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What is Bitcoin?

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Launched in 2009 by Satoshi Nakamoto, Bitcoin and the underlying Blockchain technology brings to life the first decentralized currency of the Internet. Bitcoin is a currency used independently of banks and is known by industry experts as a decentralized cryptocurrency and can be sent from one user to another directly with a peer-to-peer blockchain network. No intermediary is required to do this. The technology used to carry out this type of transaction is quite advanced. However, it still makes it easy to use by novice users and investors. Bitcoin is the world’s first and largest digital currency in the world in terms of market capitalization. Unlike fiat money, Bitcoin is created, distributed, traded and stored using a decentralized public ledger called the Blockchain. A blockchain can be considered as a collection of blocks. Within each block is a collection of transactions.

Getting started with Bitcoin

Bitcoin’s Blockchain is a collection of computers, or nodes, which all execute Bitcoin code and store its Blockchain. The Bitcoin miners constantly solve cryptographically challenging puzzles. If successful, they get to add a block to the Bitcoin blockchain and get a reward in return. Bitcoin token balances are held using public and private keys, which are long strings of numbers and letters linked via the mathematical encryption algorithm that was used to create them. The public key, comparable to a bank account number, serves as an address that is published to the world and to which others can send bitcoins. The private key, similar to an ATM PIN code, is meant to be kept secret and used only to authorize Bitcoin transmissions. Bitcoin keys should not be confused with a Bitcoin wallet, which is a physical or digital device that facilitates Bitcoin transactions and allows users to track ownership of coins. The term wallet is a bit misleading, as the decentralized nature of Bitcoin means that it is never stored in the wallet, but rather decentralized on the Blockchain.

Although not legal tender, Bitcoin is very popular and has sparked the launch of hundreds of other virtual currencies collectively known as Altcoins. There is no more doubt that Bitcoin has indeed disrupted the world’s economy and financial systems by providing an electronic payment system based on cryptographic proof that is ahead of its time. The idea of you being your own bank and owning your own bank account as opposed to storing your money in a third-party financial institution or payment processor is revolutionary. Though transaction fees are optional, miners can choose which transactions to process and prioritize those that pay higher fees. Miners may choose transactions based on the fee paid relative to their storage size, not the absolute amount of money paid as a fee. These fees are generally measured in satoshis per byte (sat/b). The size of transactions is dependent on the number of inputs used to create the transaction and the number of outputs. Anyone, whether or not they are running a Bitcoin “node,” can see these transactions happen live.

There is a Limited Supply of Bitcoin

Bitcoin, at this point, is still a risky investment, but there is also an excellent reason to think that it is not so dangerous. When you invest in bitcoin, their value is not guaranteed by any financial institution and may fluctuate over time. It should be noted that, as bitcoin becomes more and more known and used, these risks will be minimized. When you use a dollar, a euro, etc., the available supply is unlimited. This currency is not lacking because banks can issue as many as they wish. Thus, banks can try to manipulate the value of this currency. This poses problems for anyone who owns it. When that same person uses Bitcoin, a limited amount is available. Indeed, its supply is strictly controlled by an algorithm. The maximum amount of bitcoin ever allowed to be distributed is 21 million.

For this reason, it is a much more attractive property to own. What does it mean? Think of bitcoin as a form of digital gold. There is nothing like an unlimited supply of gold; ultimately, everything will be mined. Likewise, bitcoin has a limited supply. All that is ever going to be produced is 21 million bitcoins. They are made available to investors at a conclusive supply rate of one block every ten minutes. What happens when this limit is reached? That’s it; there won’t be anymore. If anyone wants to participate in this digital gold rush, aka bitcoins, they must do so quickly. For more specific differences between bitcoin and traditional currencies, read on.

