An In-Depth Guide to Bitcoin that won't frustrate You! (2024)

The concept of Bitcoin and cryptocurrency can be intimidating as the technical terms are confusing. With the steeping popularity and increasing value, the curiosity of people is growing more and more. Investors are finding ways to indulge in this new experience. Bitcoin Prime Site is a trusted trading platform for Bitcoins that investors are focusing on. So, here is an easy to grasp in-depth guide to Bitcoin.

How the concept of Bitcoin emerged?

The problems of centralized currencies are what triggered the invention of Bitcoins. The interesting fact is that an exchange medium that has gained incredible popularity and appreciation doesn’t identify the creator. The person is still anonymous and goes by the pseudonym, Satoshi Nakamoto.

He published a paper in October 2008 and got it circulated in the cryptographic community. He completed the code for Bitcoin software in 2009 and invited other people belonging to the open-source community to contribute to the project. The first block was drawn by Satoshi Nakamoto himself on January 3, 2009. As per public records connecting to the Bitcoin address of Nakamoto, the Bitcoins he owns are currently worth over $19 billion. Going by this information, he is the 44th wealthiest person in the world.

Fiat currencies, which we use, are accepted across the world. Fiat means having no intrinsic value. The value is determined by supply and demand, and people accept it, having faith in the economy. This helps the government maintain economic stability as it is the controlling head of credit supply, liquidity, and interest rates. But sometimes, it also leads to printing more money, resulting in hyperinflation.

Another issue with centralized fiat currencies is that every transaction needs authorization from a financial body, like a bank or credit card company. When you take out money from an ATM that doesn’t belong to your bank, you are liable for specific charges.

Bitcoins solve this problem. The exchange is easy and accepted all over the world in only one form, Bitcoin. All the financial transactions are recorded in a decentralized ledger, which operates through blockchain technology. It consists of several blocks that represent a series of transactions. Once a block reaches its limit of transactions, its purpose is completed and cannot be altered.

What keeps Bitcoin in the game even after the financial authorities resenting it is the smooth operation and absence of restrictions. The highlights are decentralization, anonymity, immutability (once the transaction is done, it cannot be reversed), and limited supply.

How to Buy & Use Bitcoin?

1) Acquiring Bitcoin

You can purchase a Bitcoin through an online exchange or an over-the-counter (OTC) transaction. Anyone wishing to buy large sums of Bitcoin (counting up to hundreds or thousands of Bitcoin worth million dollars) opt for OTC. This is all because exchanges do not have the facility of quick liquidation to carry out such huge transactions. OTC transactions work like trades, carried out via a broker who handles the negotiations.

OTC trades are not regulated, which puts you at risk of being scammed. It is essential to find reputable brokers. You can find some trusted brokers are China-based Richfund, Global genesis trading of New York, and Bitstocks of London.

For transactions of smaller amounts, Bitcoin exchanges are the safest and easiest way. The best sites to do that are Bitcoin Prime site, Coinbase, Coinmama, etc.

Exchanges are an incredibly hassle-free process. The only requirement it requires is to sign up with accurate details, and you can instantly get started with buying Bitcoins. Buying Bitcoins through an exchange is the best way to acquire them as there are no foreign exchange fees involved. You can choose an exchange site operating in your own country as they are typically integrated with local banks.

2) Managing the Wallet

The proof of your possession of a Bitcoin is an address and your private key. The private key gives you access to your Bitcoin, and losing it means losing the proof that you own it. Find a place very secure to store it. The private key is issued to you when you receive a Bitcoin address.

The key is a combination of alphanumerics with the limitation of the 256-bit length of data. The most common form used to set this key in Wallet Import Format (WIF). WIF consists of 51 alphanumeric characters, the first of which is always 5.

To keep your private key safe securely, you can also store it offline. Storing your coins and private key on a USB drive eliminates the chances of hackers stealing your information. But if you lose that drive, you are in trouble.

