What Is Bitcoin and How Does It Work
The first cryptocurrency ever created is called Bitcoin. This digital currency remains the most popular, although there are still people who would like to know more about it.
What Is Bitcoin?
Bitcoin is a virtual currency, which is also usually called a cryptocurrency. This type of currency exists on the Internet only and is used for digital financial transactions. You can buy, sell, or trade it online.
When Did Bitcoin Start?
Bitcoin officially started when the first Bitcoin block was mined back in January 2009. This first block granted fifty bitcoins to the creator of this crypto — Satoshi Nakamoto. The network for Bitcoin started operating on the same date.
Who Created the Cryptocurrency?
Satoshi Nakamoto is a presumed creator of Bitcoin, as a white paper about the cryptocurrency was released in 2008 under this name. It is currently unknown whether it is a real name, a pseudonym, or even a group of people that worked on the creation of Bitcoin.
How Well Has It Been Doing Recently?
Bitcoin has been rising steadily throughout its whole history. However, it has shown incredible growth during 2021. The value of one bitcoin has risen to its current peak of 64 thousand dollars by April 2021.
What Is Bitcoin Used For?
Bitcoin is essentially a currency that differs from physical money only in that it exists online. You can use Bitcoin for:
- Paying for goods and services on the Internet. The number of companies that invite Bitcoin users is not that big yet, but the range continues to grow. You can check the accepted payment solutions on the website you want to buy from to see whether they also support BTC.
This should be stated along with all other currencies they accept, such as euros, dollars, etc.
- Paying with BTC in physical stores. Even land-based shops and stores can accept Bitcoin. Such businesses usually provide a QR code to scan for payment or have special terminals that deal with BTC, if you wonder how to pay with bitcoins.
- Converting any international currency. Bitcoin is very flexible in its ability to convert to any other foreign exchange you can imagine. It can be used to receive cash after you have invested your preferred currency into it.
You can also use one currency to buy BTC and then convert it into another one. Lastly, you can mine BTC or receive from other people and convert it into the asset you need.
- Investing in BTC. Just like we invest in gold, stocks, or real estate, it is also possible to plow into Bitcoin. For example, when being taxed, the US government considers BTC to be property as opposed to currency.
Bitcoin is incredibly valuable, which is why many users prefer to store it like expensive stocks.
Much like with stock markets, you can try your analytic skills and a fair portion of luck to buy Bitcoin cheaper and sell higher.
It is unknown how many BTC millionaires are there exactly, but you can be sure that many Bitcoin investors have become some of the richest people on Earth.
How to Get Started Using It
So many people are still not involved in the crypto trade because they do not know how to use Bitcoin.
Before diving into any cryptocurrency, you should examine the question thoroughly.
The main difficulty is a lack of knowledge about where to start both your research and practical use. Getting started is actually very simple, and here is a short step-by-step tutorial:
- Step 1: Open a Bitcoin wallet.
- Step 2: Connect the wallet to your credit card to use the balance for buying Bitcoin.
- Step 3: Join a Bitcoin exchange for trading with this crypto.
You can start using Bitcoin for online transactions just like that.
Where and How to Get It
You can obtain bitcoins from scratch by mining them with the help of robust equipment. Maintaining the blockchain ledger requires powerful computers and tons of energy to solve special complex math problems.
The more bitcoins are mined, the more time and effort is necessary to generate new BTC blocks.
As of today, mining a single block with an average computer might take years if you want to work solo. This is why mining pools are now very popular.
Thanks to these pools, it is possible for miners to combine their effort and discover new blocks much quicker.
Of course, you will need to share the profits among everyone who contributed to each block. But this is not a bad thing, as a single BTC is extremely expensive.
You can also buy bitcoins with any international currency through a Bitcoin exchange or sell your services or products for this cryptocurrency.
The Bitcoin market is decentralized, and there are many different exchanges around. Some of them allow anonymity for the users, but most operate as a regular currency exchange and require certain personal data for a user account.
Finding a reliable exchange is important, so make sure to look through the most popular of them and pick the one that fits you best.
Tips for Getting Started
The most important thing to do when you start dealing with Bitcoin is to find a trustworthy exchange.
Do a little bit of research to discover crypto exchanges with a good reputation and choose one of them to use.
Also, take it slow in order to understand how everything works before investing in expensive devices for mining or engaging in some intricate Bitcoin schemes.
Patience is the key, as mining BTC or trading with it takes time. Yet, the profit is totally worth it.
Do not be afraid to ask more experienced Bitcoin users and miners for advice. The crypto community is growing each day, and you can certainly find someone to help you in setting everything up.
