If you’ve been watching the news or at least paying attention to virtually any media outlet lately, you might have heard a lot about the astronomical rise of the world’s premier crypto currency, Bitcoin. In this article we discuss some of the amazing features of this new virtual coin, tell you about some of its practical uses in today’s world and tomorrow’s, and give you a few ideas on how you might actually get involved in the exciting and new Bitcoin gold rush.
But first, allow me to briefly define what Bitcoin is, and how it works. I will try to keep this fairly simple – you can look deeper for more details later if you choose.
So what is Bitcoin and how does it work?
Put simply, Bitcoin is a ‘virtual currency’, in other words, it is a currency that does not use any physical paper or coins in order to transfer wealth. Instead, Bitcoin is stored in computers and a special type of USB stick called a ‘hardware wallet’. Bitcoin is a cashless currency stored in digital form that everyone with an internet connection can easily have access to.
It may help to think of Bitcoin and other crypto currencies as being stored inside your own type of ATM that you can access to make payments directly to anyone else anywhere in the world instantly, and without the need for the big Banks to be involved. In the Bitcoin world, you operate as if you are your own bank, and you have control over your money, rather than Banks holding it and allowing you access to it on their terms.
So what makes Bitcoin different than, say, a credit card?
You might think that Bitcoin sounds just like owning a credit card. You purchase things online, you never get to hold any real cash – it all seems very credit-card-esque, on the surface.
In reality, however, things are very, very different.
Firstly, your Bitcoins belong to you, not your bank. If you own some Bitcoins, there is nothing your bank can do to take them off you. No monthly fees to your bank for the privilege of using your own money, and no chance of anyone committing credit card fraud due to the incredibly secure blockchain accounting system that is used to store the details of every Bitcoin transaction, anywhere in the world.
Slightly techy talk about Bitcoin and the blockchain.
How does blockchain technology create a platform that is naturally immune to fraud?
Blockchain technology is really a technical and fancy name for what could also be called ‘an open ledger that is duplicated across a network of thousands of computers creating a self-checking, anti-hackable accounting system’.
A brief introduction to the Bitcoin Blockchain and how it works.
The details of every Bitcoin transaction is recorded and stored in the blockchain within seconds or minutes of the transaction being conducted. The buyer and seller’s Bitcoin wallet addresses are recorded, as well as the date, time, and transaction amount. The information is lumped together with information from several other transactions into one chunk of data known as a block. The blockchain is simply a continuous record of all the transactions that ever happen within the Bitcoin world. The size of each ‘block’ in the blockchain is currently 1MB. As a new block is created, it gets added to the blockchain, and its details get sent out on the network so that all the connected computers can be updated.
Here’s the magic of the blockchain’s security:
When someone attempts to conduct a transaction using Bitcoin, details of the transaction are put onto the Bitcoin network for validation by one or more of the connected computers. Every computer in the network has a copy of the blockchain, and can therefore check the details of all previous transactions. With the full transaction history available in a locally stored copy of the blockchain, the computer can check to see that the person paying the Bitcoins actually does hold sufficient Bitcoins in their wallet to pay the transaction with. If the person does not hold enough Bitcoins in their wallet, the transaction will be rejected.
This method of validation means that nobody can double-spend their Bitcoins.
Ok, so Bitcoin is great, but how do I get my hands on some?
I am so glad you asked. Most people haze over as soon as they even hear the words “Bitcoin” and “blockchain”, but you, you are different. You know what’s coming and you know you want in. Nice.
To answer your question, there are actually several ways you can acquire Bitcoins, and many of the other crypto coins out there. You could engage in Bitcoin ‘mining’, which is where you allow your own computer to connect to the Bitcoin network in order to boost the processing power of the whole system. People who use their computers for this ‘mining’ operation are paid a small amount of Bitcoin for every transaction their computer successfully processes.
A quick introduction to Bitcoin Mining Pools.
Over the past few years, groups of Bitcoin ‘miners’ have teamed together, creating a ‘pool’ of computer power that can process many transactions per hour on behalf of the Bitcoin network, thus generating a large source of income for the pool, which is then divided between the pool members relative to the amount of computer power each member contributed to the pool. Mining Bitcoin as part of a pool is generally a better scenario for most people than trying to mine alone.
A brief overview of Bitcoin Faucets.
Another method of acquiring Bitcoins is through the use of ‘Faucets’, or websites that pay a small fraction of Bitcoins known as Satoshis in exchange for viewing ads or conducting surveys. Collecting free Bitcoins from Faucets is time consuming, and it can be fairly tedious solving the endless captcha puzzles each time you want to claim your free coins, but it is a free method of generating Bitcoins that just about anyone with access to the internet can do.
How to buy Bitcoins online using a credit card.
The simplest way to get your hands on some Bitcoins is just to go ahead and buy them online using your credit card. You can easily buy them from websites such as Coinmama, and have them sent straight to your Bitcoin wallet. If you don’t have a Bitcoin wallet yet then I recommend getting one before you attempt to buy any Bitcoins, because you will need the wallet ‘address’ in order to conduct a purchase. For new users to the Bitcoin world I recommend using the free, Jaxx wallet.
Once you have your wallet set up and have familiarized yourself with its basic functions, it is time to go and purchase your Bitcoins.
Click here to go to Coinmama to buy Bitcoins using your credit card. Make sure you copy the Bitcoin wallet address from inside your Jaxx wallet. Double check that you have the right address for Bitcoins, as Jaxx supports a number of crypto coins, and each coin has its own address. If you use the wrong address when you go to purchase your Bitcoins you might lose your coins so double check that you have copied the correct wallet address.
Did I remember to tell you to check that you have copied the right address? I did? Good.
Once you have bought your Bitcoins you can decide on your own strategy for getting the most out of them. Some people just like to buy their Bitcoins and hold them for long term growth and stability. Others prefer to put their Bitcoins to work through leverage and trading in a similar fashion to the way stock brokers trade stocks. The profits are high in crypto currency trading due to the volatile nature of the industry but so are the risks. Seriously, do your homework before getting involved in crypto trading, it can be profitable but it is also risky.
Whatever you do with your Bitcoins, the main thing is just to get some. We are in the middle of the biggest gold rush in living memory. It can be denied but it cannot be stopped. You have the opportunity, right now, to take control of your financial future. Is Bitcoin cheap? No, it is not. But it is never going to be cheaper than it is right now. The price/value of Bitcoin is increasing and will continue to do so for quite some time.
Your time to climb aboard is now, so do yourself a huge favor. Check out Bitcoin for yourself and get your hands on some of that anti-hackable, Bitcoin blockchain goodness today.
This is CryptoCracker signing off, and wishing you a very happy crypto! And as always, The Crypto Must Flow!!!