What do you need to know about Bitcoin?
Bitcoin was released to the public in 2009, by Satoshi Nakamoto, and exploded on the financial scene in 2013, known as the alternative for digital money. It has the title of the first known cryptocurrency, using “crypto” as a reference to cryptography because it uses encryption to secure its transactions and maintains control of the creation of new units.
A more detailed explanation of why Bitcoin is known as a cryptocurrency is:
- It uses cryptographic proof as a way to record its transactions on the blockchain;
- The public ledger that announces transactions to its network using readily accessible software applications.
What is the Blockchain?
The blockchain is a continuously growing list of records, known by the term of a block. These records or blocks are linked and secured by the use of cryptography, each one containing a hash pointer connected to a previous block, allowing its participants to verify and audit transactions.
Because each block’s hash is produced using as references the hash of the block before it, each block becomes a digital version of a wax seal, a way to confirm that this block, and every block after it, are legitimate.
It is the process by which transactions are verified and added to the blockchain, and by that, it also means it is the way through which new bitcoins are released. This process involves compiling recent transactions into blocks and trying to solve computationally tricky puzzles.
Mining Bitcoin is intended to be resource-intensive and challenging, this way, the number of blocks found every day by its miners might continue steadily. That is because the target for Bitcoin is to generate a block solution every 10 minutes on average. If it’s taking too much, the difficulty will go down, and if they are being solved way too fast, the challenge will increase.
Why Mine Bitcoin?
Every 10 minutes 12.5 Bitcoins are paid to a miner that solves a block, which equates to 1800 Bitcoins per day. As the difficulty to mine is getting harder, people are joining a winning pool to help solve blocks to gather and share the 12.5 bitcoins.
To mine you need a special hardware to solve the blocks. The best in the market so far is ASIC (Antminer) S9 and would have the best return on investment. As of the time of righting, mining Bitcoins can get you a profit of $11,200 ( after deducting cost of the hardware) per year and of course as the price of Bitcoin goes up the profit increases with it.
Acquiring Bitcoin is very easy, it takes as much as signing up in a trading website or any mobile app, but before buying bitcoins, users need to download or purchase a Bitcoin wallet.
Three highly recommended wallets are:
- Coinbase (A web-based online wallet);
- A Ledger
What is a ledger?
- A hardware wallet that supports multiple cryptocurrencies;
- It creates private keys in its chip and stores them offline.
There are also cryptocurrency wallets available for:
which supports a decent number of cryptocurrencies, including Bitcoin.
Bitcoin wallets are essential when buying bitcoins. They store public and private keys, and they are a digital wallet that can store, send and receive Bitcoin.
After creating a Bitcoin wallet, an address will be designed for that user, with its own security key. That way it can be used to complete any bitcoin transaction.
The best wallet is the Ledger Nano S. When you own cryptocurrencies, you need to protect your confidential data and the access to your funds. With Ledger Nano S, secrets like private keys are never exposed.
Once you have a Bitcoin wallet, all you need to do is:
- Use traditional payment methods on a Bitcoin exchange or;
- Trade website to acquire bitcoins.
The availability of payment methods depends on the area of jurisdiction and exchange chosen: most of them use:
- Credit cards;
- Bank transfer;
- Debit cards;
- Other payment methods.
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