Want to Become Part of the Bitcoin Network? For That, You Need Baby Steps
Bitcoin is digital money that’s created, traded, and stored electronically. It was designed by Satoshi Nakamoto in 2009 but it has never been determined who’s actually behind that name.
Bitcoin is created by an algorithm through software and it was predetermined that only 21 million BTC units could be made. So far, about 80% of the total amount has been generated.
What Are the Basic Characteristics of Bitcoin?
- It provides client anonymity.
- The chain of trading itself – blockchain is completely transparent and available for everyone to review.
- Very fast transaction processing, in just a few minutes
- Permanent recording of transactions.
- The network doesn’t depend on any bank or authority.
What’s the First Step to Enter the Bitcoin Network?
The easiest way to get to Bitcoin is through buying. To be able to buy it, you need a digital wallet. Since it’s a digital currency, its physical storage isn’t possible.
Digital wallet types:
- In the form of a paper document made by specialized applications.
- Created with an account on one of the applications on a mobile phone or software intended for creating digital wallets.
- USB digital wallets that physically connect to a computer.
How Can You Actually Buy Assets?
- Bitcoin ATMs. By scanning the QR code, you access the digital wallet, insert the money into the ATM, and follow the further steps.
- Exchange offices that are authorized for this kind of trade are intermediaries, of course with a certain commission. They usually ask for some written information about the owner of the account from which the money will be paid, so you have to leave some personal information.
- Peer-to-peer (without an intermediary). You can advertise the sale on one of the websites for the direct sale of Bitcoin currency. The buyer and seller meet directly and agree on a transaction. Another option is to arrange the sale online but that carries the risk of losing money, and as the value of Bitcoin is great, a lot can be lost.
How Complicated Is It to Sell Bitcoin?
- There’s the possibility of online sales without intermediaries when connecting people with different needs. This connects those who want to exchange bitcoins for goods and those who’d buy bitcoins by credit card. With a credit card, person A buys the goods for person B, and person B sends the requested amount of bitcoins to person A.
- Bitcoin ATMs are recognized as a good option but there are still not many. There are even fewer who buy and sell bitcoins. In many cases, personal data is required before the transfer of funds. When the sale option is confirmed, you’ll receive a QR code with the address of the digital wallet to which you need to transfer the agreed amount of BTC currency. When you do that, you’ll receive the money either immediately at the ATM or via the code later.
- Exchange offices function a little differently in the sales process. With them, open an account that’s linked to your bank account. Then leave a bid for sale – how many units of Bitcoin are you selling and what’s the requested price. As soon as the buyer appears, the exchange office will complete the transaction with a commission.
What’s the Principle of the Bitcoin Network and the Exchange on It?
The Bitcoin network is based on blockchain technology. This is a digital financial book of all transactions. As we said, it’s public. People who voluntarily keep these blockchain files are called nodes.
When a transaction is made, all nodes automatically change transaction lists, so there’s no error or possibility to change the record because a lot of people keep one version of the blockchain. Nodes can register to be miners. These are the ones who earn bitcoins. Miners are people who confirm that the transaction has been completed and are struggling to be the first to enter it in the blockchain.
It’s necessary to guess the number that’s missing in the cryptographic code in order for the transaction to be verified. It’s a pure lottery with a huge number of attempts, and that’s why the miner needs a top computer in order to discover that number as soon as possible. Even miners team up in mining pools to share the prize. Given the Bitcoin price, it’s clear that it’s very profitable for the winner.
What Can Be Bought With Bitcoin?
As the value of one unit grows, so does the list of companies that exchange their products for this cryptocurrency. When it was created, a large number of countries didn’t recognize digital money. Today is a different story.
There has been a growing trend in the number of companies receiving bitcoins in exchange for products and services. You can buy in Apple stores, pay for hotels, plane tickets… You can also buy real estate with bitcoins. The number of online casinos that allow paying in BTC is growing … You don’t have to sell them and use the money to buy because Bitcoin is worth by itself.