Bitcoin: Some basic things in modern times you need to know

Cryptocurrency and Bitcoin are two terms that most of us have heard. We, especially people in this country, know the terms but don’t precisely know in-depth about them. There was a time I thought that it was just a buzz and nothing more than that but boy o boy! You can’t just ignore the bitcoin in this modern world, which is shaking the US and Europe. Sooner or later, we have to be aware about these.

Bitcoin and Cryptocurrency: Basic knowledge

Bitcoin is one kind of cryptocurrency. But at first, let’s know what cryptocurrency is. It is digital money or a tool of transaction which does not have a physical bill.

It all happens online, and that is the beauty of it. It happens online, so you don’t need to go to a bank or need any middleman.

People usually use cryptocurrencies for quick payment or transaction. By using cryptocurrency, you can avoid the third party cost or transaction fees. Generally, you can buy cryptocurrency with a credit card.

In some cases, you can buy it by going through a process called “mining.”

What is mining? Well, you will get there later. Just be with us.

Besides bitcoin, there are several cryptocurrencies.

  • Litecoin, which people call in short ‘LTC’.
  • There is another named Ethereum (ETH)
  • Cardano (ADA)
  • Polkadot (DOT)
  • Some people use Stellar (XLM) more or less.

Among all the cryptocurrencies, Bitcoin is the most well-known one, and you need to know most of the things about it because it’s 2021.

One of the wealthiest persons in the business, Elon Musk is giving his support to Bitcoin at this point.

So, you know it is a big business.

Bitcoin was created in 2009 by an unknown. That’s the exciting part of this. An Australian entrepreneur named Craig Wright said that he started bitcoin by using a fake name ‘Satoshi Nakamoto.’

Wright told the BBC that several blocks he used to send ten bitcoins to Hal Finney in the first month of 2009. It was the first bitcoin transaction, as he claimed. Wright also said that Hal Finney later helped him out to turn his vision into reality.

Even the co-founder of the Bitcoin foundation believed the claims of Craig Wright. He said that he saw the same demonstration, which made him think about Craig Wright’s claims.

The market world calls it “bitcoin exchanges,” which allow people who are using various currencies to sell or buy bitcoins. Like any other cryptocurrencies, Bitcoin also doesn’t need any middleman like banks.

People can buy Xbox games or furniture on Overstock or even book hotels on Expedia by using Bitcoin. It became famous even before the support of Elon Musk.

In 2017, the price of bitcoin increased thousands of times more than it was! When Elon Musk commented, “it is a good thing” about Bitcoin, bitcoin increased significantly. Hold yourself! The price went from 3600 Euros March last year to 27000 Euros now!

Let then sink in. Even the Bank of Singapore said that Bitcoin could soon replace the gold and its value.

But there are some terrible stories too which I will tell you on my next article. The head of the Bank of England, Andrew Bailey, warned people about the high unpredictability of Bitcoin.

An online payment service like PayPal announced that it gave the green signal to its consumers to buy and sell bitcoin by using their service. Still to this day, it is a wonder in the digital world.

It is the science of passing all sorts of secret information between the sender and receiver. No one can know that.

Bitcoin: How it works

People use bitcoins to buy merchandise. It is not only about merchandise, but also easy for international payment and cheap.

Now you must wonder how people buy bitcoins. I mean, we know that it is a cryptocurrency, but there is a process.

First, you need to know how to buy bitcoins.

Buy on an Exchange

Many marketers and marketplaces use a term, which is “Bitcoin exchanges.” It gives a green signal to people to sell or buy bitcoins using various currencies.

There are three leading exchanges: Bitsamp, Bitfinex, and last but most important one Coinbase.

But people are concern about the securities.

In 2016, more than 10 million worth of bitcoins were stolen from Bitfinex by some hackers. So you are to choose the exchange currency carefully.

