Back to Basics – An Introduction to Bitcoin

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For us, cryptocurrency is our passion. You’ve probably been following our blog, Twitter, Instagram and Facebook pages lately, as we’ve been bringing our followers news, guides, and reports that cover the whole crypto sphere. However, we do understand that many of our followers still aren’t crypto investors or simply don’t understand what cryptocurrency is. For these individuals – or anyone that wants to explore the world of cryptocurrency without the usual pressures – we’re bringing you our “Back to Basics” blog series. We are going to slow things down and week by week guide you through the ins and outs of Bitcoin, Litecoin, Ethereum, and various other leading cryptocurrencies.
Let’s get started, shall we? The following is a light introduction to Bitcoin, covering various different topics – of which we go into more detail later down the road.

What is Bitcoin?

Bitcoin is a purely virtual currency. It can be traded on exchanges and traded for goods and services with other people just like regular money. The only difference between Bitcoin and regular money – fiat currencies – is that you can hold regular money in your hand physically. Plus, when it’s not held physically, it’s stored in a bank. Bitcoin, however, is stored in a digital wallet and as such you always have full control over it. This creates something called decentralization, which is vital to the performance and presence of Bitcoin, along with various other cryptocurrencies. Bitcoin isn’t controlled by the government or any third-party body, so nobody can say “no, you can’t have your money” – which coincidentally is what the US is currently doing to Iran.

Is Bitcoin Secret and Untraceable?

This is one of the biggest Bitcoin myths, so it’s good to clear this up early. You have to buy Bitcoin from an exchange, and nowadays these exchanges carry out Know Your Customer (KYC) checks. This essentially means the exchange knows exactly who you are and therefore the exchange knows which wallet is yours. In addition to this, all transactions using Bitcoin are stored in the blockchain and are publicly available. A lot of people think that Bitcoin is for shady individuals that want to use the currency to carry out illegal activities, but in reality, Bitcoin is safer than cash. There is a public record of where every Bitcoin has ever been sent, unlike with standard paper currencies, where the term “used notes” is widely known for a reason.

Is Bitcoin Illegal?

While it isn’t legal to spend or accept Bitcoin in exchange for services and goods, in certain countries – such as Indonesia – it certainly isn’t illegal to own Bitcoin – it has also been cleared as Sharia compliant. You can still use Bitcoin for illegal purchases if you wish, but we don’t recommend you do this as like we mentioned above, Bitcoin is highly traceable.

How to Buy Bitcoin?

Bitcoin is relatively easy to get your hands on. You can sign up to an exchange such as CoinBase, Cubits, OKEx, Bitfinex, or even Revolut, make a deposit with your credit/debit card and then buy Bitcoin. The process of buying a Bitcoin can differ between platforms, but it’s mostly the same. If you don’t want to attach your card to a crypto exchange, there are other options around that could be of interest – such as Bitcoin ATMs. Through such, you just put in your card and it will convert cash into Bitcoin for you, and will print out a paper wallet that has your special Bitcoin wallet number.

How Does Bitcoin Work?

In a nutshell, Bitcoin is a virtual currency and should be seen as something similar to the dollar, sterling or euro. When you send money to your friend, rather than the transaction going through MasterCard and then to your bank to process, the transaction goes to a giant pool of authenticators from around the globe. These work to verify the Bitcoin is yours and then they move the Bitcoin from your wallet to your friends. This decentralized network of authenticators are one of the reasons Bitcoin is so secure and how it boasts a 99.9% network uptime as if one authenticator breaks, the network still runs – unlike with traditional payment methods like MasterCard.

Where Can I Spend Bitcoin?

There are more merchants accepting Bitcoin with every passing day. While there is no definitive list of who accepts Bitcoin, you can usually tell if a merchant accepts Bitcoin as they will have a sticker on their door – similarly to when they accept cards. If you like to play casino games, BitStarz accepts Bitcoin for a whole host of games. Additionally, Fancy also accepts Bitcoin on its website. It is an upmarket version of eBay with an impressive range of products, well worth checking out. Alternatively, there are some pretty cool things you can spend your Bitcoin on.

What is a Bitcoin Wallet?

A Bitcoin wallet is similar to a physical wallet or purse, except its digital – well sometimes it can be paper, but more on that later. Your wallet is essentially your Bitcoin bank account, with it featuring two sets of addresses, one is the secret address that you use to access the account, and the other is what people can use to send Bitcoin to you. Think of a wallet as your Bitcoin bank account, but you’re the owner of the bank at the very same time. If you lose your wallet, there is a good chance you will lose your Bitcoin forever, so make sure you take extra special care with it. If you want a physical wallet that you can carry around or put into safe, we reviewed some of the best ones, so you know what’s hot and what’s not.

We’ve Only Just Begun…

This is only a very basic introduction to the world of Bitcoin – trust us, this “Back to Basics” series is only just getting started. The pioneering cryptocurrency and its underlying technology have the ability to change the world. For a more detailed guide to Bitcoin you can always check out our Bitcoin 101 post – otherwise stay tuned, as next week we’ll take a look at Bitcoin’s history and how it became the most dominant cryptocurrency in the world.