There are many ways by which you can understand what Bitcoin is. Let me explain it to you with the help of an example.
Today, let’s say you want to transfer money from Nigeria to the any country, your bank helps you do the necessary transfer and all other transactions in return you pay them some amount of cash called charges
charges the bank collects is for keeping a record of your money & ensuring safety. Also If you’re using a payment method such as, PayPal, flutter wave, payeer etc or you will pay transaction fees. Some of them also deduct conversion charges.
Technically, you are paying money to the bank for securing & transferring the money on your behalf. In reality, everything is monitored on a ledger(bank statistics) and money is just transferred digitally from one account to another.
This is not like the normal physical delivery of goods and services, money is not moved physically. However, even though it’s digital/virtual, you and i pay a huge for the transfer amount assuming you transfer $100 from one country to another, anything between $2-$10 is given up because of these fees.
The fact that everything is done digitally, why are we losing so much money? Well, this is how banks & other services like PayPal and Payoneer have been collecting our hard earned money from users like me and you.
until Bitcoin came to our aid
Unlike local currency (naira, dollars, Euros & other fiat currencies), Bitcoin is not managed by any country. It’s kind of official currency of the internet & anyone with an internet connection can own it. Bitcoin is governed by the huge community of users like me, you, and all of the others who are using it.
The best thing about Bitcoin is how easy it is to transfer all over the world with very low fees. For example, transferring any amount of bitcoin from Nigeria to US or Europe will cost only $2-3 or less, plus Your transaction is always anonymous. Only the sender and the receiver know who is involved with the transaction.
Bitcoin has been around since 2009. It hit its all-time high in price in November 2017, when 1 bitcoin was worth nearly $20,000 and now at the time of writing this post January 2021 it hits another all time high of $32,000 which is equivalent to almost 16million naira
What is Bitcoin?
Like the way you store your money in your wallet or a bank, bitcoins are stored in “Bitcoin wallets”. Everything is done electronically & no fiat money (like the US Dollar, naira, euros etc is involved.
To send or receive bitcoin, you use your Bitcoin wallet. Every Bitcoin wallet can have one or more “wallet address”. This is a unique internet address to ensure the anonymity of transactions which helps keep you safe and makes sure your bitcoins are transferred to you only. You can use a unique wallet address for every transaction you make.
You can install a Bitcoin wallet on your computer or mobile phone. Upon installation, it will generate a Bitcoin wallet address & you can use that address for receiving BITCOIN from anyone and anywhere in the world.
How Bitcoin works ?
I know it may be hard to understand what Bitcoin is with just an article, but don’t worry because this blog will help you understand everything there is to know about Bitcoin technology & help you get started by purchasing your first bitcoin.
Bitcoin works on blockchain technology. The blockchain is a shared public ledger on which the entire Bitcoin network relies. Any confirmed transactions (including newly added bitcoins) are added into blockchains.
When any user initiates a new transaction (send or receive bitcoins), the transaction is verified using blockchain. Think of this like the physical ledger that is maintained by banks. The only difference is, in this case, it’s maintained by the public & anyone can use the ledger to match a transaction.
- NOTE; Bitcoin unlike the traditional banking system, it uses peer-to-peer technology to facilitate instant payments Bitcoin cannot be held or kept in a pocket or wallet like currency; it is a computerized means of exchange.
After setting up your Bitcoin wallet for the first time, you are asked to set up a private key sometimes called a “seed” .This is the most important part of Bitcoin security. it is recommended for you to write down your seed keyword on a piece of paper & keep it somewhere safe.
Confirmation: When a Bitcoin transaction happens, the blockchain confirms the transaction’s validity. The confirmation is done by “miners” & it can take 1 minute to 1 hour to confirm a transaction. There will be multiple confirmations & you should wait for at least 2-3 confirmations before calling a transaction “successful”.
What Is Bitcoin Mining?
The process of computer hardware doing mathematical calculations for the Bitcoin network to confirm transactions and increase security. Users who use their computers and/or rent resources for mining are call miners.
How does Bitcoin help an ordinary user like you & me?
Well for newbies, no person or bank is maintaining our transaction ledger. The ledger is available to everyone & transactions are linked to our Bitcoin address. Unlike normal
transactions where we have to enter our personal details, the only thing anyone will see is your Bitcoin wallet address. This ensures anonymity & safe online transactions.
When you make a Bitcoin transaction, your Bitcoin software signs the transaction with your private key. This cryptographic signature is the mathematical mechanism that allows someone to prove ownership.
Brief history of Bitcoin.
On Aug.18,2008 :The domain name Bitcoin.org was registered, even though you try to lookup the domain you wont find anything because the domain is WHOISGUARD protected hence leaving the person who registered unknown.
On Oct.31,2008: A person or group using the nick-name Satoshi Nakamoto announces on The Cryptography Mailing list at metzdowd.com: saying "I've been working on a new electronic cash system that's fully peer-to-peer, with no trusted third party. This now-famous whitepaper published on bitcoin.org, entitled "Bitcoin: A Peer-to-Peer Electronic Cash System,"
On Jan 2009 Satoshi Nakamoto first proposed Bitcoin in a 2009 white paper as a method of payment based on mathematics. The idea behind Bitcoin was to create a currency system that didn't have to go through banks and instead would operate using a decentralized ledger known as blockchain. On the 3rd of January The mining of the first block of Bitcoin (named “genesis block”) gave a reward of 50 bitcoins
Who Invented Bitcoin?
No one knows who invented Bitcoin, Satoshi Nakamoto is just the name associated with the person or group of people who released the original Bitcoin white paper till date the inventor of the famous cryptocurrency is still unknown.
Here are some of the best & official resources for Bitcoin enthusiasts:
Coinbase: A popular site in the U.S. that lets you buy/sell bitcoins & other altcoins.
Binance: Best Bitcoin exchange.
Localbitcoins: The best site to buy bitcoins using cash. Etc..
You should subscribe our newsletter for email updates for learning everything there is to know about Bitcoin & other Altcoins.
you will learn important aspects of Bitcoin, such as securing your Bitcoin wallet & how to make your bitcoin transaction anonymous.
I hope that you found this beginners guide to Bitcoin useful.. Share your reviews in the comments below if there's is any complaints, addition or subtractions, share with your friends and family and help me improve the post
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