What Bitcoin really is, how it works, how to buy it and how to earn it
If you still do not know what Bitcoin is and everything related to it, then definitely you are reading the right article!
Briefly about Bitcoin history
The current article also will tell you a bit about the ways of using Bitcoin, but besides the mentioned ones, there are many other ways of using and they grow in number with each passing day, month and year, due to the fact that people begin to recognize the cryptocurrencies and to accept them on a daily basis.
Let's start with the beginnings: Bitcoin is the first cryptocurrency which was created based on the blockchain. Right now, according to the information provided by coinmarketcap, there are already almost 1630 different cryptocurrencies in circulation, each with its own aims and nuances.
Bitcoin is a digital currency based on cryptographic principles for currency regulation as well as the creation of new units. As Bitcoin was the first of these types of currencies, it was and still is the most valuable of all currencies, and is called the decentralized digital currency. Bitcoin is also considered to be the only one of the cryptocurrencies. The other ones that were created later are called alternative cryptocurrencies or altcoins.Before we go further, you can watch a short video to superficially understand what the bitcoin really is and then I will tell about everything that is related to bitcoin in more detail:
The origin of Bitcoin
For the first time the concept of cryptocurrency was mentioned by Wei Dai in 1998. He offered a new idea of the form of money that would use cryptography to control the creation of new entities, and to control payments with this new currency, instead of central authorizing authorities being those who control it.
Specifically, Bitcoin was first talked about in 2009 when Satoshi Nakamoto presented his concept of this cryptocurrency to others. In 2010, Satohi Nakamoto himself abandoned the project, but since then, many new program developers have joined it to continue this project.
The real name of Satoshi Nakamoto is not publicly known, so people are talking about him by using this pseudonym. There are a couple of authorities who have said that they are informed about his true identity, but there is no clear information about it.
It is good question – who was the creator of Bitcoin and what was the real aim for this project. Also why the creator of the Bitcoin hid his real identity...
By itself, Bitcoin is designed as an open source project and each programmer has access to this project, although they can create their own alternative to it or use it to implement in other places.
The mystery of what stands behind the creation of Bitcoin is still actual today and will certainly not disappear so soon. Based on the name of Satoshi Nakamoto, the Bitcoin decimal values have also got their name. The same as the Euro has cents, Bitcoin has Satoshi.
How Bitcoin works
For most of the cryptocurrency users, Bitcoin is only a currency that is kept in a wallet and can be used to purchase various goods, or to do other transactions and exchanges. But if we discuss the issue in depth we will find out that Bitcoin relates to the blockchain system, through which all payments are made, and all of these payments are publicly visible to everyone. Also, all the wallets in which Bitcoin is stored can be seen in the public ledger of the blockchain.
Although all payments made between the users are visible to anyone, they do not contain any personal information, except the address of the wallet and the amount of the cryptocurrency. Other information is not available for viewing to other persons.
In order to provide the transfer of payments from one cryptocurrency wallet into another, it is necessary to approve these transactions, or in the form of mining, they are processed and sent to the blockchain system, for which also the miners receive a certain remuneration for their work, which also consists of a commission payable on conducting transactions. Anyone who wants to exchange the power of his computer for remuneration for processed payments and block decoding can become a miner. Of course, the electricity costs and the power of your computer should be taken into account, and it can also be considered if it will be profitable at all. Most often, unfortunately, you will not gain any profit, so it is better to leave it to others who have been doing it for many years and have specialized computers for mining.
Where and how is it possible to get Bitcoin?
One of the most popular and user-friendly platforms is Coinbase, where it is possible not only to buy Bitcoin, but also to store it and use it as a cryptocurrency wallet. Besides Coinbase, Blockchain is also widely used, which is also very convenient and offers a much more convenient commission for services.
In addition to the above-mentioned platforms, the XMLGold e-currency trading platform is also a widely used platform for the purchase of Bitcoin, which allows to convert Bitcoin into many different e-currencies (Perfect Money, AdvCash or Advanced Cash, Payeer, ePay, Sepa Transfer, Online Bank Transfer, Ethereum, Tether, Bitcoin Cash, Litecoin, XMLToken) or to withdraw it from ATM using the XMLGold Prepaid Card.
