A beginners guide to bitcoin

A beginners guide to bitcoin
Have you been wonderingaboutbitcoin? Areyou curious to know moreabout
Bitcoin? This guide is your first step into mastering bitcoin.
What is Bitcoin?
Bitcoin is a peer-to-peer onlinepaymentsystem that doesn’t involve any
central authority or intermediary for a transaction to take place. It makes use
of cryptography to verify these transactions through network nodes then
records them in a publicdistributed ledger called blockchain. Beingan open
sourcenetwork, the design of bitcoin is public that nobody ownsor controls.
Since its inception in 2008, Bitcoin has grown into a technology, a community
of users, an investmentvehicle and a currency.
Why Bitcoin is important?
“Bitcoin is the currency of resistance…”
The Financial crisis of 2007-2008 started withthe crisis in the subprime
mortgage market of US. In order to attract new customers, the US banks
started giving out risky loans that ended up beinga default. People’s inability

to pay back the money caused the banks to collapse. In parallel to this, the
banks wereusing people’s money to investand when the investments didn’t
pay off the financial institutions lost money and wentbankrupt. In response to
this, the American Governmenttried to bail them out through the taxes
money. This led to customer dissatisfaction across the entire country. Since
the global economy is interconnected, this developed into international
banking crises bringing the world economy to a standstill.
By puttingtheir trust in a bank, peoplelost their money. As a countermeasure
governmentprinted moremoney butthere is no maximum limit on the
amountof money that can be printed and it led to decrease in the valueof
money alongwith uncertainty in the decline of money’s value. This financial
crisis made peopledemand acurrency that is not controlled by a central
authority.
What kind of Problems Bitcoin Solves?
A currency alternative can thrive only if nobody has launched it and the
system doesn’thave any central point of failure. This is what Satoshi
Nakamoto launched in 2008, apeer-to-peer electronic cash system. Bitcoin
has fixed the maximum number of bitcoins that can be in circulation and the
rate at which new ones can be produced thatis ensured by the coding used in
its design. This allows the valueof each bitcoin to be dependenton only the
supply and demand in themarket and free from any governmentintervention.
With our currentcurrency, there is a third party involved in the verification
and validation of a transaction. Bitcoin eliminated the need for intermediaries
by enabling the users to transact directly with each other. You justneed a
Bitcoin Wallet to store your bitcoins that acts like a physical wallet instead of
a bank. The coding used in the design of these wallets makes them visible to
anyonewho wants to review it that ensures the safety of your deposits.
Moreover, the bitcoinnetwork process isanonymous, payments arereally
quick and once sent, there is no getting them back.
The Current status of Bitcoin
When bitcoin first got introduced in 2009, itsvaluewas $0 and later $0.39.
Over the time, the flat currency crises and bank blockades stimulated the
interest among the general public. Last year, in mid June, the valueof

blockchain has been $14.37bn whoseleadingdriver wasthe price of bitcoin.
At the end of Junemonth, the price of bitcoinrose to about $300.
The total value of bitcoin in existence is at $10bn. Itwould be accurate to say,
currently, the valueof bitcoin marketis muchmorevaluable than even
Twitter, which is one of the largest social mediacompany in the world.
Pros and Cons of Bitcoin
“With e-currency based oncryptographic proof, without the need to trust a third
party middleman, money canbe secure and transactions effortless.”
It’s been only 7 years since bitcoin got introduced and it’s still in its early
developmentstage. Butthere are many features of bitcoin that is certainly the
talk of the town.
Pros of bitcoin
 No third parties – The absence of intermediary makes it a cheap option.
As from a seller’s POV, once you have bitcoin money, you haveit and
buyers can’t take it back.
 Freedom – Send your money anywhere in the world at any given time.
 Digital Identity – Creation of digital identities is oneof the features that
is very much loved by the bitcoin enthusiasts. This also makes it easier to
sign up for platforms and services.
 No Central Command– Bitcoins are owned by no oneand no single
company isthe owner of it. This means neither governmentnor banks
can stop you from receivingor sendingbitcoin money, anywhere in the
world.
 Pseudo anonymity – Though bitcoin does not provide you complete
anonymity butthere is no need to disclose your identity in the network.
 Transparency – All finalized transaction is available for everyone to see
but your personal information is hidden.
 Control & Security – Users are in control, Merchants can’t charge extra
fees and bitcoin can be encrypted to ensuresecurity.

Cons of bitcoin
 Risk& Volatility – Limited amountof coins and increasing demand
makes it highly volatile. Butit expected that over time volatility will
decrease.
 Lack of Awareness – Many peoplearestill unawareand ahuge part of
the population doesn’thavea clear understanding.
 HighRisk– Increased regulation, lack of applications, limited scaling and
lack of security makes it a high-risk venture.
 Limited use cases – Though Bitcoin provides an innovative solutions to
faster and easier payments but it does have issues when it comes to
feasibility. A few flaws that is hinderingits adoptibilty are scalability and
fees issues.
Bitcoin is in the infancy stage and still developing. It will take time for bitcoin
to reach its full potential.
How Bitcoin works?
Bitcoins are virtual coins that are designed to be self-contained for their value.
In order to store or moveyour money, you don’tneed banks. The behavioral
natureof these bitcoins is similar to physical gold coins. This means, once you
have bitcoins, you can store them as value. Recently we have seen bitcoin
being used for paymentpurposes aswell but usage of bitcoin as currency is
still subject to rectification of scalability issues with Bitcoin blockchain.
Bitcoins are basically traded from the specific bitcoin “wallet” of one person to
another. Talking about the wallet, it’s a digital store for your bitcoins that you
can useon your smartphone, computer drive, tablet or in the cloud.

Now you know the basics of Bitcoin. In the next article,we’ll walkyou
throughtips and resources youwill need to master Bitcoin.
Are you ready for the next step?
For more information on cryptocurrencies
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A beginners guide to bitcoin

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A beginners guide to bitcoin