Bitcoin for dummies: Explained.

I’m sure you’ve heard of bitcoin.

This specific word has been flying around the net recently. But do you really know what it is?

The Bitcoin story is more than what appears on the headlines. It seems as if everyone is just throwing the word around, randomly.

Let’s time-travel to the crux of it:

How it all started?

In early 2009, the invention of Bitcoin emerged. It was invented by this person called Satoshi Nakamoto. The goal was to create an entirely new cash system with no central authority- this means that no banks are involved. There’s no middle-men and cash will automatically be transported to the other person.

What exactly is Bitcoin?

In plain words, Bitcoin is a digital currency. There’s no physical copy of it.Since there it isn’t managed by central banks, and it isn’t determined by political forces, it relies upon “miners.”

Miners have to accumulate the Bitcoins, transform them into complex mathematical equations, solve the equations and combine it into a Blockchain before being rewarded with a Bitcoin. Everything happens digitally when it comes to Bitcoin.

Instead of sharing personal information such as IDs, security numbers and such, owners are anonymous. Encryption keys are the glue that binds both the buyers and sellers.

How does one ‘mine’ a bitcoin?

Here is where it starts getting more complicated. To understand the mechanisms, a combination of advanced mathematical skills and record-keeping are needed.

The necessary steps to obtain a Bitcoin goes like this: Buying Bitcoins on an exchange site, accepting them for goods and services and generating new ones by the mining process.

Miners basically verify transactions made by third parties. After verification, information of such operations is transferred to an extensive database called the blockchain.

What determines the value of a Bitcoin?

The value of Bitcoin fluctuates very drastically in a short time period. The value of Bitcoin is determined solely by what people will pay for it.

With only a set number of 21 million bitcoins that can ever be mined, there is a massive undersupply for it. In current status quo, around 12 million are mined.

Here are statistics by NME of the value of Bitcoin over the past recent years:

Dec 2011 – $2.00
Dec 2012 – $3.00
Dec 2013 – $800
Dec 2014 – $300
Nov 2015 – $500
Nov 2016 – $700
Nov 2017 – $11,000

As you can see, it spiked incrementally in 2017. So why did it become so prevalent all of a sudden? Markets are beginning to shed light on the entire Bitcoin ideology.

There are less and fewer restrictions on cryptocurrencies, and it is unwinding above the surface. Most global financial companies are beginning to view Bitcoin as an actual currency allowing more individuals to buy and sell.

How do I buy a Bitcoin?

The steps are a lot less complicated than expected. It does not require much effort. Bitcoin users first need to choose a wallet of their choice. Sites such as Blockchain.info are most accessible and well-known when it comes to Bitcoins.

There are a few mobile apps you could keep your eyes on. Your account page would most definitely look like a typical Online Bank Software that traditional bank institutions tend to use.

If you are using it as advised, that is most likely what you’ll see. Once you key in all the necessary information to be granted access to your Bitcoin wallet, you can finally connect to your banking payment to purchase Bitcoins.

To invest in Bitcoins, you would have to speak to a broker. There are different rates for different brokers. Hence, it is advisable that you look for a trustable broker.

A minor heads up would be that international brokers may delay the process of purchasing a Bitcoin due to the difference in the banking system, transactions and such.

Why is Bitcoin so controversial?

Due to its unexpected rise and recognition, most banks and institutions are not so keen on the entire concept and idea just yet. There are definitely more critics than hope for Bitcoins at this point.

Due to its constant fluctuations and sudden appearance, people are inquisitive. “What exactly is a Bitcoin,” “How does it even work?”

Adding to the curiosity, it was also invented by an unknown individual. People still question its credibility. Choosing to invest in a Bitcoin may be risky and could put an individual in sheer jeopardy.

Leading up to this day, there have been a few reported theft cases on Bitcoin. Since it isn’t controlled by a middle-person such as central banks and affiliated organizations, the value of Bitcoin depends solely on transactions.

Due to the theft situation earlier, the Bitcoin plummeted to its lowest which led to putting investments at stake, albeit temporarily.

Bitcoin also has been closely associated with black market and the dark web. In the past, Bitcoins were used to exchange for dangerous, illegal goods.

This placed more heightened insecurity for potential Bitcoin users or current Bitcoin users, as there may be a high possibility of them being involved in such crises.

Do other cryptocurrencies exist?

Yes! In fact, there are an array of other Bitcoins in the market today. Although Bitcoin is undeniably the most well-known and regarded cryptocurrencies, there are plenty others in store for you.

The other famous cryptocurrencies are Dash, ETH, LTC.

Toodles, 

Sandra™