How to earn Bitcoin?
The popular way is to get Bitcoin by mining. By using the power of your computer or by purchasing mining contracts and receiving passive profits from them. These websites work on the principle that you rent your computer power to others, respectively, the more power you rent, the more you earn with bitcoin mining. One such site (as an example) is HashFlare, where the minimum price is starting from $ 2.20, which is enough to understand how it works, and after that you can already invest more. There is also the option of imposing that all incomes automatically purchase more power and, after summing up, in a few months, you can already make significant profits without very high initial investment.
There are many different ways of how and where to get Bitcoin. One of the ways, for example, is to buy Bitcoin mining packages from USI-Tech, where one package will cost +/-50 EUR and you will receive +/ -1% per day for the next 140 working days, as a result, you will generally receive around 40% profit from your initial investment.
Also, the best option here is to buy several packages at once and set it to the mode which provides that automatically new packages are obtained as soon as the account balance of profit is sufficient, and for a few months to forget about this all to see afterwards how many new packages will be automatically purchased and what already is a profit in just a couple of months!
Of course, as with all currencies, it is also possible to trade by Bitcoin and earn money due to fluctuations in prices. If you have got experience in this sphere and the desire to learn, then you can certainly consider it as a good opportunity to grow your Bitcoin account.
There are also many and different websites where you can earn Bitcoin by watching ads or take out a certain amount hourly or at other time intervals. Most of these addresses require a considerable amount of time to get some profit and there are better alternatives from the point of view of time. However, there are also addresses, like FreeBitco, where you can get various Bitcoin amounts once per hour, as well as participate in lotteries and use other ways to get faster profits.
What is Bitcoin mining?
Basically Bitcoin mining is performed for two important tasks:
- To process and confirm payments made in the blockchain.
- To create new Bitcoins from mining different blocks.
I suggest watching the video where you will be told in a few minutes how the process works:
Bitcoin mining is a very complicated process from a technical point of view. Therefore, this process requires very powerful computers and systems to carry out this process as quickly and efficiently as possible.
If there are not many and powerful computers in your possession, it is necessary to engage in mining together with other users and hence, at the end, the prize will be divided among the performers depending on the amount of work done individually. If you alone try to do mining with your home computer, then it can take a very long time until you find just one block to work with if you find any.
The profit from Bitcoin mining depends essentially on the price and power of the computers, as well as the amount of time it takes. Therefore, all those who create the “Bitcoin mining farms” will choose the locations where the electricity prices are lowest.
The award received for solving blocks is determined to all blocks the same and at each specified time when the block volume is resolved, this value is divided by two, thereby increasing the cost of mining to get one Bitcoin as well as profit from it.
Where to store Bitcoin?
Bitcoin can be stored in different places, such as online wallets, program-type wallets, hard wallets, as well as stored as an investment to get your Bitcoin back later.
For more information on storing Bitcoin and alternative cryptocurrencies, as well as how to keep them safe, in nearest future we will create the article.
How to use Bitcoin to buy and sell goods
Theoretically, Bitcoin can be used to purchase any product or service because accepting or not accepting Bitcoin, as the form of payment, depends only on the seller or the company providing the service.
There are many large companies which accept Bitcoin as a payment form.
Apart from the large companies, there are also many small companies which accept Bitcoin as a payment tool.
It is, of course, easy to sell products using Bitcoin, since the seller himself can offer to buy goods by using this currency. Although it may be more difficult at first to find the buyers who buy goods by using Bitcoin instead of the traditional payment tools, however, it is certain that some buyers will without hesitation agree to use Bitcoin and purchase the product you sell.
Advantages of Bitcoin
- One of the most important advantages of using Bitcoin or other alternative cryptocurrency is the payment freedom provided by it.
