Home Sci-Tech Bitcoin basics – Everything a beginner should know  | The Guardian Nigeria News

Bitcoin basics – Everything a beginner should know  | The Guardian Nigeria News

Bitcoin basics - Everything a beginner should know  | The Guardian Nigeria News

What hits your mind when you hear or read something about Bitcoin? Some people think this virtual currency is a speculative bubble, a shady payment method, or the financial future.

But Bitcoin is modern, decentralized virtual cash that allows people to transfer funds without intermediaries like governments and banks. Instead, this payment method uses a peer-to-peer digital network to confirm transfers between users directly.

Governments issue, regulate, and back fiat money like the U.S dollar. However, peer-to-peer technology powers Bitcoin. This technology provides a network of computers or individuals and software-driven cryptography. This network creates a digital currency with a code backing it instead of physical value items like silver and gold. Essentially, Bitcoin users don’t rely on trust in authorities like fiat currency users.

Bitcoin History
Satoshi Nakamoto, an individual or a group, launched Bitcoin in 2009. Most people consider Bitcoin the first successful cryptocurrency. However, academic papers had discussed the blockchain technology concept for decades. Satoshi noted that the world needs a digital payment system whose cryptographic proof is its base rather than trust in a white paper. Such a system would facilitate direct transactions between willing parties without involving a trusted third party.

People have used Bitcoin for over a decade now, and several companies, including PayPal and Microsoft, accept it as a payment method. Its price has also grown substantially over the years. In April 2021, Bitcoin’s price hit the $65,000 mark. Nevertheless, this virtual currency is highly volatile.

Some people take advantage of this volatility to trade Bitcoin on crypto exchanges like the Bitcoin Revolution Software. These are platforms where people purchase Bitcoins using fiat money and transfer them to their digital wallets. From there, they can use this currency to pay for services or hold onto it, waiting for its value to increase. Or you can visit bitcoin pro for further details.

How it Works
Every bitcoin is a computer file that people store in a smartphone or computer using a digital wallet. Here’s what you should know to understand how this virtual currency works.

  • Blockchain: This is the underlying technology that powers Bitcoin. It’s an open-source code that creates a distributed and shared public ledger. Every Bitcoin transaction is a chained block in the code that creates a permanent record. Ideally, blockchain is the heart of Bitcoin.
  • Public and private keys: People store bitcoins in digital wallets. Each wallet stores a private and a public key that allows the owner to digitally initiate and sign transactions, proving they have authorized them.
  • Bitcoin miners: Miners are a group of peer-to-peer platform members that confirm transactions using powerful computers. Each miner earns Bitcoin for investing their effort in this task.

How Bitcoin Makes Money
The value of this virtual currency follows the supply and demand law. Since demand wanes and waxes, its price is highly volatile.

What’s more, Bitcoin mining requires a high investment in powerful computers and technical expertise. Therefore, most people opt to buy bitcoins on crypto exchanges rather than mine them.

Is Buying Bitcoin Wise?
As hinted, Bitcoin is a highly volatile and speculative virtual currency. Whether buying it is a wise move or not depends on your investment goals and thoughts about the technology behind this virtual currency. Remember that even stock trading sometimes has the same thrill as Bitcoin. But the increasing adoption and acceptance of this digital currency hint at its potentially bright future. Therefore, investing in this virtual currency is probably better than ignoring it but regretting it later. Nevertheless, invest what you can lose, and life goes on uninterrupted.

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