When the first bitcoin was mined on January 3rd, 2009, by a person or persons known as Satoshi Nakamoto, not many people could imagine that the crypto market would be booming as it is now. Over the years, this digital currency has gained more and more attention, and more importantly, value. From its small beginnings, bitcoin has grown into a force that can’t be ignored.
Understanding what bitcoin is and how it works can be challenging if you are a newcomer to cryptocurrencies. For this reason, we have prepared some helpful information to increase your knowledge on this popular cryptocurrency; read on.
What is Bitcoin?
Bitcoin is a type of cryptocurrency. In layman’s terms, it can be described as a virtual or digital currency that can be traded across the internet. It uses a technology called the Blockchain to send bitcoin anonymously and peer to peer.
One of the most significant advantages of bitcoin is that it has no central governing body. This means that you can use it to pay for goods and services directly, without having to send money to an intermediary. There are many platforms available that let you buy and sell bitcoin.
How Do You Buy Bitcoin?
It should be understood that bitcoin can be highly volatile, and this cryptocurrency can rise and decrease in value many times throughout the day. However, many investors are now buying for the long term describing it as a form of ‘digital gold.’ If you’d purchased one bitcoin two years after inception in 2011, it would have been worth $1; its all-time high as of now is over $60,000 in 2021, but it could have climbed to even greater heights by the time you are reading this article.
There are several exchanges online where you can buy and sell bitcoin using your local currency. However, you need to find a trusted exchange if you don’t want to get scammed. Well-known examples of legitimate exchanges include Coinbase and Coinmana. The exchange you choose will depend on your payment method and the country you are from.
All reputable exchanges will require that you go through a verification procedure. Once your details are verified, you can buy and sell bitcoin and usually other cryptocurrencies. There are other platforms, such as LocalBitcoins.com, that enables people to buy bitcoin without ID, but it is essential to know what you are doing if you don’t want to get scammed.
It is also possible to buy Bitcoins with cash from sellers who are willing to meet in person to make a transaction. If you want to find out more, read this guide on how to buy Bitcoin here.
Where can I keep my Bitcoins?
With bitcoin, you have public keys that anyone can see and use to send bitcoins to. You also have private keys that should not be revealed to anyone and should be safely stored away.
When you decide to buy bitcoins, there are several ways in which you can store them. The most popular option is an online wallet. These apps work like any other kind of wallet. If you decide to use them, you will have your own wallet address, which can be used to send and receive bitcoins.
A second option is a hardware wallet; two of the most popular are the Ledger Nano X and the Trezor Model T. The main advantage of hardware wallets compared to other options is that they offer offline storage for your bitcoin.
You can even print off a wallet and keep it somewhere safe. The essential consideration is if you lose or have your private keys stolen, you can say goodby to your bitcoin.
What Else Do I Need to Know?
If you are new to bitcoin, you might ask how it is produced. The answer is relatively complicated, but to keep it simple, bitcoin miners solve complex computational problems to process transactions and are rewarded in bitcoin for their work.
A question often asked is why bitcoin is so valuable; one of the main reasons is that it has a fixed supply limit – after this limit has been reached, no new coins will ever be mined again. The exact limit is 21 million coins, and while we are nearing that number, it is estimated that the last bitcoin won’t be mined until around 2140. The reason is that the mining difficulty increases with each successive new block. Still, it should be understood that you aren’t required to buy a whole bitcoin. Bitcoin can be divided into smaller units; for example, there are a million bits in one bitcoin. So you are free to buy bitcoin in the smallest of denominations if you wish.
Bitcoin is the most established and popular decentralized digital currency and a great place to start if you are interested in exploring the world of cryptocurrency. With security protocols that are almost unparalleled, human error is Bitcoin’s biggest vulnerability. You must do your due diligence and find a reputable exchange to buy your bitcoin and then ensure your private keys are protected and safe, so they are not lost or stolen.