Bitcoin Definition and Basics, the Cryptocurrency that started it all

A basic introduction to Bitcoin and how it defines our world.

Bitcoin is a crypto currency, a digital asset designed to work as a medium of exchange. Bitcoin was created by Satoshi Nakamoto and on the 3rd January 2009, the Bitcoin network came into existence.

In 2011, based on Bitcoins open source code, other crypto currencies began to emerge, and at present, there are over 1600 different crypto currencies and the number keeps on growing.

In this article, i will give you the basic definition of Bitcoin, how it works and how it is going to revolutionize and impact our future.

What sets Bitcoin apart from traditional fiat currencies(the US$, the Euro etc)is that it is decentralized, meaning that no individual, government or institution can regulate it. Bitcoin was created using mathematical computations and is policed by millions of computers worldwide called Miners.

The large network of miners solve complex and intricate math problems as well as verifying millions of transactions made daily, making the platform secure and trustworthy .The miners, in turn, are rewarded with new Bitcoin for their services and that is the only way Bitcoin can be created.

There will only be 21 million Bitcoin ever created, and currently there are just over 17 million Bitcoin in circulation. Bitcoin cannot be created arbitrarily, Satoshi’s ingenious code ensures this, and in many ways we can equate Bitcoin to digital gold. The fact that only 21 million Bitcoin will ever be created makes it unique and ultimately rare, unlike fiat currencies, which are being indiscriminately printed worldwide.

The BlockChain     

The Blockchain is an incorruptible digital ledger of transactions that can be programmed to record not just financial transactions but virtually anything of value. It is the recorder of data that is managed by a network of computers(miners). The Blockchain is an ingenious way of passing information from A to B, fully automated and carries no transaction costs. Bitcoin uses the block chain as its platform to transact .Bitcoin is the first mainstream manifestation of its potential. Miners validate Bitcoin transactions using block chain technology.

The Blockchain has highlighted a critical aspect of how data is going to work in the coming decades. Blockchains advanced technology ,with its many real life applications, has a bright future ahead of it.

How to buy Bitcoin and its safekeeping

Buying bitcoin is easy ,first you have to download a crypto currency wallet to store your private and public keys. Your private key is a long string of numbers and letters, a mathematical encrypted algorithm that is assigned to your wallet on creation, and works like your ATM pin. This key should be kept secret and secure.

Your public key is like your bank account number and serves as an address published to the world and to which others can send Bitcoin to. Encrypting your wallet with a strong password is vital for security. There are an array of apps available online for you to download onto your mobile smart phone or computer. There are several types of wallets that provide different ways to safe keep your crypto currency.

  • Desktop:these wallets are downloaded and installed onto your PC or laptop, and only accessible from the device the wallet was downloaded onto. These wallets offer one of the highest levels of security. The drawback is the possibility of a virus or if the device gets hacked, you may lose all your funds.
  • Online:these wallets run on the cloud and are accessible from any computer in any location, while they are more convenient, your private keys are stored online and are controlled by a third party, making them more vulnerable to theft and hacking.
  • Mobile:these wallets run on an app on your phone and are convenient because they can be used anywhere like in a retail store. These wallets are usually smaller and simpler than desktop wallets.
  • Hardware:these wallets differ from software wallets in that they store the users private keys on a hardware device that resembles a USB. Although this type of wallet makes transactions online, your keys are stored offline which delivers increased security. The wallet is compatible with several web interfaces and supports different crypto currencies. Hardware wallets make it easy to transact while also keeping your Bitcoin offline and safe.
  • Paper:this type of wallet refers to a physical copy or printout of your public and private keys. These wallets are easy to use and provide a very high level of security. You can transfer crypto currency from a software wallet to the public address shown on your paper wallet. Alternatively, if you need to withdraw crypto, all you need to do is transfer funds back from your paper wallet back into your software wallet.

Once you have downloaded a wallet that meets your requirements, you will be ready to buy your first Bitcoin. This could be done through a crypto currency exchange. There are many well established and reputable exchanges where you could purchase bitcoin, and your first bitcoin can be purchased using traditional methods such as bank transfers, credit cards, or debit cards. Once payment is made, the bitcoin is transferred to your wallet. Because the Bitcoin is bought through the exchange, which uses an order book to match buy and sell orders between people, neither the buyer or the seller has any idea who the other party is ,providing anonymity and privacy.

Availability of this methods of payments is subject to area of jurisdiction and exchange chosen.

Another method of buying Bitcoin is through peer to peer market places and exchanges. These exchanges match buyers and sellers without holding their funds during the trade. You could either pay for the Bitcoin on offer through PayPal or rather meet up for a cash transaction.

Peer to peer trades do not require you to provide any documentation regarding you identity and the exchanges offer a reputation system to track your own and other users trading history, thus increasing the chance of a successful trade.

Bitcoins future and its impact on our lives.

Bitcoin is unique in that it gives you total control of your funds because it is decentralized, you can send and receive it anonymously without a third party. No bank, institution or government police the way you transact, they cannot close down, freeze or investigate your account, your account is owned ,secured and operated by you alone.

Bitcoin, together with block chain technology ,will soon become the “next generation”gold and will become the most predominant means of storing wealth. It is available to everyone and could be bought and sold in tiny fractions, its adoption by the retail world is growing at a rapid rate, you could pay for a car in Bitcoin, your air travel or even a cup of coffee at outlets that accept it as a form of payment .Bitcoin transaction costs are a fraction of traditional bank chargers and the use of the Blockchain ensures speed and security.

There are over 1600 different crypto currencies in existence and although some seem to improve on certain aspects of Bitcoin, Bitcoin remains the total package and is clearly in the lead due to its acceptance and accessibility globally.

Conclusion

Just like the onset of the internet, plastic money and online banking, there will always be skepticism towards new technology, but in my opinion, and the opinion of many experts around the world, Bitcoin and the Blockchain are set to revolutionize the way we live and the way the world does business. Even governments and large institutions, who were not so long ago, the biggest skeptics, are now quietly wading into the block chain and crypto currency world.

Bitcoins future looks bright, technology is making our world a smaller and smarter place and bitcoin is a child of this tech and will continue to grow.

I believe Bitcoin and Blockchain technology is our future and that Bitcoin should be defined as a good investment and a means to trade safely, securely and anonymously. As a store of wealth, the only advantage gold has over bitcoin is a 3000 year head start. Bitcoins forecast is strong, its fundamentals are solid and its worldwide adoption is inevitable, bitcoin and the Blockchain are the future.

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Herbert

 

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