What is Bitcoin: An easy to follow guide

Bitcoin

Bitcoin is one of those things currently, that everyone is talking about. Or at least trying to figure out. So much, that Forbes calls it the “Second Most-Searched Global News Term Of 2017” here. In this article, you will learn all about Bitcoin, in very simple words.

In short, Bitcoin is just a digital currency. It is not controlled by anyone, and therefore cannot be manipulated in the way that normal currency is.

Understanding the basics using a simple example :

Sending money from person A to person B. Both of them maybe in the same city, or even in different countries. Usually, one would use a service like :

  • Wire Transfer
  • Paypal
  • Skrill
  • Payoneer

..and similar platforms. And in essence, this is how the flow works :

  • The bank takes the required amount of money from Person A’s account.
  • Bank takes a percentage of money called Transaction fees
  • Converts the currency of Person A’s to Person B’s bank currency (if applicable) – cuts a percentage fee from the conversion.
  • Services like Paypal, Payoneer, Skrill take an additional charge.
  • Money finally deposited to Person B’s account.
  • The transfer may require you to answer some questions, may have limits you can send, and may take up to 2 days or 2 weeks.

With Bitcoin :

Since Bitcoin is not regulated by any institution, you can send any amount of money to any person around with world – no questions asked. Most of all, the transaction executes within 10-20 minutes and lower fees (may differ as per the network congestion). Any one who has an internet connection can do this – you become your own bank.

Where do you store Bitcoins?

Bitcoins are stored in Bitcoin Wallets. A Bitcoin Wallet may come in different forms as below :

  • Desktop Wallets like Jaxx, Exodus
  • Mobile wallet like Coinomi, Jaxx, Mycelium
  • Hardware Wallets like Ledger Nano S, Trezor
  • Paper wallets
  • Online wallets – Like BitGo or ones provided by exchanges

How does Bitcoin Technology Work

At first, this might be a bit hard for a beginner but if you take time to understand – you will get it.

Most noteworthy, Bitcoin works on a technology called Blockchain which is the base of most cryptocurrencies. Imagine Blockchain as a public ledger, which keeps a track of all transactions in the history of Bitcoin – it just cannot be cheated.

When initiating a Bitcoin transaction, the sender just needs an address to send Bitcoins. This address is generated by your Bitcoin Wallet. Anyone can check the public ledger (Blockchain) and check if the transaction is confirmed. Your identity cannot be disclosed.

Basically, you just send Bitcoins from one wallet to another.

Note : Besides the address (or the public key), a wallet may also generate a private key. This key is the most important asset.. please never share this with anyone, or you will lose your Bitcoins!

Benefits of using Bitcoin

Bitcoin is already used for sending money and even online payments. It’s also a store of value, which means in the long term, it’s value has always increased – exponentially!

We hope this article helped, if you have any questions please leave a comment below!