What is Bitcoin? – Another Newbie Guide

What is Bitcoin? A few words before we start…

Since I get questions on several social media channels, I thought it might be a good idea to add an additional “What is Bitcoin” article to make it as easy as possible for you to understand the fundamentals of the coin but also what it means in terms of technology.

When it comes to financial advise I can provide my opinion of course about investing and analyses but I won’t give any financial advise in terms of “What should you buy and what to put in your portfolio to make some decent amount of money”.

The articles on Crypthor will hopefully help you to understand the blockchain technology and what the use-cases are behind the individual crypto solutions. Never forget to do your own analysis and define your own opinion as most of the predictions and charts that I have seen are pure hocus-pocus and dangerous to follow!

If you have any questions, contact me via the social platforms or via the contact form on Crypthor.net.

A Bit on Bitcoin: What Is this Bitcoin Currency?

Bitcoin is confusing and even mysterious to the outsider’s perspective. Not everyone does understand how it works, and its existence stirred a lot of online controversies. Digital currency money does not exist in the real world as a physical object such as a euro, swiss franck or even gold coin. Instead, it exists virtually.

Currently, one Bitcoin costs around:[cryptocurrency_widget type=”spark” symbol=”BTC~USD” template=”line2″ color=”blue”]

What Does Bitcoin Look Like?

The image of a letter B on a coin that you see online isn’t how Bitcoin really looks like. Instead, it’s just a representation— a symbol used to illustrate the currency.

As mentioned above, Bitcoin exists in the digital world and has no physical coin or bill. It is sent electronically from one person to another. The minimum amount of Bitcoin is 0.00000001 ($O), which is referred to as Satoshi, named after the founder of Bitcoin (more on him later.)

Asides from Bitcoin the token, Bitcoin is also the name of the payment network wherein the tokens are moved and stored.

What’s interesting about Bitcoin is that it is not run by a single company or person. Bitcoin is managed by different individuals who volunteered to keep track of all of the data, and transactions are done by other people. Every record is then stored in what is known as a blockchain, and this chain updates every second.

Bitcoin as a Criminal’s Instrument?

We hear stories of criminals online taking advantage of Bitcoin; buying illegal things but are not easily traced by authorities.

Bitcoin appeals to these people because of anonymity. Bitcoin does not take your name or address like traditional online payments. Anyone can simply open an account and receive Bitcoin without getting caught. The lack of central authority means you can buy whatever you want.

While Bitcoin was first invented in 2008 and released to the public on 2009, its rise to popularity began on 2011 when drug dealers started using them as a mode of payment on the black-market website Silk Road. Silk Road was shut down on 2013; however, other markets similar to it arose, and the use of Bitcoin became widespread.

Not only is Bitcoin used as a way of buying illicit drugs, weapons, and documents, but it is also used for ransom. Hackers can place a target in a state of vulnerability, either blackmailing them with their personal info or not giving them access to their own computers, and they will ask the victim Bitcoin in exchange of their information or computers.

What are the Governments Doing about This?

Governments also raise the question “What is Bitcoin” and even more, what can they do about it? Well, not that much. The government cannot do anything to Bitcoin, and even if they do something, the currency won’t cease in production and use.

The Bitcoin network is decentralised and all of its data is not stored on a single computer but in multiple ones worldwide. If the American government were to ban Bitcoin including its participation in transaction and record keeping, then nothing will change because the network is still running in other countries.

Can you Cheat the System?

Hence, it’s already established that Bitcoin is not run by a single source; this gives the users the freedom to cheat and add more Bitcoin into their account without anyone knowing. Well no, that cannot happen because if someone ever tries this, the other computers that are recording the data will see this as a mistake in computation and won’t record it.

Is Bitcoin Legal?

Bitcoin is like most forms of currency; it is legal. It just so happens that people are taking advantage of it and are using it illegally. Only a small percent of Bitcoin transaction can be considered as illegal. Most people use Bitcoin as a normal form of buying and trading, and this has sprung many online markets.

Countries like Argentina and Venezuela, where inflation is commonplace, use Bitcoin in order to fight the sudden rise and fall off their goods’ prices.

Another use of Bitcoin is being able to move money across borders easily. This business plan allows the large sum of money to be delivered within just minutes online rather than having to wait for weeks just to receive it physically. While this practice isn’t used too often yet, there is a chance that this will come in handy in the future.

How to buy or get Bitcoin

In order to get Bitcoin, you need local money and then have it exchanged. There are companies like the United States Company Coinbase or Binance from Asia that will exchange your dollars for Bitcoin. You can either use your bank account or your credit card requires a lot of identity verification process.

If you want to check out some of the Bitcoin Trading Platforms and know more about how to buy cryptocurrencies then don’t miss our nice little Guide.

A more anonymous approach is to use services like LocalBitcoins wherein you will have to meet with someone who will sell you the coins in person. While risky, you don’t have to bring any form of ID or verification.

Who Determines Bitcoin’s Worth?

Bitcoin is similar to stock and gold when it comes to determining its worth. Bitcoin has no fixed amount and prices always fluctuate. Bitcoin worth dictated by open-market bidding and exchange and that is also why Bitcoin is extremely volatile these days.

Bitcoin Mining

You still ask yourself “What is Bitcoin“? Well, you can say Bitcoin is similar to real money since you mine to obtain it. But while you mine minerals and resources to create real coins, Bitcoin mines computer. That does not mean you stick a pickaxe to your monitor.

Bitcoin mining involves strong computers racing on who can compute transactions the fastest. The winner would get the first chunk of Bitcoin. Right now, a winner gains 12.5 chunks, but this amount is halved every 4 years. This is how all Bitcoin is made.

Generally, there is a new winner every 10 minutes. This cycle will continue until there is 21 million Bitcoin existing worldwide, in which case creation of new Bitcoin will be put on halt. Currently, 16 million Bitcoin is distributed. The targeted 21 million is said to be reached by the year 2140.

Anyone can join in the creation of Bitcoin with their computer but only those with specialised hardware manage to win the race. If you are interested in Bitcoin Mining, make sure to read our Bitcoin Mining Beginners Article.

Bitcoin Competitors

Bitcoin has plenty of competition; however, no one can reach its level of recognition. These lesser-known online currencies equate lesser in real life because not a lot of people recognise or use it.

Who Created Bitcoin?

What is Bitcoin you ask yourself? Well to understand we should ask also who is the creator?  The creator of Bitcoin is simply known as Satoshi Nakamoto. This elusive person (or possibly a group of people) released Bitcoin on 2009 and since left the responsibility of watching over it to the public on 2010. He has not surfaced to the public’s eyes since.

The search for the creator is still ongoing. Many had come forward introducing themselves as Satoshi, including a man from Temple City, California last 2014. However, the real identity of Satoshi, like his creation, remains shrouded in mystery.