Top Bitcoin Wallets
Another issue to consider is how to store bitcoins. Luckily, numerous cryptocurrency wallets are available nowadays, and it might be even difficult to pick the most convenient one. Here are some of the highly reputable and reliable Bitcoin wallets in 2021:
How to Use Bitcoin
It is recommended to use online wallets for managing your bitcoins easily.
Each Bitcoin user has a specific address and verification key to secure their crypto from scams.
Using these addresses as they are is inconvenient, and here is why crypto wallets come into play.
They allow managing your cryptocurrency like any physical one. You can store bitcoins, transfer them to other people, play with them online, or even convert the funds to any currency you can imagine.
How to Receive It
Receiving BTC through an electronic wallet is simple.
You will need to select the “Receive” option in your wallet for generating a unique address.
Give this address to the person you want to receive Bitcoin from so that they can use it in their wallet. You can copy the address or provide the QR code for the person to scan.
How to Send BTC
Sending BTC is just as simple as receiving it.
Use the address sent to you in the “Send” menu or simply scan the QR code. Select the wallet you want to send bitcoins from and the exact amount you want to transfer. Press “Send” to finalize the operation.
How to Cash Out
The most common method used for cashing out Bitcoin involves an online exchange.
You need to deposit your BTC there and wait for it to convert into your preferred currency. It usually takes from one to five days for the money to return to your wallet.
Different payment methods are used for different currencies. For example, SWIFT payments work for dollar exchange. Many crypto exchanges allow cashing out funds only to the bank account you have previously used for depositing money.
This means that you will have to make a small deposit first to cash out your BTC later. This is required to guarantee the safety of your money, even though it might take longer for the transaction to complete.
Where to Pay Using the Cryptocurrency
More and more companies are starting to accept Bitcoin as a viable payment method globally.
Some of the major corporations currently operating have been already accepting BTC, and you can use this crypto for purchases there. These companies include:
- Burger King
- 4Chan, etc.
While many companies do not accept Bitcoin yet, they are planning to implement convenient solutions for cryptocurrency users, so keep an eye out for your favorite stores or companies making an announcement about BTC.
Is There an ATM for Bitcoin?
Yes, there are special ATMs in different countries that allow managing Bitcoin specifically or a selection of currencies, including BTC.
These ATMs are connected to the Internet, and they work fine for buying bitcoins with physical money.
However, they do not cash out BTC or provide physical bitcoins, as this digital currency exists on the Internet only.
How to Make Money with Bitcoin
One of the main reasons for people to engage in Bitcoin trade is that this currency is incredibly valuable and can help with making a decent amount of money. There are various ways of earning with Bitcoin, and we will cover some of the most popular ones.
Main Ways to Make Money
The most common methods of making cash with Bitcoin are also some of the most accessible ones. Here are the solutions you can use if you want to benefit from BTC:
- Trading. Much like with the stock market, you can buy BTC at a certain price and sell it whenever its value becomes higher than when you bought it.
- Investing. Purchasing and selling Bitcoin regularly is a good way to earn money; however, you can make even more by investing in bitcoins and holding everything you bought for a long time up until you can sell it at an amazing rate.
- Block mining. The first way of actually gaining BTC is not buying and selling it at a higher price but mining it from scratch. If you have a piece of powerful equipment to mine BTC, you can try farming your own crypto.
Mining becomes more difficult overall as more and more blocks are mined, although some alternative mining solutions also appear. Joining a mining pool might be a great idea if you want to mine efficiently.
- Accepting BTC as payment. If you are selling anything online, you can add Bitcoin as one of your preferred payment options. Other crypto owners can then use it to buy from you.
You can also become an affiliate of a company that provides commissions in Bitcoin or fractures of BTC. The better you promote this business, the more bitcoins you will be able to accumulate.
Can You Make a Lot of Money with BTC?
Yes, it is actually possible to earn an incredible amount of cash with Bitcoin.
One unit has once amounted to more than 64 thousand dollars. However, the price for BTC is constantly fluctuating, and you have to observe its tendencies carefully.
If you want to take a risk and wait until BTC possibly becomes even more expensive, you can accumulate a certain amount of bitcoins or its fractures (also known as mBTC or millibitcoin and satoshi) and store them for later.
This risk is similar to that you take with shares. You have to trust in what you are buying to sell it later at a higher price.
Pros and Cons
Many consider digital money to be the future, and Bitcoin has numerous advantages even today.
There are also some disadvantages like with any other currency, which is why you should take into account everything you can before making a decision to use crypto. Here are some positive and negative sides of Bitcoin:
- High accessibility. It is extremely easy to buy bitcoins via an online exchange, and everyone can start investing in this cryptocurrency without limits.
- Great liquidity. You can apply for Bitcoin cash-out at any time, which is helpful when you need to have a certain amount of cash.
