A Beginner’s Guide to Bitcoin: What is it and How Does it Work?

Understanding Bitcoin can be a bit of trouble, even for experts. So if you’re new to this and struggling, it is understandable. It has become a buzzword recently, especially in the fintech industry.

Don’t get overwhelmed by loads of information on the internet. This article provides you with everything you need to know about this cryptocurrency. 

History of Bitcoin

It’s slightly weird to conceptualize the history of Bitcoin; probably, because money has always existed in some form. But since it is a novel development in currencies, let’s take a brief look at its decade-long history.

The currency was created in 2008 by an unknown programmer Satoshi Nakomoto. It was made available for the public in 2009. The first Bitcoin transaction was made in 2009 by computer scientist Hal Finney when he received the cryptocurrency from Nakomoto himself. However, two Papa John’s Pizzas made for the first transaction carried out with Bitcoins – 10,000 to be exact..

What is Bitcoin, Really?

So if you’re confused about what Bitcoin is, then do not worry. Simply put, it is a type of digital and virtual cryptocurrency. Unlike money, it has no bills to print or no coins. It is a decentralized system of exchange which means no authority (bank or government) has control over it.

How does it Work?

Bitcoin operates on a blockchain system. This means that there is public ledger that is being maintained for all transactions. The public ledger is anonymous and so it operates on a peer-to-peer technology. This means that people can make transactions without third-party interference.

Furthermore, blockchain technology prevents double spending, which is easy to do so in e-files.

How to Get Bitcoin Currency?

If you’re interested in buying Bitcoin currency, then you can look for crypto ‘exchanges’. For any currency, you can buy and store it in your Bitcoin wallet.

Some well-known exchanges are Etoro, Bitfinex and Coinbase. 

Storing Currency

If you’ve acquired Bitcoins, you need a place to store it; just like we do for physical money. A cryptocurrency wallet is a ‘digital’ wallet where your currency can be stored. It is like a virtual bank account with addresses and keys that can be used to access funds.

But be careful! You are solely responsible for the safety and security of your digital wallet as opposed to a bank.

A common type of digital wallet is a hardware one which can be bought online. Examples of these include Trezor or Ledger Nano. 

Should I Invest in Bitcoin?

Bitcoin is a highly volatile investment and often perceived as unsafe. If you’re interested, conduct your own research or talk to someone who has invested in it. Even though it is emerging as an accepted form of payment, the future for this cryptocurrency is still unclear.