulate Bitcoin, and no government or entity can control it. Bitcoins won’t print like dollars or euros. They manufacture by computers around the world using a secure network. A large community of users handle everything about cryptocurrencies. It makes it possible to break free from the monopoly of any company and country and act independently.

Bitcoin is a kind of money that has no physical nature and will store in a digital BTC wallet. Everything will done electronically and there is no news of Fiat money or any other paper currency.

One of the most important advantages of Bitcoin is that it can be transferred worldwide at a very low cost. Also, your transaction remains anonymous to others. Only the sender and recipient of the Bitcoin know who is involved in the transaction.

Today there are thousands of other cryptocurrencies with different functions or specifications that made after Bitcoin and based on Blockchain technology. Altcoins (Bitcoin substitutes) are the cryptocurrencies created after Bitcoin.

What are the keys in the BTC network?

Every user in the Bitcoin network has two public and private keys. A public key like your bank account number is the address you can give to anyone anywhere in the world to deposit cryptocurrency for you. A Private Key as like your bank card password means a password protected through which access to BTC and its transfer is possible.

Therefore, to buy BTC, you only need a public key to give it to the seller, but to sell BTC to access your wallet, a private key is required.

Bitcoin

Public and private keys

Who first introduced BTC?

In October 2008, an article was published under the pseudonym “Satoshi Nakamoto” which proposed bitcoin as an electronic payment system based on mathematical proof. In 2008, Satoshi Nakamoto also released a white paper from Bitcoin.

A white paper, or performance report, is a report in which developers detail their design or system. The idea of creating BTC was to create an exchange device that could be transmitted electronically in a secure, verifiable, and unchangeable manner. This exchange currency also works independently of any central authority. We suggest you also read the article “What is Bitcoin White Paper?”

Many believe that Satoshi Nakamoto is not a person and that this cryptocurrency is the product of a large programming group. So far, many people have introduced themselves as the creators of BTC, but the identity of none of them has been proven, and it is still unknown who the main creator of these cryptocurrencies is.

Bitcoin

Who first introduced BTC

Is Bitcoin backed up?

You may be wondering what support Bitcoin has. Before we talk about the backing of these types of currencies, we need to know that there is no backing for any other currency in the world.

At present, all the money in the world is fiat or unsupported money, which has been declared an unsupported currency by Richard Nixon since 1971. The dollar is created when the US government prints it. In the past, gold supported the dollar, and its supply was commensurate with the amount of gold in the state treasury. But today, the dollar has no backing.

Bitcoin as a cryptocurrency that its secure network and people will back it . It is also the public acceptance that determines its price and value. As more and more people accept bitcoin and demand increases, the price of BTC increases day by day.

Bitcoin

BTC backed up

What is the difference between Bitcoin and traditional currencies?

The difference between Bitcoin and Fiat are as following:

  1. Decentralization,
    The most important feature of Bitcoin is decentralization. No single entity controls the BTC network. It is run by a free network of computers distributed around the world.
  2. Limited supply
    Fiat currencies like dollars and euros have an unlimited supply. Central banks can publish them as much as they want. They can manipulate the value of money. In this case, currency holders incur the costs of manipulation and change. In contrast, the supply of bitcoins is limited and the total number of bitcoins is 21 million.
  3. Preserving identity
    While users of traditional electronic payments are usually identified, in Bitcoin transactions, users remain anonymous. Since there is no central “validator”, users do not need to identify each other when sending bitcoin to another user. When we send a transaction request, the network reviews all previous transactions to confirm that the sender has the necessary bitcoins as well as the authority to send them.
  4. Record-keeping
    Unlike the traditional system where the central bank store all transaction records, in the Bitcoin network, no individual or bank maintains our ledger. The ledger is available to everyone, and the deals linked to our digital wallet address. Unlike regular transactions where you have to enter your details, when you buy Bitcoin, the only thing anyone will see is your wallet address.
  5. irreversibly
    Bitcoin transactions, unlike electronic Fiat transactions, are non-refundable. So any transaction in the Bitcoin network cannot be a problem. Although this irreversibly may upset some people, there are solutions to cancel the transaction.
  6. Divisibility
    Satoshi is the smallest unit of a bitcoin. One bitcoin is equal to one hundred million satoshi. Therefore, using bitcoin, you can do small transactions. Small transactions that are not possible with traditional money.