- At any time, from anywhere in the world to anywhere in the world, it is possible to send Bitcoin from wallet to wallet. There are no days off, like bank charges, nor are you restricted by transfer time concerning the international or continental money transfers.
- In addition, when paying, depending on the choice of the wallet, you can choose what commission you want to assign to your transactions, from these commissions, it will also depend how fast Bitcoin is transferred from wallet to wallet. The sooner it is necessary to carry out this transaction, the commission will be more expensive, but most of the commissions are carried out in a reasonable period of time and still outstrip banking offers.
- You are fully in control of your account and making payments. Only you and the person who receives this payment are involved in the transactions. There are no third parties involved.
- All payments are clearly visible in the blockchain ledger and can be tracked.
Disadvantages of Bitcoin
Most often, everything in the world has positive and negative aspects. Bitcoin is no exception:
- One of the negative aspects is that Bitcoin is not yet sufficiently widely spread. Many people do not know about it, from those who know, there are quite many who refuse it, there are also some other reasons, why Bitcoin is not sufficiently spread, and often it is not possible and in the nearest future will not be possible to make payments with Bitcoin.
- While Bitcoin is still relatively unknown, its value is very volatile, and as soon as an individual person makes a big deal, it bounces on the Bitcoin price. As soon as a prominent person expresses his opinion on Bitcoin on the social networking sites, once again, its price may fluctuate due to rumours and other factors.
- Next thing, (one more disadvantage, )Bitcoin is still in its infancy state from the software point of view, and in the future, based on blockchain technology, there will be developed many different systems and devices.
- Bitcoin mining energy & costs. By the end of 2018, the energy required for BTC mining will be near to 0.5% of the planet's energy consumption. Current data are found in the research performed by the economist Alex de Vries. 0.5% definitely is a shocking number. This is a large difference compared to the traditional financial system. And this growing energy consumption will certainly not helping resolving climate issues.
At its very beginning, Bitcoin was created as an anonymous payment system that protects a privacy of a person. However, we are well aware that if Bitcoins will become an official global currency, then the privacy of personal data will be forgotten also in relation to Bitcoin. The state financial institutions will track illegal money flows. And this type of control mechanisms is still further developing. This may result in the fact that the initial use of Bitcoin and blockchain, the level of privacy over time can be very different from the first version. This can lead to the opposite, namely, technologies such as Bitcoin and blockchain, on the contrary, can contribute to personal data availability, control provided by the state and the services concerned. There is no reason to deny that many discoveries in the name of human progress have led to things like – genetically modified food, dangerous chemicals hiding in everyday products, atomic weapons, etc., which have done and are doing much harm to people. Let's be honest, the privacy that cash offers can not replace any other payment method. We are very hopeful that the mysterious bitcoin creator Satoshi Nakamoto and his invention is in no way connected with any particular idea of some government, institution or influential person for creating a controllable society.
And having a deeper insight into the so called human “progress" from the existential point of view, we can only hope that Bitcoin and these new technologies have nothing to do with the text from Bible, Revelation 13:16-18.
Let’s hope that it will not end with a nicely designed chip (with, for example, ID info, tax payer number, money wallet number) in your forehead, say, after 20 - 50 years.
The conception – everything that is new is automatically better than the old one is short-sighted and not correct. So let's not be naive and take every new idea and innovation with healthy, careful criticism rather than naive sincerity. As the saying goes, "The only free cheese is in the mouse trap".
Time will tell whether these new digital technologies like bitcoin, blockchain etc. are just short-term trends and the way how to get quick money, or whether they are ongoing and long-term technologies which are socially beneficial, perform significant functions for our society and will keep their development continuous. Will it lead to good or bad outcome? Time will tell.
At the conclusion of the article, for those who have followed so far, I would like to thank for the time allotted for reading this article.
Note: XMLGold does not promote neither non-use nor use of bitcoin. This author's article is republished just for informational purposes. Digital technologies, currencies are just at the initial stage, and is unsufficiently regulated financial sphere, therefore – quite a risky type of investment.