So the convenient option is to store your Bitcoin in a Bitcoin wallet with a third-party provider. There is much software available that continuously keeps the addresses and key pairs of every Bitcoin transaction you make.

3) Transactions through Bitcoin

Making transactions through Bitcoin is very simple, like any other UPI payment. You need the Bitcoin address of the person you want to send the Bitcoin to. The Bitcoin address must be entered into the Bitcoin client. If you and a person you are transacting with uses the same Bitcoin client, then all you need to do is to enter your email address link to your account.

Very few online businesses accept Bitcoin till now. Those who do will usually have a button which, on clicking, will take you to your wallet from which you can make the payment. Wallets can also be installed on mobile devices if you will be provided with a QR code.

How can you make money from Bitcoins?

1) Become a Miner

Mining is a safe method to earn money from cryptocurrencies. Miners are people responsible for validating every transaction in exchange for rewards. Rewards are distributed when someone adds a new block or monitors a transaction.

You can participate in the network of mining by lending your CPU. That will definitely cost you a considerable amount of electricity charges, so it is essential to calculate whether the profit you are earning through mining is sufficient. As China has cheap electricity costs, the majority of the miner network is from there.

Another prime factor to be kept in mind while calculating your cost is the hash power of the hardware you are using and Bitcoin’s current price. Dedicated miners using specialized hardware with high hash rates, which supports the process of solving a block. These devices are usually termed as Application Specific Integrated Circuit (ASIC). Anyone with ASIC and cheap electricity can churn out huge profits from Bitcoin mining.

2) Invest in Cryptocurrency

Trading in cryptocurrencies is a risky but quick way to earn money. The volatile nature of Bitcoin is what allures traders to invest in Bitcoin. There has been a massive growth of Bitcoin over the past years, and the returns are great.

Cryptocurrencies can be bought at any time, but there is a prime period when the opportunity of gaining or losing is more. This is during the ICO (Initial Coin Offering). It is an event where any Crypto coin is first introduced to the world, and its value is not set yet. This is the prime time to analyze the market and decide whether to invest in it or not. If the project is carried forward and gains profit, you are benefitted too.

Some fantastic stories reveal how Bitcoin can be surprisingly profiting.

• In 2009, a Norwegian student bought 5,000 Bitcoins for his research, which cost him around $27. He completely forgot about it later. After four years, when Bitcoin became the headlines, he checked the value and was amazed to find out he owns Bitcoin worth $886,000.
• A computer programmer decided to buy two pizzas using Bitcoin on May 22, 2010. He had to pay around 10,000 BTC, which was only worth $41. But when calculated at the present exchange rate, those Bitcoins are worth $67 million. Those became the most expensive pizzas ever purchased.

However, the success stories are not the only ones to be considered; there have been significant failures. One piece of advice would be not to invest a substantial portion of your earnings in Bitcoins, which you can’t afford to lose.

Is Bitcoin Legal?

The rising popularity of Bitcoin has caught the attention of the government and other financial regulatory bodies. Bitcoin doesn’t fall under counterfeit fiat currency. Hence it is legal in many countries. Nevertheless, as it is anonymous and decentralized, financial bodies worry that cryptocurrencies will disrupt the government’s economic control. So, they have placed restrictions on its use.

Most countries do not project clear laws regarding cryptocurrency. Therefore, it is better to check the rules and regulations of your country before going ahead.

Countries like Algeria, Columbia, Bangladesh, Nepal, and others have declared Bitcoin as illegal. The United States has legally accepted it and is considered a commodity by the CFTC (Commodity Futures Trading Commission). The rules for taxes are the same as any other asset.

There are several ways you can profit from Bitcoin. Bitcoin has changed how traditional currencies work and has given people a new medium of exchange without government control. The transactions can be made all over the world without worrying about the conversion of currencies. You will just be transferring in one currency, which is Bitcoin. It assures you a safe and trusted exchange rate, which also gives you a lump sum return.

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