Bitcoin for Dummies: All You Need to Know About Bitcoin?

  • The Bitcoin network is peer-to-peer. Also, transactions occur between users directly, without an intermediary.
  • You can use your Bitcoin almost anywhere! Just like traditional currency, you can use your bitcoins at online stores, and physical stores, and even pay for items in person.

What is Bitcoin? Bitcoin is a cryptocurrency and global payment system introduced by a mysterious person/persons known as Satoshi Nakamoto. It was first released as open-source software in 2009 and since then, its network has grown to become the largest blockchain network in existence.

It works without any central authority or single administrator. The Bitcoin network is peer-to-peer. Also, transactions occur between users directly, without an intermediary. These transactions are verified by network nodes through the use of cryptography and recorded in a public distributed ledger called the blockchain. Bitcoin uses the SHA-256 cryptographic hashing function.

The number of Bitcoins in circulation had exceeded 10 million before reaching an all-time high of over 17 million in November 2013. In January 2014, the value fell below 6,000 per coin, where it remained until late 2017 when the price again started increasing steadily and surpassed 1000 per coin in January 2018. 

The Hard Fork

On 5 August 2017, a hard fork took place, which created two different cryptocurrencies: a new currency called Bitcoin Cash (BCH), which kept the name Bitcoin and followed the original Satoshi client implementation, and Bitcoin Gold, which renamed itself Auroracoin after the Queen of England’s title. Bitcoin cash increased in value during 2017, rising from under $1000 in early December to almost $4000 in mid-December; at that point, the value began to fall back down due to issues surrounding transaction malleability.

In October 2017, a hard fork named SegWit was activated, which changed the size of each transaction to reduce the transaction backlog. As a result, the block size of Bitcoin rose from 1 MB to 4 MB, which came into effect in May 2018.

In April 2018, a soft fork was announced to change the proof-of-work algorithm used in mining to Equihash. This resulted in a rebranding of both Bitcoin Cash and Bitcoin Gold as Bitcoin SV.

As of June 2019, the total market capitalisation of all cryptocurrencies reached $274 billion.

Where can I spend my Bitcoin?

What is Bitcoin:  You can use your Bitcoin almost anywhere! Just like traditional currency, you can use your bitcoins at online stores, and physical stores, and even pay for items in person. However, if you plan on spending your bitcoins, ensure you understand the transaction fee associated with each purchase. Fees vary depending on the amount of bitcoins being purchased.

How to Buy Bitcoin

The first step to buying Bitcoin is finding a reputable exchange. There are many exchanges out there, some good, others not so great. Do you want to find a place where you feel comfortable trading your money? A few things to look for are low fees, fast transactions, and a wide variety of coins. Once you have chosen a platform, you need to deposit funds into your account. Most platforms allow you to fund your account using bank transfer, credit card (Visa/Mastercard), or wire transfer. After you have funded your account, you can start purchasing Bitcoins.

Can I send and receive Bitcoin?

Yes, you can send and receive bitcoins just like any other currency. All you need is a wallet. Wallets are software programs that store your bitcoins securely. There are many types of wallets, including desktop wallets, mobile wallets, web-based wallets, hardware wallets, paper wallets, etc. Each type of wallet offers its own unique set of advantages and disadvantages. Before choosing a wallet, make sure you know what you are getting yourself into.

How much does it cost to buy Bitcoin?

Buying bitcoins is relatively simple. Depending on the exchange you decide to use, you may be able to buy bitcoins instantly or you may have to wait until the market opens. When you buy bitcoins, you are essentially paying someone else to hold onto your money while you wait for the price to go up. As soon as the price goes up enough, you sell your bitcoins for fiat currency. The price you pay per bitcoin varies based on the current supply of bitcoins and demand.

Is it safe to trade Bitcoin on an exchange?

Exchanges are a great way to buy and sell bitcoins. Exchanges are websites that connect buyers and sellers. Buying and selling bitcoins is done through these sites. Exchanges are regulated by governments and follow strict guidelines to protect users. Exchanges are generally safer than dealing directly with unknown parties. However, it is always recommended to practice caution when transacting with strangers.

Do I need to register with an exchange?

No, you do not need to register with an Exchange. Exchanges are simply a tool for connecting buyers and sellers.

 

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