Mining

Bitcoin mining is one kind of process which produces new bitcoin while solving a computational puzzle or use. It is necessary to maintain the ledger of all the transactions upon which bitcoin is based.

It is interesting to think that people compete to “mine” bitcoins by using the desktop to solve complicated math issues.

At present, a winner of mining is rewarded with 12.5 bitcoins every 10 minutes!

Every single bitcoin is stored in an app called Digital Wallten on a mobile phone or computer. Each bitcoin is a computer file.

Suppose you and your friend want to use bitcoin for the transaction. Your friend will have to send bitcoins to your digital wallet and vise versa.

Meanwhile, you can send these bitcoins to other people. Every transaction is recorded on the “Blockchain.”

Let me clarify some of these terms, including blockchain.

Blockchain: This code powers Bitcoin. It invents a shared public ledger where every deal or transaction is a block that is chained to the code. What does it do? Well, it creates a permanent record of each transaction for safety issues. This is the essential thing for every cryptocurrency. It is the heart of more than 6000 cryptocurrencies, including bitcoin.

Bitcoin miners: I mentioned mining earlier. The miners are the people who are involved in this peer to peer platform. They are paid for their hard works in bitcoin.

Public and Private keys: A digital wallet contains two keys. One is shared, and the other is private. It works as the proof of the deal which is made in bitcoin. It allows the owner to involve in the transaction digitally.

Two Wallets: Users can store bitcoins in two kinds of digital wallets.

  1. Cold Wallet: It is an encrypted portable tool. It is much like a thumb drive that permits you to carry your bitcoins. It is not connected to the internet, unlike the hot wallet. But to download the bitcoins into your cold wallet, you just need a hot wallet.
  2. Hot Wallet: The digital currencies are stored on a trusted exchange and connected to the internet. It gives you access through a desktop browser or mobile app.

So, whenever people ask you about how bitcoins are created, mention them about Bitcoin mining. The users work out on their computers to incredibly tough mathematical problems.

They are rewarded with a bitcoin on several occasions. This is the reason many people set up powerful PC to get bitcoins only. And this is called mining.

It is a necessary term which I already mentioned twice. So, if you want to get a bitcoin, you can start mining now. You may get one after years.

But here’s the problem, you may spend more BDT or dollars on electricity for your PC than the bitcoin would be worth. And there’s not even surety that you will get one.

So we can understand that people can get bitcoins in two ways.

Firstly, is by using a computer, which is called mining. The people who get bitcoins like that are called miners, which I mentioned before.

Secondly, people can also sell products and let the buyers pay them with bitcoins.

There is another way people can get bitcoins, which is by using real money like Taka or dollars. I also mentioned this earlier.

In Bangladesh, it is still illegal, but it is a coinbase for investors in America. The bitcoin wallet will link to your bank account, and also, if you buy 100 dollars worth of bitcoins, then the coinbase will you a 10 dollar bonus.

It is not so complex to understand,

How to earn money from Bitcoin?

You guys remember the law of supply and demand, right? At some stage of your life, you studied Economics and must have countered this.

In terms of making money, bitcoin follows the general law of supply and demand. The demand for bitcoin doesn’t stay constant. It increases and decreases every minute, and that is why the cryptocurrency’s price is volatile.

Besides this, people need technical specialists and investment in high-performance computers for mining bitcoin.

People in The United States buy bitcoins early, hoping that one bitcoin’s US dollar value will be higher in the future than it is today. But that isn’t easy to guess. Tesla is investing 1.5 billion US dollars in bitcoin, and that triggered the value of one bitcoin.

This is the thing about bitcoins. It is too risky, but if you are lucky, you get richer within a day. This is why people want bitcoins despite the risk.

Besides, it is not controlled by the banks, although Government charges a tax rate.

In my next article, I will talk about the advantages and disadvantages of bitcoins. It is still illegal in Bangladesh, but shortly, I believe it will become legal. People need to know about this. I will talk about it in my next article.

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