The Decentralization Factor

The most significant advantage of bitcoin is its decentralization factor. What does it mean? This means that the bitcoin network is entirely independent of external or institutional control. There is not a single institution that operates it. A group of volunteers oversees the process. There is an open global network of computers dedicated only to bitcoin. Electronic transactions involving traditional currencies have been subject to a problem commonly known as double-spending. Bitcoin eliminates this problem. It does this through a smart combination of economic incentives and cryptography. Therefore, maximum transaction integrity is always present. An online business can easily accept Bitcoin by just adding this payment option to the others; it offers credit cards, PayPal, etc.

Pseudonymity

Pseudonymity is not the same as anonymity. When you send or receive bitcoins, you do not complete the transaction without any identity. Instead, you use an alternate name. Think of it in terms of an author who uses a supposed name instead of his real name. The term for this is a pseudonym. This is what happens when a bitcoin transaction is made. A pseudonym, or an address, is used in place of a real name. After that, each time you make another transaction with bitcoin, the system knows your address because of your address. The result is that your true identity is not revealed. Pseudonymity is one of the best reasons to own bitcoin, as it is rarely used for criminal activity, but also conceals your identity with the right steps taken. On the other hand, when traditional currency is used in electronic payment, the user is required to provide his identification. This makes the customer’s identity vulnerable to criminal activity coming from leaks.

Immutability of Bitcoin

Immutability is one of the most critical features of bitcoin. A transaction done this way makes it entirely impossible for anyone to interfere with the related data. In no case may transactions be falsified, manipulated or corrupted. As a result, Bitcoin has a remarkable degree of integrity. A transaction involving the Bitcoin network cannot be spoiled. Once a transaction is completed, recorded, and more than six confirmations have been made, there is virtually no situation where it can be changed. This is another reason why more people are turning to bitcoin compared to traditional currencies. A native internet currency like Bitcoin makes a lot more sense than a credit card that allows several months for chargebacks and often very little recourse by the merchants who are victims.

Divisibility of Bitcoin

The use of Bitcoin allows the buyer to carry out microtransactions of one hundred millionths of a whole bitcoin. Experts know them as satoshis. This directly contradicts the investment capacity of a dollar, a yen, etc. What this means is that a single bitcoin can be divided into eight decimal places. Believe it or not, someone looking to invest in Bitcoin can do so in tiny amounts. In this way, large quantities worldwide of bitcoins can be purchased at the same time. This practically guarantees that, ultimately, Bitcoin can become a globally accepted currency.

Bitcoin is Better Than Gold or Stocks

If you are at the financial point where you can invest money, you may be in a kind of dilemma. Should you invest in something like gold or stocks, or bitcoin? The latter is much more practical if you think about it. You can now use bitcoin as a payment method in many cases. You can’t pay anything with gold. Investing in stocks can also be very futile. People in the financial world are becoming aware of bitcoin these days, so the value is increasing by the day. Since there will be a finite supply, it is a unique investment. It may not be something that everyone will have. For this and many other reasons, an investor should consider Bitcoin.

How Does Someone Acquire Bitcoin?

Given the benefits and the sense of security when someone owns Bitcoin, the next logical question is how to buy? There are a lot of different options when it comes to buying Bitcoins. For example, there are many cryptocurrency exchanges where Bitcoin and other forms of cryptocurrency can be purchased in various countries. There are a lot of Bitcoin ATMs; moreover, you can buy BTC using gift cards, investment trusts, bitcoin mining, and you can even trade face-to-face. When it comes to other, less popular cryptocurrencies, the buying options aren’t as diverse. However, there are still numerous exchanges where you can acquire various crypto-coins for flat currencies or Bitcoins.

Pertinent Advice

Someone can start by doing some homework.  You can find a font of helpful articles and site content on D-Central. The best thing to do is to speak to a Bitcoin expert at length.  They can instruct you on how to proceed, as well as answer all questions.  If you are reading this article, a great place to begin is with this very website.  There is contact information elsewhere on this website. Give us a call, and we will happily guide you through the entire process.

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