Bitcoin 101 for People who Live Under a Rock

Bitcoin has been around for quite some time, and in this relatively short amount of time, the cryptocurrency has not only become a financial behemoth but has also created numerous new industries that are bringing in billions of dollars in revenue every year. However, if you’re not familiar with bitcoin this article is for you.

Bitcoin is a cryptocurrency or in simpler words a virtual currency or a digital store of value, that is anonymous and decentralized. Bitcoin uses a peer to peer network to operate and requires no central processing authority to regulate. The currency is open source, and the design is also public, meaning no particular person, company or country owns bitcoin.

How does bitcoin work?

Each bitcoin is basically a computer program that can be stored in a digital app on a computer or a smartphone called a wallet. The wallet can directly send and receive bitcoins to and from other wallets. The technology that bitcoin works on is called blockchain, blockchain helps in keeping a record of every single transaction so that one bitcoin can’t be used multiple times, and there’s a record for every transaction made.

Bitcoins can be acquired through many ways, the most common way is to directly buy bitcoin through cash, this can be done through any cryptocurrency exchange on the internet. The second way to get bitcoin is by trading things, and valuables for bitcoin, like selling stuff online in exchange for bitcoin and the last but most important way is by creating a bitcoin through bitcoin mining.

Bitcoin mining is an important part of the bitcoin ecosystem, the ledger maintenance on the blockchain requires a lot of computer power, thus the bitcoin ecosystem allows for people with high computing power to loan their power for a reward. That reward is in the form of bitcoin and thus new bitcoins are created. Currently, there are 18 million bitcoins in circulation while only 21 million can exist ever, by design.

Bitcoin transactions are also very safe, as the bitcoin network has many systems in place that make every transaction as flawless as possible. However, the safety of payment through bitcoin depends mainly on the knowledge of the person himself. If a person knows how to keep his addresses safe, makes sure to enter the correct address during transactions, knows the pros and cons of software wallets and their vulnerability to hacking, knows how the statistics of bitcoin work, it’s a fair way for him then.