What is Bitcoin?
Simply put, Bitcoin is the first decentralized currency that runs on a digital format. There is no bank or administrator controlling the currency. It is a peer-to-peer system that is controlled via blockchain technology.
There will only be a set amount of Bitcoin created which gives value to the digital currency (21,000,000).
Like other currencies, Bitcoin can be used to buy and trade on the worldwide market place with vendors willing to accept it.
Who is behind Bitcoin?
Bitcoin was supposedly invented by Satoshi Nakamoto. But no one has been able to determine who this Satoshi Nakomoto is.
Speculations exist that Satoshi is actually a group of people or even several corporations who teamed together to create a system to eliminate world banks from controlling the values of currency and provide a system that will hold value and can be used by citizens of all nations.
How does Bitcoin Work?
Many would equate the Bitcoin system much like any precious metal. Be it gold, silver, palladium or any other, that metal must be mined from the Earth before it can be used to buy or trade.
The same is true with Bitcoin.
As Bitcoin transactions occur, records must be logged into the digital system called the Blockchain, But these logs must be done by sophisticated computer systems. Those who own these systems can allow their computer to log these records into the Blockchain and as a reward for their time and service, they receive Bitcoin.
And Bitcoin can be divided down to small units… The smallest being a Satoshi which is 1/100000000 of 1 Bitcoin.
So essentially, the Bitcoin system via Blockchain is not controlled by any 1 entity but by many through Blockchain logs that cannot be altered after entered. It is all done using cryptography, hence cryptocurrency.
How can I buy Bitcoin?
Buying Bitcoin is much easier than it may seem.
You will first want to attain a “wallet.” The wallet is your own personal digital storage place for your cryptocurrency.
Each wallet has a private key and a public key. The private key is for you alone to manage your Bitcoin while the public key is used to send and receive Bitcoin or other digital currencies.
There are various types of wallets with different features. You can discover more on crypto wallets here on Investing Online.
At that point, you can purchase Bitcoin from other people on marketplaces and they will send it to your wallet via the public key. Or, you can join any number of Bitcoin exchanges where you can purchase Bitcoin and transfer to your wallet.
How can I trade Bitcoin?
Trading Bitcoin works the same way as buying Bitcoin. You can trade 1 cryptocurrency for another via exchanges or you can trade peer-to-peer via many marketplaces.
As trades are made, miners use their systems to log the records and they are sealed to any changes.
So any buys or trades are dependent on the time it takes for a miner to log that record. It could take 1 minute or ½ hour.
Naturally, miners are looking for the higher paying logs first.
How to choose a Bitcoin Exchange?
Choosing a Bitcoin exchange is frightening for many who are just starting their Bitcoin investment strategy.
Keep abreast of all our reviews here which can help you choose. But there are 3 properties you should consider when choosing a Bitcoin exchange:
- Where you are – Regulations on cryptocurrency exchanges are still being developed. But some exchanges will not accept investors from certain areas.
- Payment method and fees – Some exchanges may accept pay systems like Paypal, Neteller and others. And others may only accept credit or debit cards. Plus, you want to look at fees incurred such as miner fees and conversion fees.
- The currency you want to purchase – Most exchanges carry Bitcoin but if you are seeking another cryptocurrency, the exchange may not carry it.
Overall, Bitcoin is not as difficult to buy and trade as it may seem.
If you have any questions, feel free to contact us and we can help you proceed. And research Investing Online as your questions may have an answer on our pages.
