Easy Bitcoin Facts for Those Who are New to the Game
The Internet is booming with information on this emerging method to exchange value. Yet there are many of us who are still uninitiated on what Bitcoin is. Even some of those who got into it have yet to fully grasp its concept. A great number of “early adopters” are of course now enjoying the fruits of their research and courage. These easy Bitcoin facts however are mainly for people looking for a starting point in the world of crypto currencies.
It is quite understandable to be hesitant to jump into this alternative way of transacting. You may or may not already know it but decentralization is one of the main features of Bitcoin. What this means is that there is no central banking authority that is governing or checking our crypto currency transactions. Who does this you might ask? Us.
It may be best reserve this topic for another article. For now, we will just talk about some of its most basic points.
When: These easy Bitcoin facts began in 2008
Yes, Bitcoin has been around for almost a decade. Satoshi Nakamoto conceptualized it through a white paper released in October 31, 2008. This is not his real name by the way, but a pseudonym. Its creator may be shrouded in mystery but his paper entitled, “Bitcoin: A Peer-to-Peer Electronic Cash System” is not. You can still check out a copy of it online.
Since then, this new asset class has been steadily moving into mainstream consciousness. Billionaires such as Bill Gates and Mark Cuban are among its prominent backers. JP Morgan’s CEO Jamie Dimon was among its critics but has since regretted uttering contradictory remarks though maintains his stance. There are also a growing number of high-profile companies (Microsoft, Tesla and Dell Computers) that now accept Bitcoin as payment.
What: A short description
These easy Bitcoin facts will not be complete without a brief discussion of its details and features. The first among the crypto currencies, it was set-up to perform without the need of a central banking authority. In addition to decentralization, one of its main draws is its anonymity. You can send or receive Bitcoins using a randomly generated address. There is no need to disclose your personal information. Your address can still be linked to your identity however depending on certain circumstances.
Every transaction is publicly accessible through a digital ledger called the blockchain (like a big Excel file). It chronologically records all Bitcoin transactions. This makes it possible to trace its history. Note that there are only sending fees and no receiving fees. Such fees are calculated based on sending speed, not on the amount sent.
Bitcoin will have a maximum supply of 21,000,000 units. Its release into the market will be in measured increments until the year 2140 (estimate). The speed of which could increase depending on the evolution of mining power technology. More on that later.
How: Ways to get it
There are multiple ways to own Bitcoin. One of the quickest ways is to buy it from an exchange. Some of the more popular ones are Coinbase, eToro and CEX.io. You can actually purchase a certain amount using your credit card. No, you do not have to buy an entire bitcoin. It is entirely possible to get it in fractional amounts depending on how much you would like to spend. Keep in mind that you should store your Bitcoins in a personal storage device outside of an exchange.
You can buy Bitcoin from people that already own some. Another option could be to accept them for goods or services that you give. You must however have a crypto currency wallet that they could send it to which contains your receiving address. Wallets can either be online (hot) or offline (cold). It is safer to use an offline wallet such as a specialized usb or a paper wallet.
The first method of getting Bitcoin was through mining. It is now a highly lucrative process, depending on the total computing (hashing) power of your equipment. This is not the physical type of mining as we know it but a way to verify transactions. It involves a difficult puzzle solving process. This requires a huge amount of power to produce the desired data. These verified transactions are then added to the blockchain, for all to see.
“Miners” perform these verifications. System generated Bitcoin amounts serve as their compensation. These are miner or transaction fees.
Why: Bitcoin is the future
Bitcoin will improve on the inefficiencies of regular paper money. Sending and receiving it is easier, no matter where you are in the world. It operates 24/7 with no holidays. Transaction fees are comparatively lower, without having to wait for days to clear. It is an evolution from fiat currencies such as the US Dollar or Euro. This might seem to be a bit of a stretch, for now. Accepting it among these easy Bitcoin facts might still be debatable. Paper money was however viewed the same way when it first superseded gold and silver.
This digital asset is also more secure. Unlike credit cards, there is no need to disclose your personal information when transacting. Successfully performing fraudulent transactions using your account is way more difficult. Depending on the type of wallet you use, it will likely have a private key, public key, password and possibly two-factor authentication (2FA) to ensure that access is restricted only to you. Read further reviews on the strengths and weaknesses of different types of wallets.
There is a lot more to these easy Bitcoin facts
Bitcoin has certainly come a long way since its inception. Its value has skyrocketed from about 0.08 USD in June 2010 to over 19,000 USD in December 2017. Those lucky to own and hold onto this crypto currency when it was first introduced have already profited handsomely. There have been however a good number of rapid rise and decline of values in between. As of this writing, it has been hovering around the 7,000 USD level.
It does not matter.
This scary roller coaster ride is likely to go on in the coming years. But it has already gained traction towards mass adoption and has steadily improved its infrastructure. Its value however remains extremely sensitive to any positive or negative news about it. The best thing you can do is to research more into it before actually entering the market. Perhaps you might also want to read up on some self-control tips to help reduce impulsive decisions. Take these easy Bitcoin facts as a starting point, nothing more.