BEGINNERS GUIDE TO BITCOIN 2018
You have probably heard of Bitcoin but you are not sure how it works. Do not worry we are here to show you the beginners guide to bitcoin 2018, we’ll
make everything clear starting from the basics to where things get a bit technical but overall, it is quite
easy to wrap one’s head around the concept. This is a step-by-step guide on how Bitcoin works and why
it is evolutionary to our conventional lifestyle. We will look at what Bitcoin is, history of Bitcoin, How
Bitcoin works, what blockchain is, Bitcoin limit, how safe is Bitcoin and how to invest in it if you so
WHAT IS BITCOIN?
Bitcoin is money, but in this case digital money or you can call it electronic cash. Bitcoin belongs to the
family of digital money called CRYPTOCURRENCY. Bitcoin is not centralized and is not regulated by
government or by any financial institution. Bitcoin transactions are done without any middleman – it is
peer-to-peer that is individuals perform transaction among themselves without anyone giving
conditions. Encryption is a major factor in the success of Bitcoin as it solves the security problem to the
best of our knowledge. Cryptography is use to verify transactions in the network and each transaction is
recorded in the BLOCKCHAIN to avoid using the same money more than once. The major challenge with
digital currency is making it impossible to use the same money more than once as we all know how
digital files work – files can be used countless times and it does not affect the original size.
One of the major reasons for the creation of Bitcoin was
- to evade taxes charged by the middleman or
financial institutions even the government. That does not mean that Bitcoin transactions does not carry
charges but the charges are very low compared to charges by financial institution and the rest.
HISTORY OF BITCOIN:
The name Satoshi Nakamoto is associated with the creation of Bitcoin even though very little is known
about the creator, the aim which was to create a currency which is free of regulator(s) where people
perform transactions directly. Satoshi Nakamoto proposed the idea in the year 2008 and in 2009 Bitcoin
was established and made available to the public. It was nothing big at that time but now it is beyond
our biggest imagination how many people have turned to this digital currency.
HOW DOES BITCOIN WORK?
Bitcoin makes use of the Blockchain technology which is a public ledger which keeps record of each
transaction made. It is not regulated by any institution or governments but rather there are group of
people who are called miners and they are responsible for mining Bitcoin. The term “mine” in this case
refers to the process of mining Bitcoin. Mining is the process of using sophisticated computers to
produce Bitcoin this is done all over the world without any interference from any government and the
people involved in this process are called Miners. It is also important to note that you don’t need any
commercial bank to buy or perform transaction with Bitcoin. One of the most important things you will
learn when you start out with Bitcoin is that Bitcoin transactions are IRREVERSIBLE. So when performing
transaction you have to be careful because once the transaction is performed there is no way back.
Miners are not just tasked with mining Bitcoin they also make sure that transactions are legit and
records are kept to avoid using the same money more than once – that is in the public ledger. This is
where “Block” comes in. A Block is group a of Bitcoin transactions that occurred within a certain time
frame. As blocks are made over time, they are being added to an already existing chain of blocks – the
blocks are not just linked, a very complex cryptography is used which makes the blockchain secure. This
chain of blocks makes the BLOCKCHAIN which is very complex and serves as a protection.
DOES BITCOIN HAVE LIMIT?
Yes, you must have guessed it right, Bitcoin is not limitless. The developers of Bitcoin capped it at 21
million that means when the number of bitcoin mined reaches 21 million there will be no longer Bitcoin
available to mine. Though not certain, most people think that this number (21 million) will be reached in
2140 it is just an estimate no one can say for sure. Currently more than 16 million Bitcoins have been
mined already which leaves about 5 million to be mined.
Miners are rewarded with Bitcoin when they successfully mine Bitcoin according to speed and resources
of each group of miners, the mining process involves solving a very complex math puzzles which makes
IS BITCOIN SAFE?
It is safe to say that the Blockchain is untouchable because of its complexity and if nothing touches the
Blockchain then there is no way around the system. It will require thousands of computers working
simultaneously to even stand a chance of bridging the security and it is a very difficult task as so many
eyes will be watching. So, you can say with all amount of certainty that Bitcoin is safe. You store your
Bitcoin in your Bitcoin wallet – a program designed to store Bitcoin. You can use it on your personal
computer or your smart phone it can also be stored securely on web and accessed anywhere in the
HOW DO I INVEST?
After reading and hearing so much about Bitcoin, may be you have decided to invest in it which is quite
simple. But you have to be careful since Bitcoin is more like stock the price goes up and comes down
whenever the forces causes it to. Of course, there is a chance that you may run into losses – take it as an
investment. Make sure you are aware of the risks involved before you start; you can consult an
There are a number of applications that makes investing on Bitcoin really easy, the likes of Coinbase,
Blockfolio, e.t.c All you have to do is download and install anyone of them in your computer and just
follow simple instructions and you are good to go.
Don’t make the mistake of investing your whole income; just use 10 to 20 percent if you must do.
A GOOD DAY!