Considering all the stories about non-specialists turning into millionaires overnight thanks to a smart cryptocurrency investment, you may have gotten busy looking up bitcoin for dummies, so you too can reap the benefits of this fantastic techno-revolution that will one day undoubtedly rule the world.
So, ease yourself into the world of cryptocurrency and learn how bitcoin works, how is bitcoin valued, why is bitcoin valuable and much more by reading up on this bitcoin for dummies article.
Currency vs. money
Before one can understand what is Satoshi or what is hodl, it is essential to be informed about something as basic yet overlooked as currency vs. money. Every bitcoin for dummies enthusiast must be able to define these two terms, individually and relative to one another.
The traditional money we use in our everyday lives has a physical form (coins or paper notes) and is backed by the government, meanwhile, a digital currency does not exist in the real world. Digital currencies only exist in the digital world and though they have the same applications as classic money, they are not bound geographically or politically. Cryptocurrency is a type of digital currency and bitcoin is its most example. Some key differences between the two are:
- Cryptocurrency transactions are anonymous unlike classic money
- Since digital currency exists outside of normal regulations, these accounts cannot be frozen
- Digital currency cannot be counterfeited
This requires one to have a bitcoin address.
What is a bitcoin address?
A bitcoin address is a unique sequence that is generated when you set up a bitcoin wallet. This address can help your chosen ones send or receive money from you so make sure you are selective of who you share it with.
What exactly is bitcoin?
The first thing that the bitcoin for Dummies is going to teach is obviously what a bitcoin is. A bitcoin is a cryptocurrency, as in its a virtual currency that exists on the internet. It is a decentralized currency, without an administrator, which means that it completely eliminates the need for a third party to hold funds (people are usually sketchy about a third party holding funds).
The currency is sent to different users using peer to peer bitcoin network. Don’t worry the bitcoin for dummies will even explain what peer to peer networks are. In simple words, a peer to peer network is created when two (or more) computers are connected and share resources, without a third computer acting like a network.
Now that you know what bitcoins are, then as a bitcoin for dummies students, you may be wondering that considering their nonphysical and rare nature, just how many bitcoins are there right now in the world, how will they continue to exist and what things impact their number.
At the time of their inception, it had been decided that only 21 million bitcoins will ever exist. As of today, around 16.7 million bitcoins are in circulation an constantly being transferred, so that means there are still 4.3 million of these indigenous currencies that have yet to enter circulation.
Interestingly, it is estimated that of the ones currently in circulation, around 30% will probably be lost forever due to human error and negligence such as hard drive crashes and misplaced bitcoin private keys.
Who created Bitcoin?
Bitcoin was released in 2009 and was developed by a person or group of people, who go by the name of Satoshi Nakamoto.
Surprisingly though today we know so much about what is bitcoin worth today and bitcoin private key, but we have yet to unmask the identity of its creator. But worry not, at bitcoin for dummies, we believe that knowing how many satoshis per bitcoin is way more important than knowing who Satoshi Nakamoto is!
What is Satoshi?
Satoshi is the smallest unit of bitcoin, it is aptly named in honor of its unknown creator, Satoshi Nakamoto. This may have you wondering just how many satoshis per bitcoin are there, well the answer to that is that each bitcoin contains 100 000 000 units and each of these bitcoin units (0.000 000 01 BTC) is called a satoshi. When reading Bitcoin for dummies, it is important to understand just how necessary a Satoshi is. Common uses of satoshi include:
- Before their conversion to display, all amounts in a block chain are represented by a Satoshi
- When specifying an amount of bitcoin, the source code uses satoshi
- Satoshi is also used when displaying a very fine fraction of bitcoin
- Interestingly, as of January 2018, 1 Euro cent is worth approximately 83 Satoshi.
How Bitcoin works:
The Bitcoin works in several ways, that will be explained in this bitcoin for dummies. To begin with, there is a balance blockchain. The blockchain is a shared public ledger, which is used as a platform by the entire bitcoin network. Every transaction that occurs is eternally embedded in the blockchain.
The blockchain allows the users to calculate their spendable balance ensuring new transaction to be verified, ensuring the user is indeed the spender. The data on the blockchain is encrypted though advance computer programming.
Then comes the transactions, which is a transfer of value that gets included in the blockchain. The Authenticity of each owner is done by a private key which is used to sign each transaction with mathematical proof of each transaction, proving that the transaction occurred from the owner’s wallet. This also prevents alteration of the transaction for scamming purposes, providing security to each owner after every transaction.
Finally comes mining, which is a must know for anyone trying to learn bitcoin for dummies. Mining is the process which confirms each transaction and embeds it into the blockchain. It upholds a sequential request in the blockchain, ensures the lack of bias of the system (net neutrality), and enables the participating PCs to concede to the condition of the framework. Mining also prevents users from altering the blockchain or deciding what to add and what to remove from it.
