The Most Simple Guide for Understanding Bitcoins

The Most Simple Guide for Understanding Bitcoins

If you are reading this blog, it means you have already heard some good stories about the rise of bitcoins lately. This blog will clear most of the basic concepts for you in the least complicated way, the reason for writing this blog is when I heard about bitcoins back in 2010, it was worth 900 INR and I dint it seriously and now  1 bitcoin is worth more than 3 lahks INR a month, it’s my duty to share the info as much as I can

 What is BTC or bitcoins?

  • First-ever cryptocurrency /digital currency
  • Decentralized Virtual Currency/Digital Currency
  • Uses cryptography rules to control the amount of currency available hence limited in number

Difference Between Bitcoin and Bitcoins

  • Bitcoin is with Capital letter “B” which refers to a decentralized  P2P network
  • Bitcoin is  a protocol for transferring value
  • Bitcoins with the lower letter “b” refers to the virtual currency  that exists on Bitcoin Network

Trust Factor in Bitcoin

  • Open Source Protocol
  • Can be audited by anyone
  • Trust originates from a pool of protocol supporters who are confirming transactions called “miners”.

How the price is determined for Bitcoin

  • Like commodities it depends upon its availability, its demand and supply
  • The rise in bitcoin prices suggests that more people are willing to buy bitcoins than to sell and vice versa

Why use bitcoins

  • Transactions are practically free.
  • It’s accepted globally.
  • It’s instant, no need to wait till settlement.

Risks with bitcoins

  • Its value risk, bitcoins are volatile in value, it can change its value up to 50% up or down per day.
  • Storage, if you use an unsafe computer that can easily be socially engineered then you may end up losing all bitcoins assets
  • Since bitcoins are irreversible, any counterparty If not honest can cheat with tangible and intangible products or services.

What are Bitcoin Wallets?

  • It’s software that resides on computing devices, the web or hardware.
  • It allows you to store your bitcoins
  • It allows you to work with the Bitcoin network to send and receive money.
  • You own your bitcoins by keeping safe your private key. The private key is a digital signature  that no one can forge or fake
  • Since you are the only one who owns the password, there is no reset or recovery  possible so one needs to secure the private key and password at all times, you have total control and hence you are responsible
  • Software wallets on your smartphone or computers  are connected to the internet so can be compromised
  • If you don’t want to get into the hassle of keeping your private key or password safe you can keep your bitcoins  on web-based bitcoin exchanges, the only issue with bitcoin exchanges is that they will keep  a certain commission on each transaction  and unlike banks, they are least responsible in the event of hacking or internet heist so No insurance
  • Hardware-based Bitcoin wallets are safest, as they are not connected to the internet, but you must keep them physically safe.

What is a blockchain

  • Bitcoin is a protocol for transferring value over the internet, it involves a Network of computers  around the world  verifying transactions in a shared public ledger
  • Bitcoin miners use an obscene amount of computing power to verify and secure transactions.
  • Bitcoin miners solve particular mathematical problems  to add and record transactions  to Bitcoin’s publicly shared ledger, which is called “blockchain”

Stay updated with this memesahab, we will soon share another blog that will tell you about the process of mining, the tools that you would require, where you should buy it from and where exactly you can spend the bitcoins.

Please also read about Ethereum

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