It’s 2022 and it’s now commonplace to hear the words Bitcoin, crypto, and NFTs on the daily. It all seems like it was yesterday when the big crypto boom happened and everyone started putting their money on it while you’re still trying to figure out what it all means.
If you’re one of those folks who’s still a bit at a loss as to what Bitcoin actually is, you’re in the right place. We’ve gone ahead and prepared a beginner’s guide to some of the basics of Bitcoin and the main things you should know about the budding cryptocurrency.
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Now, let’s start with the guide.
What is Bitcoin, exactly?
Bitcoin is a type of digital currency and serves as an alternative payment system to the usual fiat currencies we have traditionally used in recent times. It is a cryptocurrency, meaning it has no single monetary authority or central bank maintaining it. Instead, it uses a decentralized system of computers to store and facilitate exchanges and transactions.
Are crypto and Bitcoin the same thing?
No. As earlier mentioned, Bitcoin is a type of cryptocurrency. It just so happens that Bitcoin has become the most popular form of crypto. However, there are a number of other cryptocurrencies that are gaining similar ground on the mainstream space. Cryptocurrencies such as Litecoin, Dogecoin, Ethereum, and Cardano have gained their own following as well. However, there’s no denying that Bitcoin still reigns supreme.
How does Bitcoin work?
As a cryptocurrency, Bitcoin is built on what’s called blockchain technology. The Blockchain is essentially a digital ledger which stores and maintains all the transactions, and the data therein, that happen within a particular cryptocurrency.
Blocks of data, containing information about these transactions, are chained together and organized in chronological order, hence the term blockchain.
Where do Bitcoins come from?
Bitcoin is generated through a process called mining. What happens with mining is that computers all over the blockchain network use computing power to validate and verify transactions that happen on a blockchain. Each computer helps in solving complex mathematical problems, in an effort to assist the system complete transactions. As a reward, those networks that lend this computing power are granted a certain amount of Bitcoin.
This process of mining is not only found on Bitcoin but also on other cryptocurrencies out there. That’s why you would hear many crypto miners having several computers or graphics cards to mine these coins. The more systems you have to lend computing power, the more coins.
What are the benefits of Bitcoin?
Now, there are a number of notable benefits and innovations that Bitcoin touts to the general public. We’ll be giving a short rundown of a few of them here:
- Decentralization
This is perhaps the most widely known benefit of Bitcoin. As a currency that is decentralized, it does not have to be regulated or maintained by a central monetary authority or bank. This makes the currency more user-centric and crowd-powered. You wouldn’t have to worry about a big bank going bankrupt or losing your money anymore.
- Security
Now one would think that the decentralized system would make the currency less secure, but it’s actually the opposite. Because of the way blockchain technology works, in that each transaction is verified by all the connected computer nodes, it would be extremely difficult to tamper with Bitcoin overall.
- Speed and convenience
Another notable benefit of Bitcoin is its marked speed and convenience compared to more traditional currencies. As a currency that primarily runs on the internet, you need not go to a bank or set an appointment to make a transaction. All you need is your phone and your computer and you’re good to go!
- Global reach
Last, but not the least, Bitcoin allows you to make transactions all over the globe. You won’t have to overcome red tape or a number of banks to make an international transaction. With the power of the internet, you can exchange Bitcoin with virtually anyone all over the world!
And there we have it, a few of the essential things you should know about the most popular cryptocurrency around the world. Now, it’s important to remember that crypto, not just Bitcoin, is still a relatively new type of currency. It will have its growing pains and challenges. However, it’s undeniable that there is a lot of upside to how Bitcoin can change the way we exchange value as we know it. That’s why, it’s best to have the basics down at least right now!
