From the day Bitcoin came into our lives, it has managed to divide the investment world and create a whole new market, that of cryptocurrencies. But some still don’t all know what bitcoin is and how it works. It makes sense to ask, “How do I earn bitcoin? Or, how do I buy bitcoin, and what will it do for me?” So, keep reading to find what you need to know to enter the world of the king of cryptocurrency.
What exactly is bitcoin?
Bitcoin is a digital currency. In other words, it allows you to make electronic transactions (so it works like regular money). You can use bitcoin to pay for products and services, play in some Betting Sites, or accept bitcoin to sell products and services. The difference with the electronic money that corresponds to the money we have in bank accounts is that it has been created without the mediation of a central bank or other central authority like a government.
How can it not be mediated by a central bank or another authority?
To understand the comparison, the US Federal Bank is responsible for the dollar. It guarantees its value, while the European Central Bank is responsible for and guarantees the Euro’s value. In contrast, there is no organization or individual responsible for Bitcoin. Through blockchain technology, the “operating, security and distribution system” of bitcoin is open to everyone without being able to be “tempered with.” When the programmer with the pseudonym Satoshi Nakamoto created bitcoin 2008 reported in the “manifesto” that he imagines a world where people can make online transactions without involving a bank or a company like PayPal. He wanted bitcoin to function as a regular currency but changed the traditional rules. Today, bitcoin is called the “king of cryptocurrencies,” as is the digital currency with the highest capitalization and the first—and only to date—that managed to overcome the one trillion dollars. Bitcoin began as something “exotic” and “tricky,” but today, many companies accept Bitcoin as a payment, such as Microsoft.
What are the prevailing opinions among those interested?
As with all disruption and causing new things, there are fanatics and skeptics alike. Those who are in favor of Bitcoin believe that digital currency is becoming the future of money. Others believe that it can replace even gold as a means of preserving and storing wealth. The opposing viewpoint believe that Bitcoin is nothing more than another “bubble” of markets that will drag thousands into the investment abyss when it bursts.
How bitcoin works?
Every bitcoin is a computer file that is stored in a “digital wallet.” You can send to others but also accept bitcoins from others. Every bitcoin transaction is recorded in a public “ledger,” which is essentially the blockchain. The transaction is checked for validity (if there are bitcoins), and then it’s filed in a block. The chain of blocks with the transactions that have been audited is the blockchain. A new block is created every 10 minutes or so, while the correlation of each block with the previous ones is done through an algorithm, and somehow, the chain is “maintained.”
The bitcoins are created through “mining,” which is essentially a digital representation of the traditional way in which people extract gold and other metals from the earth. Computers with high processing power trying to find a solution in the algorithm to create a block and, with it, a certain number of bitcoins.
The bitcoins that “born virus is” attributed to those who solve the algorithm. Depending on how many network users are trying to solve the algorithm, the resolution difficulty is adjusted to create a block every 10 minutes.
There are many ways to enter the world of bitcoin.
# 1 Buy bitcoin with money
The most common and understandable, perhaps, is to buy bitcoin with “regular money,” through the many platforms that offer it. Because the value of a bitcoin is valued at a few tens of thousands of euros, the platforms allow you to buy a fraction of the bitcoin that corresponds to the money you want to spend.
# 2 Earn bitcoin from buying and selling
Another way is to accept bitcoin is to sell something so you make a transaction with a bitcoin holder, where you give him something you own and you get paid with bitcoin.
# 3 Make your own bitcoin
You can also create your own bitcoin through the “mining” process, which requires a high-powered computer.
But remember that if you start now, it can take years to mine your own bitcoin. You may spend more money in super-computer needed and energy consumption than would be worth the bitcoin when mining.
Transparency and security: How secure are bitcoin transactions?
The “ledger” of transactions with bitcoin is available to all users of the network. Thus, no one can beat, falsify, or control the system to their advantage. Any user has access to all the information and can confirm it at any time. This achieves a high degree of transparency, security, neutrality, and independence of transactions. However, there have been several cases of cryptocurrency theft. Most of them involve hacker attacks on digital wallets where bitcoins are stored.
How do I protect my cryptocurrencies from theft?
Experts warn that the best way to protect bitcoin is to have your private key stored :
- to a device or application that is not connected to the internet.
- In non-digital format.