- Powerful security. Bitcoin is described as the safest currency for a reason. Money transactions with BTC are highly protected from a hacker attack and offer a decent level of anonymity for the users.
- Lack of regulations. While Bitcoin is not illegal, it is not exactly legal in most countries either. This digital currency is still very young, and there are no specific laws to regulate its use in most places.
- Online only. Being a cryptocurrency, Bitcoin relies completely on access to the Internet. You can perform transactions and any other actions with it only when you have access to the web.
- Not a common currency. Bitcoin is still not as widespread as it needs to be to provide convenient payment solutions for everyone. The amount of businesses accepting BTC is quite low yet.
Despite some drawbacks we can currently observe, we have to take into consideration the fact that this crypto develops at an extremely fast rate. In a couple of years, we might be able to use Bitcoin freely just like dollars, euros, or pounds.
Is Bitcoin Safe and Legal?
Bitcoin laws are generally quite unclear nowadays. Most developed countries do not consider BTC illegal.
For example, the United States, Great Britain, and Japan recognize Bitcoin as fully legal.
However, there are some countries that restrict its usage without actually declaring it illegal. It is important to explore the laws of each country to confirm the legal status of BTC.
Certain countries allow financial transactions in Bitcoin along with its storage while providing special regulations regarding its tax status. To be more specific, the US has special guidelines that apply to Bitcoin when it comes to paying taxes.
Using Bitcoin is safer than dealing with regular currencies, such as dollars or euros.
While offering a general level of anonymity, BTC transactions are also relatively transparent.
All transactions made by separate individuals are recorded, which is why Bitcoin is no longer actively used for illegal deals. In the early years of its existence, this crypto was often involved in illegal trade. But everyone can use it safely and lawfully now.
How Many Bitcoins Are There?
There are approximately 18.7 million bitcoins existing at the moment. The amount increases every ten minutes as new blocks are mined.
About 6 BTC are added to the overall amount with each new block. However, just like any other resource on our planet, this currency also has its limits.
It is known now that there can be only 21 million BTC in existence. This means that less than 3 million BTC is left to be discovered. Yet, as soon as the limit is reached, there will not be exactly 21 million Bitcoin circulating in the world.
Because each BTC has a special key, it is inevitable that many of them will be simply lost or inaccessible in case of the owner’s death, etc. As a result, there will be several million fewer bitcoins available than the total number.
What Other Cryptocurrencies Are There?
Bitcoin was a pioneer, and with the number of crypto fans growing, many new currencies have emerged.
The idea of a digital currency that uses coins or some sort of tokens is becoming more popular each day, and there are some actually widespread cryptos apart from Bitcoin. Some of them are:
- ETH – Ethereum
- LTC – Litecoin
- ADA – Cardano
- DOT – Polkadot
- BCH – Bitcoin Cash
- BNB – Binance Coin
- XMR – Monero
What Is Bitcoin?
Bitcoin is a cryptocurrency, which is a digital type of currency. Bitcoin exists on the Internet only, as this is a virtual currency. There are no physical bitcoins, contrary to traditional currencies available in different countries.
How Many Bitcoins Are There?
The amount of Bitcoin currently existing changes every ten minutes on average as new blocks are obtained by crypto miners. At the moment, there are about 18 million bitcoins in the world.
When Did Bitcoin Start?
The exact date of acquiring the first bitcoin is January 3rd of 2009. The first-ever block was mined on that date by the creator of this crypto.
How to Use Bitcoin?
To start using Bitcoin, it is first necessary to download any Bitcoin wallet you can find.
From there, you can purchase bitcoins and use them as a form of payment when you buy products or services online.
Who Created Bitcoin?
Satoshi Nakamoto is considered the creator of Bitcoin. However, the identity of this person is covered in mystery. Nakamoto can be a pseudonym for a single person or group of people who worked on the creation of Bitcoin. The true identity is yet to be revealed.
Is Bitcoin Safe?
Bitcoin technology is used by many people because of its high privacy. Financial transactions performed with it are generally much safer than using regular currencies like dollars on the Internet. Bitcoin also provides a high level of anonymity.
How to Make Money with Bitcoin?
Mining Bitcoin is the first way to obtain more of this currency and use it to your advantage. A single bitcoin is extremely valuable if converted into any physical currency, which makes owning even one unit very beneficial. You can also sell bitcoins based on their price fluctuation like on the stock market.
What Is Bitcoin Used For?
As a virtual currency, Bitcoin’s main objective is providing an opportunity to trade with it over the Internet. Bitcoins are used for online purchases and other financial operations.
How to Store Bitcoin?
Bitcoins can be stored in a virtual wallet. There are different types of electronic wallets, and you can choose the one you consider the safest or the one that will serve your personal purposes.