Bitcoin

BTC vs traditional currencies

How does Bitcoin work?

The factors in the functioning of Bitcoin are:

  1. Confirmation
    The most important thing about the operation of a digital payment system is to make sure that no one spends more than one amount of money to pay or invest. We know that the central bank for currencies control it. But the main innovation that makes Bitcoin special is that in the network, everyone on the network has to confirm the transaction. Bitcoin uses a distributed power in its system. The whole network checks that everything done correctly and each bitcoin consumed only once.
  2. Blockchain
    Bitcoin is based on Blockchain. Blockchain means a place where all approved transactions are recorded in a place called a Blockchain. Blockchain is a distributed public ledger that the entire network trusts. Each user who participates in it has a copy of this ledger. There is no original version in Blockchain and all versions are equal. Any transaction that approved will add to the Blockchain in block form.
  3. Miners
    Trading will done by miners who use their computers to trade. Cryptocurrency cloud mining solve complicated mathematical equations and problems and create a block in the grid. Each time a new block will mine, the miner suck as Bitmain AnTrack miner receives some bitcoin as a mining bonus. After a few hours of registering each transaction on the Blockchain, it is impossible to delete and delete it.
  4. Restrictions
    All bitcoins that we can mine are 21 million and more than 18 million bitcoins mined so far. Every 10 minutes, a new block create on the network, and the bitcoin network automatically complicates the mathematical equations. If we can mine BTC too quickly, a sudden increase in bitcoins will lead to inflation. Therefore, Bitcoin software designed in such a way that if we extract bitcoin easily, the network imposes more restrictions.

What does BTC mining mean?

Mining bitcoins and other cryptocurrencies in simple language is the process of solving mathematical equations in the blockchain. Cryptocurrencies are a string of codes registered in a blockchain network. This string of code stores all the information of the previous coins and their related transactions. The mining task is to add a new block to this code string to record new transactions.

Mining bitcoins will add new coins to the cryptocurrency cycle. It is the mining process that helps cryptocurrency survive without the need for central control. The basis for the mining function of bitcoins and other cryptocurrencies is the same and only their details are different.

Bitcoin

BTC-mining

Why should we use BTC?

There are many reasons for the importance of Bitcoin as a global currency:

  • Bitcoin selected as the top currency since 2014.
  • As a global currency, you can send and sell bitcoins to anyone anywhere in the world without having to worry about international transfer costs.
  • No one can lock your budget and capital and cut off your access, because you keep bitcoins in a secure wallet like blockchain.
  • We can store bitcoins offline and prevent theft.
  • Bitcoin is a global economic phenomenon that is inflation-free and will contribute to a better financial future.
  • We can see the Bitcoin market as an investment opportunity. You can use online investments methods and benefit from them. Of course, do not forget that the Bitcoin market, like other financial markets, is risky and with fluctuation.
How to use BTC?

As mentioned above, no person, company, or government controls Bitcoin, so anyone can own these cryptocurrencies. To use Bitcoin for personal and business purposes, you need a secure crypto wallet and internet. You can use bitcoin to transfer, receive and store like regular money.

When you first set up your Bitcoin wallet, it will ask you to set up a private key, which is the most important part of security. It is best to write your keyword on a piece of paper and keep it in a safe place. Since no bank or financial intermediary has access to your wallet, you are responsible for its security.

Remember one important thing that never shares your private key with anyone!
If you are a business owner and you want to accept Bitcoin as a trading tool, you need three tools:

  1. A secure digital wallet to receive payments
  2. Use Bitcoin payment gateway
  3. Choose a secure crypto exchange to convert Bitcoin into Fiat currency and currency accepted in your country

You can install a Bitcoin wallet on your computer or mobile phone. Once installed, a wallet address will create and you can utilize this address to receive bitcoins from anyone anywhere in the world. Each wallet can have one or more wallet addresses. It is a unique URL to ensure that transactions are anonymous. This unique address helps you maintain security.

Bitcoin

Use BTC

What is the role of public address in Bitcoin wallet?

