A Beginner’s Guide to Bitcoin

Guest Author Bitcoin November 6, 2020

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A Beginner’s Guide to Bitcoin

Bitcoin is a Crypto-currency that is mined online and does not exist in a physical form or shape. It can be transferred virtually from one person to another and operates out of the legal currency system. 

Introduction:

Unlike Fiat currency, Bitcoin is not printed, rather it is ‘mined’ using an open-source computer program. The process of mining is a complicated one and is largely restricted to professionals. 

But once mined, each unit of the Bitcoin gets a public and private key which gives it a unique identity. This not only give Bitcoin a token value but also makes it transferrable using those string of numbers. 

Currently, Bitcoin is being mined every 10 minutes, and a transaction happening every 15 minutes. Each of these Bitcoin transactions like buying and selling happens by encrypting those public and private keys. While they are recorded in the public domain, the users can remain anonymous.

This means there is no official account or identity number designated to a user. Therefore, a Bitcoin transaction can never be traced back to the original user giving you the liberty of enjoying this anonymity. 

All these transactions happen out of the regulation and radar of any government, official, or any regulatory institution. It’s a self-regulated virtual system with no middlemen or authority to facilitate its functioning. 

How does it work? 

The absence of a middle-men makes the process of buying, selling, and holding Bitcoin easier with no transfer fees at all. 

Primarily, all this trade happens through Bitcoin online exchanges, and for any act of buying, selling, or spending Bitcoin, its public and private keys are encrypted and decoded. 

Bitcoin money is saved in virtual wallets which keeps the record of these private and public keys that identify and execute the transaction. So, the possession of these public and private keys accounts for possession of Bitcoin. Hence, you need to keep your digital wallets secure from hacking or any other illicit activity. 

Furthermore, bitcoin is now more accessible than ever, as there are an increasing number of apps such as Bitcoin Up that make it possible to buy bitcoin on mobile.

This means that you don’t even need access to a PC to buy Bitcoin, which makes it much more convenient to handle.

Security of Bitcoins:

As talked above, all your Bitcoin money is saved in digital wallets which are prone to various risks. There have been instances of cyber-attacks, hacking, and malware attacks which could make you lose your Bitcoin. 

The fact that the industry is not officially regulated, makes it prone to such risks. So, it’s the user’s responsibility to keep the Bitcoin wallets safe by practicing the following:

  • Backup your digital wallet
  • Protect it using a strong password
  • Use an offline Bitcoin wallet also, to keep some of the units there
  • Don’t store your Bitcoin on any third party website, or exchanges. Always, keep it safe in your digital or offline wallet. 

The other factor is the high-volatility of the market. Its prices take sharp swings even during the course of a day so it becomes very difficult to trace its growth. Due to its unregulated nature, the risk factor is very high. Hence, the user needs to be extremely conscious before investing in Bitcoin. 

Verdict:

Since, its inception in 2008, Bitcoin has made remarkable strides and has grown into a system that has made a big difference in the world’s financial system and economy. It introduced a financial system that is way ahead of its time and is nothing like we heard before. The idea of using Bitcoin and operating in the Crypto-industry is very fascinating as you get to operate away from the scrutiny of any official system. Plus, the prices of Bitcoin have been rising which gives users a good option to invest and grow their money. As of now, Bitcoin seems to be going in a positive direction and has a lot of potential in terms of growth. 

Author: Guest Author
This author could be anybody, but he/she is not a member of staff coingape.com and opinions in the article are solely of the guest writer and do not reflect Coingape's view.
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