Bitcoin Made Simple

Here’s What You Must Know About Bitcoins

Bitcoin is a completely digital form of currency, first used back in 2009 by Satoshi Nakamoto. Bitcoin allows for users to transmit and accept money, whether as payment for goods and services or for a personal saving. Over the years of its implementation, the global system has proven to be a safe and reliable way to send money without exchanging various bits of your identity.

To become a Bitcoin user, you must obtain an “address.” This is a form of identification using between 26 and 35 characters. The address is utilized to both send and receive money and the numbers and letters indicate your possible location.

Bitcoin is a Peer-To-Peer Exchange

Peer To Peer Network

Bitcoin is a “peer-to-peer” exchange, cutting out the need for a middleman or any significant figures of authority. Rather than being protected by banks or major organizations from fraudulent transactions, Bitcoin is powered by millions of computers worldwide, called nodes, that check for suspicious activity by tracking your previous purchases and recording all past and present transactions into an online reserve that can be accessed by the public. This is called the blockchain.

The blockchain’s database records a users “public key,” which is the part of a person’s identification that must be known in order to send Bitcoins. Your Bitcoin balance is known publicly to all users, but your personal information is kept hidden. The blockchain is needed in order to keep track of how many Bitcoins are currently in circulation and how many more are being generated daily.

In order to create new bitcoins, a user must do some “mining.” This means a consumer has to solve a very complex math question in order to generate new bitcoins, thus earning themselves a profit. Groups are regularly formed to solve these math questions, that are often so difficult that they must be calculated with extremely strong computer processors. There are many “miners” competing to complete that specific problem at the same time. However, only the first person or group to solve it will be rewarded with Bitcoin currency.

Bitcoin Commonly Use QR Codes During The Exchange

Bitcoin Uses QR Codes

QR codes are often used to exchange bitcoins between peers. They are convenient because smartphones can easily read them and access various information. To make transactions simpler, “exchange” sites were created to easily transfer money, purchase bitcoins and trade with similar types of cryptocurrencies. Many exchange applications also offer “wallet” services.

Wallets track transactions between peers and keep a record of their addresses. A single peer may have multiple addresses. This is also helpful for you to keep track of transactions with different people. Similar to an actual wallet, your money and information is kept well organized and safe, in a reliable and convenient location. Wallet “backups” are also used as a safety reserve, keeping your bitcoins protected.

Although Bitcoin seems like a distant and immaterial thing, the reality is that thousands of dollars are being transferred at any given time and it is a secure and protected way of sending and receiving payments. As Bitcoin’s popularity grows, it may quickly become the standard of cryptocurrency.