What is Bitcoin(BTC) A Beginners Guide - CoinGyan

In the past several years, One Name has created a lot of buzz around the globe is BITCOIN.  So, today is the day we learn a lot about the so-called “Bitcoin Revolution.” Let me explain to you What is Bitcoin more Clearly.

What Is Bitcoin

Bitcoin is a software-based cryptocurrency which allows people to send and receive money in the form of Bitcoins all over the world. It has several properties that are similar to usual currencies like USD, Pound, etc but it also consists of a ton of other properties that are both intriguing and modern.

For instance: You’re able to convert US dollars to Bitcoins and vice-versa. You can also make transfers Bitcoin transfers throughout the world. Pretty cool. right? Because if you take a look at how bank transactions happen then you realize that Bitcoin isn’t that complicated in terms of transactions. And, more importantly, it’s free to deal in or deal with as in you can easily send a bitcoin from one person to another globally for next to nothing. All you need to do is just wait for a little period of time and that is it.

It isn’t a commodity like paper currency but rather an outcome of multiple transactions that determine its history. A bitcoin is forged when it is mined (which is a base transaction) and then from here on people can get involved with it and become a part of its journey on the platform through future transactions that people undergo with it.

So basically, this is what Bitcoin is in terms of cryptocurrencies. I hope this reiterates what bitcoin is because most of you might already be familiar with what Bitcoin is unless you’re living under a rock in a cave or something. Most probably many might be trading bitcoins in bits and pieces and enjoying the gains as well.

How does it work

Transactions – private keys

A transaction is a transfer of value between Bitcoin wallets that gets included in the blockchain. Bitcoin wallets keep a secret piece of data called a private key or seed, which is used to sign transactions, providing a mathematical proof that they have come from the owner of the wallet. The signature also prevents the transaction from being altered by anybody once it has been issued. All transactions are broadcast between users and usually begin to be confirmed by the network in the following 10 minutes, through a process called mining Source

Security – Decentralized

Bitcoin depends on a peer-to-peer network. One fundamental principle behind bitcoin is that it doesn’t consist of a particular place where all the servers are maintained like Google or Yahoo but rather involves a distributed bitcoin network. The transactions taking place on bitcoins network are obviously stored within the system and are verified by several other servers through the implementation of a hash system. This procedure of verification is achieved by means of cryptography and it’s performed in such a way that it’s exceptionally difficult for anyone on planet earth to create a fake transaction.

However, if any person thinks that he possesses that level of intelligence and resources to be able to game the system then, in my opinion, he is entitled to receive an Oscar for “The stupidest person on planet earth”. Now the reason for this is that that person (whosoever tries to make a fraudulent transaction) could make more money mining bitcoins instead of wasting his valuable resources, time and energy in trying to outsmart the system for his ulterior motives. So, I don’t see any reason for anyone to even entertain the thought of trying to hack the bitcoin network to become a mysterious millionaire overnight like Mr.India. Lol.

You literally need to have 50% i.e. half the system under your control to be able to forge a fraudulent transaction. And this is going to be an uphill task to accomplish as the server not only consists of millions of servers run by individual people but also considering the fact that attempting to forge(make/create) fake transactions would compromise the entire bitcoin system and thus all the hassle to game the system would be rendered pointless (useless) in the first place. See what I mean. Lol.

That’s why it is sensible for every member of this network system to contribute his/her time, efforts and resources towards strengthening the system. It’s a win for him and everyone else on the platform which is much more fulfilling and rewarding in terms of an experience than trying to be a fraudster and cheating the system for his/her own benefits. Therefore, you can rest be assured that you can trust the platform in terms of security of funds.

Creation -Mining

Alright, moving on to how transactions actually take place here. As I mentioned earlier a bitcoin takes birth when it gets mined. Mining is a computerized process that needs not only cryptographic work but also some proof of work to be done. After this happens other people on the platform interact with it and the circulation of bitcoins commence on the platform.  So as and when an individual completes enough work with a computer and can prove it to the community then that person receives a fresh bitcoin. It’s quite similar to how gold gets injected into any economic system of any state or country. You have to do some spade work and actually, mine some gold out of the earth. When you successfully accomplish that it’s your to do with as you please. You could hog it all for yourself or be generous enough to share it with the community. There are no shortcuts in mining gold and no shortcuts in mining bitcoin either. You have to do the required work in order to reap the benefits of your efforts. Otherwise, you get little to nothing mostly nothing for your efforts.

