The term bitcoin is now common than ever. As an ever growing cryptocurrency, people are continuously learning new tips of utilizing the currency. Starters usually have an uphill task of obtaining reliable and accurate details on this digital currency. They usually browse a bunch of websites; but yet to get all concerns addressed. As a beginner in trading using cryptocurrency (specifically bitcoin), this guide simplifies the topic for a faster understanding.
A Brief Evolution of Currency: Ancient Currencies to Digital Currencies
The term ‘currency’ carries the underlying meaning of money being currently used. Each jurisdiction usually has its currency. For instance, dollars in the US and Euros in the European Union. Invest MIB
The ancient world used different forms of currency: cowry shells and plant products like wheat. These type of currency were unique and universally accepted. Nobody could manufacture the currencies, and they were exchanged manually. That was over 2000 years ago, but their value is traceable to the 20th century.
As the need for trade and sovereignty of regions grew, currency evolved to a standard form called money. With money, you can buy or sell anything; you can deposit/ withdraw from banks. In short, you can transact any business.
Changes could not stop with the introduction of money. People started building computers, which transformed the globe into a digital arena. This influenced the invention of the digital currency known as ‘cryptocurrency,’ which is electronic money produced by computer technology.
Cryptocurrency, or crypto, guarantees protected wire transactions and user identity. This currency occurs in different forms such as litecoins, etherium, monero, and bitcoin. Our focus is on bitcoin, which was first mined by someone called Satoshi Nakamoto in 2009.
Bitcoin is understood better through its features:
- Digital coin, i.e., you can’t manually exchange the currency
- Decentralized: No single body or authority owns nor controls the currency; its value depends on changes in a free market.
How Bitcoin Works
Without diving into complicated details, the currency operates on an open record termed blockchain. This open ledger stores approved transactions in pieces called blocks. Every block is subject to clients’ approval as they enter through a computerized framework. This process ensures every user can monitor their exchanges, thereby limiting fraud. Besides, a user cannot spend double the required amount on one transaction.
Getting and Using BTCs
To start with, you can get bitcoins through mining. It is a cryptography process termed buying of bitcoins. It includes a digitized and public medium of transaction. These transactions are grouped in blocks, which undergoes confirmation. Since the process requires computer algorithms, some people perform these transactions in exchange for money. These people get a percentage of the transacted coins.
Of course, mining can be hard to comprehend as it involves experts, but your job is simple. Open up a digital wallet, and buy the coins using dollars. The exchange rates between bitcoin and dollar keep fluctuating.
Buying or selling using BTC is also simple. You only need to install a wallet, and then send a private key to your seller. Your recipient will get a differently-encrypted message, together with your wallet address. Through a public ledger, the transaction is broadcast and takes about 10 minutes to receive a confirmation. At this point, you can opt to continue with the process or quit it altogether. Confirming the process means safe online trading using BTCs.
Finally, always remember to safeguard your wallet against cons. But apart from scams, this currency has essential advantages: efficient, secure, transparent, and out of government interferences. Of course, digital currency will continue growing. Many alternatives to bitcoins are surfacing. Governments might start regulating the currency. But what remains clear, is that the coin is among excellent long-term trading tools.