To receive bitcoins from an exchange or sender, you are dealing with a public bitcoin address. No one can pick it up unless they have access to your account information or your private key. Public bitcoin addresses that we give to a certain exchange or individual to receive bitcoin do not pose any security problems. Items that matter includes private keys, account information, wallet recovery words, and more.

So rest assured about the security of the public Bitcoin address. The general Bitcoin address for each wallet is a long-phrase containing 34 to 40 characters made up of a combination of letters and numbers. A public address is typically something like a phrase “1Bm2AyPDv3x5eJSkUPJ4MTVDTaLDRjVwcShBV.”

No one can withdraw from another person’s account with a public address unless they know that person’s sensitive information. Anyone can use their Bitcoin wallet address to receive Bitcoin.

How to buy and sell BTC?

One of the easiest ways to buy and sell bitcoins is to use a well-known and reputable crypto exchange. Create an account first, after verifying your identity, you can buy and sell Bitcoins.

Most exchanges offer the possibility of buying and selling bitcoins directly among their subscribers.

Our advice is to choose a safe and simple platform to work in this field. After starting your investment with very small amounts. Once you fully acquainted with the system and make a decision for large investments, start working professionally in the cryptocurrency market.

Bitcoin

Buy and sell BTC

How to get BTC?

The best way to get Bitcoin right now is to buy it but consider the risk. You can buy some bitcoin for yourself, save it, and hope that its value will increase in the future. As it turns out, this is quite risky, and it is possible that for any reason the value of this cryptocurrency will fall sharply and all your capital will lost, so keep in mind that never invest too much in this virtual currency.

Cloud mining is another way to get bitcoin. You need to do a research about your mining facilities to find the best crypto mininin rig and Cloud mining is the process by which you pay someone to rent their cryptocurrency mining devices, electricity, and, of course, their cryptocurrency services. If you want to start making money online using BTC cloud mining, the first thing you need to do is find a host. The host is the person or entity that sells its cloud extraction services to you. You will then easily agree to a contract. This contract register in person or absentia.

What are the features of BTC?
  • The concept of bitcoin is no different from existing currencies or commodities such as gold and silver. The significant difference is that bitcoins and altcoins promise a financial system that any financial institution cannot manipulate or control it.
  • Bitcoin is based on blockchain technology. A blockchain is like a physical ledger that banks keep it. The only difference is that the general public maintain the blockchain. Anyone can use this manual to trade cryptocurrencies.
  • When a block will enter into the Bitcoin network, everyone will notice that the block created. As a result, the possibility of theft and fraud in the network will eliminate.
  • The number of Bitcoins is limited. Its extraction also becomes more complex over time. Therefore, no central bank can create a group of Bitcoins and, consequently, cannot devalue it.
  • Bitcoin provides a platform for individuals and groups dissatisfied with the control of governments and banks over their money to trust and welcome the system.
  • Bitcoin has no central control reference. A peer-to-peer computer network made of nodes support it. Nodes are the devices by which users or network miners verify transactions.
  • Supports public acceptance of Bitcoin. The greater this acceptance and demand, the greater the value of Bitcoin.

Bitcoin

BTC network

Where is the future of BTC

Since the birth of Bitcoin in 2008, cryptocurrency has been able to establish itself as a technology, a currency, and an investment machine. It has had considerable success. But we can not talk about the future of Bitcoin certainty.

The rapid rise and sharp fluctuations in the BTC market price attracted all the attention to the cryptocurrency market. Bitcoin continued its upward trajectory in the New Year 2021 and started a storm. On the third day of 2021, it reached its price peak of $ 34,755. Today, on February 18, 2021, its price has reached about 52 thousand dollars.

In recent months, analysts have cited several reasons why the current bitcoin price trend will not be similar to what happened in 2017 for the cryptocurrency. The first reason that analysts cite for this is the entry of more institutional investors into the market. Large and institutional investors are usually more patient and will not sell bitcoins quickly. Another reason is the increasing influence of BTC which is among the top 10 most profitable Cryptocurrency mining in 2020 assents in economic exchanges. Many hope that Bitcoin will become one of the main methods of payment, which will eventually increase the demand for cryptocurrencies. However, analysts say there is still no guarantee that the bitcoin price will fall sharply, at least in the short term.

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