What is Bitcoin?
Bitcoin is an innovative digital currency allegedly invented by a mysterious figure named Satoshi Nakamoto. The currency is completely peer-to-peer and works on a decentralized network platform known as the Blockchain.
Satoshi Nakamoto disappeared days after successfully launching his innovative creation while paving the way for many other cryptocurrencies. It is said Nakamoto’s main motive was to challenge our traditional monetary systems through Bitcoin. He was fed up with the Government’s unpredictable changes and control over the financial system – which bankrupted many hard working and innocent people all around the world.
Bitcoin is based on a completely decentralized network where there are no middle or governing authorities such as the Government or Banks and allows users to transact anonymously. This ensures that the currency is purely peer-to-peer based with no unnecessary control over the network and transactions.
The currency is supported by many people around the world as the single most democratic currency currently available in the market. Bitcoins are sent, received, and stored through Bitcoin addresses generated on a Bitcoin wallet.
What is a Bitcoin wallet?
There are literally hundreds of Bitcoin wallet service providers available out there with the most popular browser based wallets being Blockchain.info, Coinbase.com, and my personal favorite Cryptonator.com. Wallets are necessary for Bitcoin users as it allows users to create Bitcoin addresses which can be used to send and receive or store Bitcoins. Each Bitcoin address is unique, much like e-mail addresses.
These addresses consist of 25-31 different alphanumerical combinations, and it is used much like how we use our e-mail addresses: to identify – receive – send – store. Users can generate as many addresses as they want on the wallet, making it difficult for people to track down and identify the end-user of each unique addresses – hence, the reason why it is ‘anonymous’ or ‘pseudonymous’.
How to get Bitcoins?
Bitcoins can be earned by mining them or purchasing them on online exchanges where users can purchase Bitcoins with fiat currencies such as USD, GBP, JPY, KRW. Those who wish to purchase Bitcoins through these exchanges are required to register and verify their identities before connecting their bank accounts to the platform to purchase bitcoins. Most Bitcoin exchanges accept bank wires and electronic transfers of fiat currencies. It is always best to use an exchange which is popular and operated within the country – to ensure quick bank transfers etc.
The process of ‘mining’ Bitcoin is merely a term used to indicate the process of computers solving algorithmic ‘blocks’ on the Blockchain network. Computers which solve a block through calculations are rewarded with Bitcoins – and this is how the currency is supplied. Through ‘mining’ and ‘solving’ these algorithmic blocks, it helps to sustain the network by pushing transactions and supplying more Bitcoins into the market. By ‘solving’ it means to ‘calculate’ the hash contained in each block – there are lots of mathematics involved and usually, this process of mining requires many specialized computers called ASICs.
Whenever a new block is solved or successfully ‘mined’ by a computer, transactions which were recorded on the network during this time – the process of ‘solving’ the new block – gets confirmed. These confirmations on the transactions are only made whenever a new block is found or solved and it ensures that Bitcoins are successfully sent/received. By confirming a transaction and mining a new block, it ensures that previous transactions were legitimately placed without any abnormal activities.
Mining Other Cryptocurrencies
Zcash, Monero, Ethereum, along with many others, are currencies that can be mined in a similar fashion. However, much more coins can be mined with a much lower hardware investment. These coins can easily be mined by a computer with a decent graphics card. For a beginner wanting to start mining, check out this tutorial that will help you to start mining the most profitable currencies in seconds. Also, shop here to create or upgrade your mining rig and stay tuned for more tutorials coming soon.