Bitcoin For Beginners

—TechRound does not promote nor recommend any financial investments or practices. All information in articles is purely informational—

Almost everybody who knows Bitcoin understands that it’s the first successful digital currency. However, many people don’t know how this virtual currency works. Perhaps, what intrigues many people are the increasing numbers of Bitcoin investors and traders. But Bitcoin isn’t the only virtual currency in the world.

Recently, some governments embarked on creating centralised digital currencies. For instance, China introduced a digital Yuan. Today, the Chinese people can trade this virtual currency on (, the authorised distributor of the central bank’s issued digital currency. Nevertheless, Bitcoin dominates all cryptocurrencies. So, what is this dominant virtual currency for a beginner?

What is Bitcoin?

Bitcoin is a virtual or electronic currency operating on a decentralised network. A public ledger or the blockchain records every transaction users complete with this digital currency. Bitcoin allows users to remain anonymous using encrypted keys.

People can transact with Bitcoin without intermediaries. That means you don’t have to go through a financial service provider, like a bank, when transacting with Bitcoin. Also, Bitcoin doesn’t require any central authority, like a government, to function. Instead, miners generate new coins by validating transactions.

When using Bitcoin, you don’t require your real-world identity or name, account number, or anything that may link the transaction to you. You can purchase or sell anything using Bitcoin without leaving footprints that criminals can easily use to trace you.

Bitcoin’s Creation

Satoshi Nakamoto, a mysterious developer, created Bitcoin. Its launch in 2009 introduced a digital currency and a crypto asset that the world had never had before. However, the world doesn’t know whether Satoshi Nakamoto is a person or a group of individuals.

According to Bitcoin’s whitepaper, the goal of this virtual currency was to introduce a peer-to-peer cash system that doesn’t involve a central authority. Thus, Bitcoin is entirely decentralised.

Some people argue that Satoshi created Bitcoin in response to the financial crisis of 2008, aiming to put people back in the hands of the people that suffered from central authorities and large banks’ greed.

Satoshi limited Bitcoin’s supply to 21 million coins. Miners generate new Bitcoins by solving complex mathematical puzzles or mining new tokens. Mining new Bitcoins is not easy because it requires a lot of electricity and high computing power.

The Bitcoin network rewards miners with new tokens for solving math puzzles. And the reward reduces every four years, a process called Bitcoin halving. Bitcoin halving is vital because it ensures that miners generate all the 21 million coins within the protocol’s duration. And this ensures that Bitcoin retains its value and remains immune to inflation that most people associate with fiat money.

How to Obtain Bitcoin and Store

Bitcoin mining is not the only way to obtain this virtual currency. You can also receive Bitcoin as a payment for services and goods. Also, people purchase Bitcoin on crypto exchanges using fiat money. Perhaps, this is the quickest and most straightforward way to get Bitcoin.

It’s crucial to note that you need a Bitcoin wallet to receive, store, and send this virtual currency. A digital wallet is an application you install on a smartphone or computer. It comprises an address, a long string of letters and numbers, and a private key for digitally signing transactions.

Ideally, a Bitcoin wallet compares to a bank account that allows you to receive and send Bitcoins. Also, you can use the application to scan a Bitcoin address’s QR code when sending money.

Using Bitcoin

People use Bitcoin to pay for services and goods. Others speculate about Bitcoin prices to make profits by trading it. Alternatively, some people purchase and hold their tokens as an investment.

—TechRound does not promote nor recommend any financial investments or practices. All information in articles is purely informational—