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10 Things to Know about Bitcoin

10 Things to Know about Bitcoin

Today there are 1000+ cryptocurrencies and the list keeps growing – but Bitcoin...

Bitcoin has is all started. Despite being created in 2009, it didn’t catch much attention until 2013-2014. But even then its value and potential was not yet recognized globally. In 2016 it surged and continued to grow in 2017. Even despite some downturn, Bitcoin has started a revolution in the ways people exchange goods and services, raise capital, share ownership and store value. It has also shown how to implement blockchain technology into everyday life. Today there are 1000+ cryptocurrencies and the list keeps growing – but Bitcoin still serves as a poster boy for the whole industry. Thus for the newcomers, it’s handy to know 10 key things listed below.

  1. What is Bitcoin?
    Bitcoin is a form of currency i.e. a digital form of currency that is not backed by any raw material like gold or silver, and not authorized by any central bank, financial regulator or other established institution.

  2. Who created Bitcoin?
    Bitcoin was created in 2009 by a person named Satoshi Nakamoto. Although there is a lot of questions of whether or not the name is the creator's true identity, the so called ownership of Bitcoin has gone way beyond one person. Nowadays Bitcoin is owned, operated and controlled by a global community of developers, miners and users.

  3. Where do you keep Bitcoin?
    To use Bitcoin or other cryptos for that matter, you have to create a Bitcoin wallet. This wallet is a digital form of your everyday wallet – most often an app or a website with login credentials working as a bank account: showing balance, transactions and payment options.

  4. How do you use Bitcoin?
    You can send and receive Bitcoin by using a unique Bitcoin address that is attached to your wallet. Think about it like how PayPal operates. When there is a PayPal transaction, you use an email address. But unlike PayPal, Bitcoin allows you to use several different addresses which increase its privacy.

  5. How do you get Bitcoin?
    There are three ways to get Bitcoin:
    You can receive Bitcoin by asking for payment for a certain good or service that you provided.
    You can purchase Bitcoin on exchanges which are similar to exchanging US dollars for foreign currencies.
    Lastly, you can get Bitcoin through Bitcoin mining.

  6. What is Bitcoin Mining?
    In its simplest form, Bitcoin are created by solving complex mathematical problems related to clearing the transactions in blockchain environment. Bitcoin miners use computing power to solve these problems. Once they are solved, the Bitcoin miner is rewarded with a certain amount of Bitcoin. However, due to the increasing difficulty of these problems, it is almost impossible for a single miner to solve the problems on their own. So in most cases, Bitcoin miners use to form a group to join in mining pool.

  7. Bitcoin Mining Pools
    Because of the rapidly increasing difficulty of the mathematical problems, you would need to have a lot of money and some very expensive equipment to solve these problems on your own. So instead, Bitcoin miners join together as a group to solve these problems. The Bitcoin that are generated are then divided among the group based on how much they contributed.

  8. What hardware is needed to mine for Bitcoin?
    Originally, all you needed was your computer's CPU power to mine for Bitcoin. But as the difficulty increased, miners began using their graphics cards with standalone processors, known as GPUs. Unfortunately, both options are now insufficient to mine for Bitcoin and you have to look into ASIC hardware. ASIC stands for Application Specific Integrated Circuit and these chips perform only one task which is to mine for Bitcoin.

  9. Where do you buy ASIC Miner?
    You can purchase pre-built ASIC miners from many manufacturers online. However, due to its high demand and low supply, there is typically a waiting period of several months before you can even get the equipment. Although you can also build your own ASIC miners.

  10. Should I invest Bitcoin?
    Unfortunately, no one can answer this question for you. There’s a lot of risk with uncertain reward, and high volatility. Bitcoin is still very new and it’s subject to a number of risks including regulatory, sovereign or continuity risks. It is good to have some Bitcoin if only to keep up with the recent developments of cryptos, but it really depends on how much you believe in the future of blockchain and if you think that the value of Bitcoin, or any other currency for that matter, will continue to increase.

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Are mining pools a threat to bitcoin and near every crypto currency, if they own more than 50% of whole network computing power? What happens then?