Bitcoin has already gained enough popularity that although you may not yet acknowledge the legitimacy, you probably have heard about it. However, this was not so a decade ago when it started. Bitcoin was created by a certain person or group of people known as Satoshi Nakamoto who maintained anonymity then and through the years. Before Bitcoin, there had been some attempts at making cryptocurrency. For instance Bit Gold, but like others, it wasn’t successful. Hence, Bitcoin is the first successfully established cryptocurrency.
The Mysterious Foundation of Bitcoin
In 2008, cryptography was a frequently discussed topic, so much that there was a group of people dedicated to making something out of it. Satoshi Nakamoto who was certain that his idea would be a breakthrough in the discussion of cryptocurrency and cryptography mailed everyone on the email list of the cryptography forum. Hence, on October 31, 2008, the white paper for Bitcoin was circulated, with the sender’s name being Satoshi Nakamoto. This was followed by the registration of the domain name on August 18, 2008 – bitcoin.org, and this was also done anonymously. By January 2009, the first ever Bitcoin was anonymously announced, and the mining of Bitcoin started.
There have been speculations about who Satoshi Nakamoto is, some have suggested that the name is a joint pseudonym of three persons. On August 15, 2008, Charles Bry, Vladimir Oksman, and Neal Kim filed for encryption patent. All three of them have denied any connection to Satoshi Nakamoto. On the other hand, some have mentioned that the name belonged to an Australian. In any case, Satoshi Nakamoto has completely disappeared into oblivion, and the Bitcoin in is wallet remain unspent. The essence of anonymity surrounding the creation of Bitcoin is not farfetched. One of the cores of the cryptocurrency is to ensure that the privacy of the users is protected.
How To Use Bitcoin?
This is the part many Bitcoin wannabe investors focus on, particularly how to make a profit from Bitcoin. However, more detailed knowledge of Bitcoin will empower whoever is interested in making money from it. Hence, it is necessary to understand the workings of Bitcoin.
First, Bitcoin is a digital currency that can be used to make payment and be received as payment. You can use it to buy a game on Xbox, to book a flight on Expedia.com, buy a subway, or shop on Shopify, and other companies or people who accept the digital currency. Another core of Bitcoin which was established in the white paper is the decentralized character. It runs on an open source platform, and free from any regulation whether government or banking institutions. In fact, the value of Bitcoin is determined by users, completely free from any authoritative body including Bitcoin Foundation.
Bitcoin can be owned either by exchanging a legal tender such as dollars or pounds for it, that is you can pay friends who have Bitcoins dollars and be given Bitcoins in exchange. You can also exchange your money for Bitcoin on exchange platforms such as Kraken or Coinbase. People sometimes pay for Bitcoin using other valued possessions such as the Australian member of a Bitcoin forum who sold his car to get 3000 Bitcoins in 2011. There are several incidences like these.
Wallet
As already mentioned, Bitcoin is a digital currency, although people now mint Bitcoin, the primary state of Bitcoin is digital hence it cannot be held. That is why you would need to have a wallet to keep your Bitcoin; the wallet will also serve as a payment solution. It is from this wallet that you can send or receive Bitcoin in. Cryptocurrency wallet is like a digital bank, and there are several available wallets and different varieties of wallet. There are two major types of wallet, cold storage wallet, and hot storage wallet. Some of the popular platforms where you can open a wallet are Coinbase, Blockchain, Ledger Nano, etc. Therefore, the first thing to do before buying Bitcoin is to create a wallet where you can keep the Bitcoins.
Bitcoin Mining and Blockchain
Another means by which you can own Bitcoin is by mining it. Bitcoin mining is an essential part of Bitcoin because it is the miners who ensure that there Bitcoins in circulation. The more Bitcoins mined, the more Bitcoins in circulation. So being a Bitcoin miner is a lucrative way to have Bitcoins. Bitcoin is a currency based on algorithms known as cryptography. There are nodes and blocks, with every transaction made, there is a block created for it on the network. Each transaction automatically arranges chronologically on other transactions, and this is called blockchain. The blockchain is a 24 hours running public ledger, and it is what ensures the transparency of Bitcoin. Hence, miners are needed to interpret and solve each transaction; once a miner correctly solves the algorithm of a Bitcoin transaction, the miner earns a portion of the Bitcoin.
Bitcoin can also be traded like forex trading. Traders predict the rise and fall of Bitcoin and trade based on this.
What makes Bitcoin Different From other Legal Tenders?
Aside from that Bitcoin is digital money, there are other characters of Bitcoin that makes it different from dollars, pounds, yen or other legal tenders.
Bitcoin maintains anonymity – while the blockchain is a public ledger system, transactions are anonymous. Only alphanumeric identifications show on blockchain representing each transaction carried out by different people.
Bitcoin is decentralized – just as we have mentioned before, no one body regulates Bitcoin, not even the authoritative Bitcoin body known as Bitcoin Foundation. It is free from government and banks. Hence circulation is not withdrawn, neither are there unnecessary charges on transactions. Not to mention that there are no charges at all.
Bitcoin is a universal currency – one of the reasons for the creation of Bitcoin is to have a currency that can be spent everywhere in the world. Bitcoin payments are quick, takes only about 5 minutes, you can receive Bitcoin from or pay Bitcoin to anyone from any part of the world. Except China, and that’s because the government of China banned Bitcoin completely. It is not a case of regulation. This takes away the lag which always accompanies legal tender transactions, such as sending dollars to someone in Ethiopia.
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