What is Bitcoin?
A complete Bitcoin guide for beginners. Bitcoin is the first-ever decentralized global digital currency that exists independently of any government, state, or financial institution. It can be transferred globally without the need for a centralized intermediary like a bank or payment provider.
At a deeper level, Bitcoin can be described as a whole economic system. Thanks to the combination of the technical features it integrates, the wide array of participants and stakeholders it involves, Bitcoin is now a globally traded financial asset with daily settled volume in the tens of billions of dollars.
Who invented Bitcoin?
In 2008, during the global financial crisis, a unknown person or group, nicknamed Satoshi Nakamoto decided that it was the right time for the first digital decentralized currency. On October 31, 2008, Bitcoin was introduced with the relase of the Whitepaper called “A Peer-to-Peer Electronic Cash System”
The real identity of the pseudonymous name Satoshi Nakamoto remains unknown to this day. Some people claimed to be Satoshi but none of them could provide sufficient evidence. As Bitcoin evolved and created a strong and active community of people who continuously improved the original code, Satoshi left the project. The last verified communication was an E-Mail from April 2011.
Who controls Bitcoin?
It was once thought that an entity such as a government must stand behind a currency to ensure the stability of its economy and the value of the currency.
By definition, decentralize means “ to move the control of an organization or government from a single place to several smaller ones.” Thats exactly what the Bitcoin network does. Instead of a central entity, the control of the system is delegated to thousands of nodes – every person who choose to run the Bitcoin software on their computers.
No central authority makes decisions in regards to the Bitcoin network, changes can only be made by consensus of all participants. No one owns the Bitcoin technology, it is users around the world who control Bitcoin. Anyone is free to develop and improve the Bitcoin software. Likewise, anyone is free to choose which version of the software they want to run.
What is a Blockchain?
The Bitcoin protocol is built on the blockchain technology. A blockchain is a growing list of records, called blocks, that are linked together using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. The timestamp proves that the transaction data existed when the block was published in order to get into its hash.
Bitcoin’s technology gets its strength from the nodes that run the blockchain which are distributed around the whole planet and even in space on the blockstream sattelite. Anyone can create a node and help to preserve the security of the blockchain.
Who can have a Bitcoin account?
Unlike with banks, anyone can create a Bitcoin account without the permission of a third party, this brings a lot of benefits, perhaps the most important of which is accessibility and censorship-resistance.
Banks create policies to which customers must oblige; if they fail to do so, the banks have the authority to reverse transactions, shut down or freeze the account. This can’t happen with Bitcoin because there’s no central authority controlling it. Most of us take basic access to financial services for granted but 1.6 billion people around the world don’t have access to a bank account or any financial services.
In terms of accessibility, literally anyone in the world who has $50 smart phone and access to the Internet can obtain, send, store, and transact with Bitcoin. Anyone can open a Bitcoin account, which is basically just downloading a wallet app for desktop or mobile.
How are Bitcoins created?
The process which makes the functioning of the Bitcoin network possible, while also creating new coins, is called mining. It’s the beating heart of the Bitcoin network.
An example: When Joe wants to send Bitcoin to Annie, he creates a transaction, signs it with the private key of his Bitcoin wallet and then broadcasts it to the network. Here come the miners.
Basically, the miners are the ones who validate and verify this transactions, put them into the next block, and broadcast the block to the public ledger, or the blockchain. This is where the word comes from – it’s essentially a chain of blocks. When a new block is successfully mined, the miner receives a predetermined amount of Bitcoin, new Bitcoins are created.
There will be only 21 Million Bitcoin in total and a new block is created roughly every 10 minutes. Every 4 years the reward for a new block is cut in half.
How to buy Bitcoin?
To buy Bitcoin or any other cryptocurrency, you’ll need a crypto exchange where buyers and sellers meet to exchange traditional currency for cryptocurrency. Moste exchanges require the creation of an account and a basic KYC (Know your customer) process.
There are hundreds of exchanges out there, but as a beginner, you’ll want to opt for one that balances ease of use with low fees and high security. We recommend to use a all in one solution like the Swissborg mobile app. Its easy to use, very safe, low fees and a reputable company from Switzerland.
Also be sure to check out our top picks for best crypto partners and get some rewards for signing up.
How to store Bitcoin?
Bitcoins are stored on the Bitcoin blockchain network. A special program called a “wallet” is needed to access and use one’s coins. The wallet safeguards the secret code you need to use your bitcoins and helps manage transactions. There are different type of wallets.
Paper wallets. The term generally refers to a physical copy or paper print of your public and private keys. Here’s how you can generate one.
Desktop wallets. Desktop wallets are software installed on computers or laptops. Their security depends on the security of your computer.
Mobile wallets. Mobile wallets, like desktop ones, are software wallets, but usually, they are substantially smaller and simpler.
Web wallets. Web wallets include browser plugins, website wallets, exchange wallets, and other sorts of “hot” wallets.
Hardware wallets. Hardware wallets are the safest choice since they are dedicated hardware always offline. Check our list here.