In summary, bitcoin operates on a peer to peer network basis and is a decentralized cryptocurrency, that’s it is controlled by the public in general unlike Google, Microsoft, etc. Anyone anywhere and anytime can trade in bitcoins as much as they can afford. Transactions on the platform take through mining and are verified through cryptography.

How Much Bitcoins There Will be Ever

There are only 21 million bitcoins that can be mined within the system and beyond this point, no new bitcoins can be generated or will be accepted on the platform. This number is adjusted every 2016 blocks thus aiming for a fixed two-week adjustment period which is equivalent to 6/hour. The number of bitcoins that can be forged/block has been set to decrease geometrically by 50% for every 2,10,000 blocks i.e. all 21 million bitcoins should be tapped out within 4 years approx. Satoshi (the founder) choose this decreasing-supply algorithm because it estimates the rate at which commodities like gold are mined. However, he never really has justified the constants involved in terms of mining bitcoins. So that’s why you can only play around with 21 million bitcoins. Clever man Satoshi. What do you think?

What Problems Does Bitcoin Solve

With paper currencies, you have these authorities and institutions in the form of banks and government that controlled the forging and circulation of money in an economy and you had to trust that they wouldn’t defraud you of your hard earned money, etc. But then with bitcoin, the problems that were caused due to paper currencies were solved. Some of these are as follows:-

  1. It facilitates for quick payments over the internet. Now you can say goodbye to waiting for hours or sometimes even days for the payments to be processed by banks and then getting access to those funds.
  2. It affords people the luxury to send and receive money in the form of bitcoins globally at no cost. How cool is that? Forget those hassles of overseas transactions with bitcoin.
  3. Bitcoin has been made in such a way that it’s supposed to be a non-inflationary currency. The reason for this is that there’s a limited amount of bitcoins that can ever be mined on the platform and once this milestone is accomplished there will be no new bitcoins. This ensures that there will be a steady rise in its price over a certain period of time. This makes it a good investment alternative to paper currencies in order to beat inflation.
  4. You can pay for stuff with Bitcoin wherever it is accepted and not have to reveal your identity or other private information as in credit card or email, etc. As compared to other avenues that require you to disclose both your identity and private info. in order to purchase goods and services. Pretty cool. Right?

Team/personalities behind bitcoin:-

Who is the founder of Bitcoin, is still a mystery. In October 2008, a paper was published on The Cryptography mailing list. This paper was published under the fictitious name Satoshi Nakamoto“. Since Start, the real identity of Satoshi Nakamoto is unknown.

In January 2009, when the first Bitcoin software was released as open source software, the first ever bitcoin was issued. The mining of the first block of Bitcoin (named “genesis block”) was a reward of 50 bitcoins at that time.

Where to Store it Safely

I would recommend using a hardware wallet such as the Ledger Nano S or the Trezor Wallet. This obviously means that your tokens, private keys, etc., etc are going to be stored offline. Therefore, technically speaking, this is supposed to be the safest possible option that you can use to store your hard-mined bitcoin.

If you want less secure and more convenient then Exodus and Coinomi would be good choices.

Here are some of the trusted & official resources for Bitcoin

So that’s it for this post on Bitcoin. I hope you enjoyed either learning about bitcoin with me or refreshing what you may have already learned about bitcoin. Thank you very much for reading this post and blessing this site with your presence. Now please do remember to follow us on Facebook and Twitter and ask your doubts, questions, etc in the comments section below.

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About Author

I am a tech enthusiast & Digital nomad from Dhenkanal, India I've been dealing with Bitcoin since 2014.I started CoinGyan to help users around the globe to learn about popular Cryptocurrencies. Here at CoinGyan, I write about Bitcoin Wallet, Cryptocurrency wallets, & making money from Crypto.

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