Technology

Bitcoin Made Simple: Detailed Guide

What is bitcoin?

In this article, we’re gonna talk about what is bitcoin, how it is created, where you store it, when it was created, and everything you need to know about bitcoin.

 

All right, first of all, when was bitcoin created?

In 2008, someone, we don’t know if it’s a man or a woman or who they are, even if it’s their real name, but Satoshi Nakamoto put a paper up on the internet that describes the idea of bitcoin and the blockchain where bitcoin, I guess you could say, resides. Bitcoin is a decentralized currency.

 

What does decentralized currency?

Think about it this way. If I wanted to pay you some money, I would have to send that money through our bank. The bank is the middleman. Well, a decentralized currency, there is no middleman, there is no government in between me and you.

We are the currency. Bitcoin is a decentralized currency that runs on a technology known as the blockchain. Once bitcoin is exchanged or transferred to somebody else, that transaction is verified by a miner and when the miners verify a certain amount of transactions, they will actually earn bitcoins.

Bitcoin was the first decentralized digital cryptocurrency and one of the reasons for its success, it has low fees whenever you transfer it, it can be in any country, your account can never be frozen.

It is an exciting, exciting time. Bitcoin is a digital currency. It doesn’t actually exist. You can’t hold it in your hand. It’s only electronic. It is a digital currency.

 

How many bitcoins are there?

Unlike currencies produced by governments, also known as fiat currencies, there is a limited supply of bitcoin. This means when your government wants to print more money, they can just go print it and printing more and more and more money, sometimes that will devalue the currency.

One thing that has made the value of bitcoin skyrocket is there is a limited supply. There will only be 21 million bitcoins ever in existence.

The last bitcoin will become available in the year 2140, so we got a while.

 

How are bitcoins created?

They’re created through a process called mining. Just like gold miners will go and they will mine in the mountains to get gold, bitcoin miners will mine on their computers to get Bitcoins and this is done by setting up your computer and having it solve complex math problems around the clock and whenever those problems get solved, you earn a bitcoin.

Now in the early days, you could mine on your laptop and everything was fine but now it takes much more energy and larger computers, so it’s really not feasible unless you have larger computers and access to very cheap electricity.

 

Now, if you don’t want to mine bitcoin, how can you get it?

 

 

Bitcoin double spending explained

 

Well, you can just flat out purchase it, and that’s what I do. Just google buy bitcoins you will find bitcoin sellers on the internet. Just make sure it’s a trusted, secure, and safe place to get bitcoin.

 

Now next, once you purchased your bitcoin, where do you store it?

You have a couple choices. But You want to typically take it off the exchange and put it in something that’s more secure that you hold the security for.

 

Infographic showing how to buy Bitcoins

 

You could put that in a digital wallet, which may be stored on your computer or even on a device that you plug into your computer. It can even store it in what is called a paper wallet and what this is, is where you literally, on a piece of paper, print out the details of your bitcoin with the password on that paper.

Don’t lose that paper.

 

Now, what keeps bitcoins safe?

Everyone has a public key and a private key. Think about it this way. Think about it like a post box and you have
a letter that you wanna put in the mail. You can put that letter in the mail.

That is like a public key. Anybody can put the letter in that mailbox. Now, the private key would be owned by the postman. Only the person with that private key can get the mail out.

So, everybody has a public key and that means anyone who has that public key can put bitcoin in that address, just like anyone can put mail in the mailbox, but only you have the private key to your bitcoin mailbox and only you can withdraw the funds.

Never let anyone get that private key. Recently, an internet marketer had a video going and in the background on his computer, he had his private key displayed. Somebody zoomed in, got that private key, and took over $15,000 of bitcoin from him. Do not let people get your private key.

 

And here is an interesting fact about bitcoin.

The first time Bitcoin was ever used to purchase anything was May 22, 2010. In a bitcoin forum, Laszlo Hanyecz offered someone 10,000 bitcoin to order him a pizza. Someone took him up on that offer and they ordered him two Papa John’s pizzas equivalent to about $25 in exchange for 10,000 bitcoins.

Today, those 10,000 bitcoins would be worth over $25 million.

 

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