Bitcoin has been making a buzz around since a few years ago until today. More people are getting to use it everyday which makes bitcoin value to increase dramatically. In this Bitcoin Beginners Guide, I will clear all the myths around Bitcoins and how to start using it for absolute beginners.
First, Why to prefer Bitcoin over any other online payment processor? Okay, Let’s say you need to transfer money from India to a friend of yours in United States. You have different options here:
- Use Bank Wire Transfer.
Fine, But you will end up paying a combination of different fees to complete the transfer.
- Currency Conversion Fee.
- Transaction Fee.
- Service Fee.
These fees combined can be anywhere from 2.5% to %10. So if you’re transferring $100, You’re simply giving away an amount ranging from $1.5 up to $10 as fees!
But there’s a definitive solution to cut down these fees significantly.
Bitcoin is what saves you all these fees when you’re doing a global money transfer. Because it’s simply an internet’s official currency which is not regulated by any country or bank except peers just like you and me. Anyone has an internet access can own/send/receive bitcoins easily.
It can be transferred around the world with lower fees. For example, Transferring any amount of bitcoins from a country to another may cost minimal fees comparing to other transfer solutions.
In the past 15 years, many efforts have been exerted into shifting the currency exchange into a digital form instead of the paper one. Thanks for PayPal and other similar companies, 95% of the entire cash in the world is Digital.
A lot has been written all around the internet about the Bitcoins. In this article, Let’s delve deeper to find more about the history of Bitcoins and how it has been introduced to the world.
What is BitCoin?
Bitcoin is a digital currency (cryptocurrency) in operations since early 2009.
No paper currency is involved in Bitcoin transactions. As you put your money on your wallet, Bitcoins are to be stored in a Bitcoin Wallet too while everything is being done electronically.
The mean benefit why you may prefer to use Bitcoins over other digital currencies is that the associated fees (middleman fees) are so minimal comparably. It’s simply open-source Peer-to-Peer payment service running away of any service provider transaction fees.
There are many bitcoin storage systems available on the internet. CoinBase is offering an awesome wallet system. Upon registering a free account on it, CoinBase will allow you to generate a Bitcoin wallet address (BTC). You can use that address for receiving bitcoin from anyone and anywhere in the world.
What may surprise you at this point is that many online merchants and online stores started to accept Bitcoins as an optional payment method. Some of these networks are Amazon (Amazon Gift Cards), eBay, Zappos, Microsoft, Dell, Shopify.
How Do Bitcoin works?
The Ultimate Bitcoin Beginners Guide
Okay, Bitcoin is based on a technology called “Blockchain”. This is the main backbone of the bitcoin system. It’s a public ledger where all bitcoin transactions are added into.
Initiating a transaction of buying/selling/transferring bitcoins between two peers will be verified by Blockchains. So basically, the Blockchain technology is the platform which manages transferring bitcoins between peers.
Important Bitcoin Terms:
- Altcoins: Alternative cryptocurrencies to Bitcoin (Ethereum, Litecoin, Dogecoin, etc).
- Bit: It’s a Sub unit of Bitcoin. 1 bitcoin (BTC) = 1,000,000 bits. And you can always buy/sell/transfer less than a bitcoin using bits.
- XBT and BTC: Common abbreviations for bitcoin. There is no difference between these two abbreviations.
- Confirmation: When a Bitcoin transaction happens, the blockchain confirms the transaction’s validity. It can take 1 minute to 1 hour to confirm a transaction. You should wait for at least 2-3 confirmations before calling a transaction “successful”.
- Mining: The process of computer hardware doing mathematical calculations for the Bitcoin network to confirm transactions and increase security. Users who use their computers and/or rent resources for mining are call miners.
- Bitcoin: When the B is capitalized, it represents the overarching concept of Bitcoin: The technology, the community, the protocol, and the software.
- bitcoin: When the b is not capitalized, it is describing the unit of currency.
How was Bitcoin Introduced to The World?
Bitcoin introduction to the world is still a big mystery until right today. It has been first introduced in October 2008 when a paper was published on The Cryptography mailing list under the name of “Satoshi Nakamoto“.
And until right today, This name “Satoshi Nakamoto“ is still a mystery and unknown.
In January 2009, The first Bitcoin mining software has been introduced to the world. The mining of the first block of Bitcoin (named “genesis block”) gave a reward of 50 bitcoins.
Many words are to be written about Bitcoin and how to get started with it. In this article, I tried to make sure you get a glance about this world’s leading buzz.
Delving deeper, let me share with you additional resources in order to understand more about this cryptocurrency and how it works in details:
- Bitcoin course on KhanAcademy
- Bitcoin Sub-Reddit
- Bitcoin Block Explorer
Is Bitcoin Legal?
Although it’s legal to use it in many countries around the world, Other governments have declared that using cryptocurrencies is falling under money laundry. Accordingly, Trading Bitcoins in those countries may lead to Jail.
Bitcoin Legality depends on the user location and the purpose. The reason is that it’s unregulated by official world’s governments. In order to get to know whether it’s legal in your country or not, Check Wikipedia Article here.
- The United States: Declared bitcoin as a commodity.
- Saudi Arabia: Declared the use and possession of any digital currency (such as bitcoin) to be illegal.
- Egypt: According to Egypt Independent, Egypt’s central bank declared that it has no intention of issuing legislation or passing a special law that allows the trading of digital currency, including bitcoin.
- India: On 28 December 2013, the Deputy Governor of the Reserve Bank of India made a statement that the Reserve Bank of India had no plans to regulate bitcoin.
- Bangladesh: Stated that “Anybody caught using the virtual currency could be jailed under the country’s strict anti-money laundering laws”.
So, it’s very important that you double-check your local government laws pertaining to Bitcoins before making use of them to avoid breaking laws.
How People are Using Bitcoins?
People are using Bitcoins in different ways. Some of them share and exchange money between friends and family to save the extra fees associated with bank wires and credit card transactions.
Some other Bitcoin users are making use of the currency exchange network to make purchases online, including to buy things like Pizzas, clothing, games, electronics, accessories and much more.
Furthermore, Many small businesses across The United States, Canada, & Europe started to accept Bitcoin as an optional payment method due to the waived transaction fees and instant transfers.
And Although there are many upsides of using Bitcoins, There are associated dark side to it. Since the Bitcoin transactions are anonymous, It is used across the Dark Web to buy illegal stuff on the market.
Now, What do you think about Bitcoin?
Feel free to let me know your thoughts and comments below.