How is bitcoin valued
Bitcoins value is perceived in regards to its benefits and how useful it is. They have values, as long as they are used as a medium of exchange.
Why is bitcoin valuable
Bitcoin is valued due to it’s scientific, technological, social and secured aspects. The bitcoin innovation has achieved self-organizing and time-based consensus record. Since its decentralized, it is censorship resistant (cannot be shut down). It is a trustless dimension of transactions, and the public/private key pairs make transactions secured.
How to do a bitcoin transaction
If you own or wish to own bitcoins then you will undoubtedly have to do a bitcoin transaction at some point, so here are some basics you should be familiar with. A bitcoin transaction comprises of three parts:
Input– this is the address which shows where the coins in question originally came from
Amount– the specific amount that is being transferred between two people
Output– this is the public key, also known as bitcoin address. If you wish to send an amount to someone, you must know their public key.
To make a bitcoin transaction, one uses their private key to sign a message with the transaction-specific details. This message is then sent to the blockchain and contains the input, amount and output details. Once these are verified by miners, the transaction is complete. If you wish to make a bitcoin transaction, then your wallet keeps a distinct bitcoin private key or seed which is a mathematical formula that ensures that the transaction was done by the owner of the wallet and prevents tampering. Thus ensuring that transactions are safe even for beginners such as bitcoins for dummies.
Who owns bitcoin and who takes bitcoin
Wanting to know who owns bitcoin and who takes bitcoin is a very common concern among bitcoin for dummies as they are quite new to the whole concept of digital currency. Bitcoin is merely a blockchain code; it is digital, so it doesn’t exist in any physical form so no one can take it. But one can buy the rights to a specific fragment and thus own bitcoin.
The beauty of bitcoin lies in the fact that it is not owned by any bank or organization, rather it is the public that owns it and has complete access to every transaction that takes place. Thus, bitcoin is a purely peer to peer electronic cash service, that allows two parties to exchange cash without going through a financial institution.
How long for bitcoin confirmation
It depends from transaction to transaction on how long bitcoin confirmation occurs. It depends on network activity and transaction fees. There is a fixed computational time of 10 minutes for minors to verify the transaction on the blockchain (miners mine the collection of transactions i.e. blocks, not the transactions itself). A bitcoin transaction is usually considered successful after a minimum of 6 transactions takes place. However, only a limited number of transactions process in the 1 Mb block size of bitcoin, and the fee decides which transaction to prioritize.
How to cancel the bitcoin transaction
It’s obvious that the bitcoin for dummies would also teach you if a transaction is reversible or not. Before canceling a transaction, one needs to check whether it has been confirmed or not. You do this by taking your transaction ID and checking online. If a number of confirmation is 0, there are two ways to cancel a transaction, however, that is only in theory and since transactions begin confirmation as soon as the order is placed, the bitcoin transactions are considered irreversible once the process has begun. Hence, it is imperative to be careful before beginning each transaction, as the process remains to be irreversible.
What is bitcoin worth today
The value of 1 bitcoin (although fluctuating) is worth 6,282.99 dollars. The current price of BTC you can check here.
How to make money with cryptocurrency?
Hearing stories of Bitcoin riches may have you wishing you had some yourself too. O bitcoin for Dummies will teach you just that. You can make money in cryptocurrency in the following ways:
- By investing in crypto stocks and profiting
- By selling your cryptocurrency for money
- By mining bitcoins, therefore, becoming their proud owner.
How to mine cryptocurrency?
If you wish to mine crytpocurrency then you will need custom mining hardware, a wallet and a constant source of energy. Once you set up your PC, the mining begins right away, speed depends on the power of the hardware.
So how to mine cryptocurrency isn’t exactly as easy a task as some may have mistaken it for, that’s okay because clearing such misunderstandings is a key aim of bitcoin for dummies.
Is bitcoin mining still profitable?
If you want to know how to make money with cryptocurrency, then one should first be well aware if and is bitcoin mining still profitable! After all, your profits will mean nothing if the amount you spend on mining adds up to be more than gains! Due to the elusive nature of bitcoins, you may often be wondering how many bitcoins are there right now and if you should be hurrying up to grab them, but bitcoin for dummies suggests that you weigh your pros and cons first before making any decisions.
If your computer is too slow, thus your electricity bills will be reaching for the skies, so bitcoin mining will not be the profitable choice for you.
What is hodl?
You should know that the bitcoin for dummies will also make you familiar with common slang and terms. Well, the term hodl is a slang in the bitcoin community, which is defined as the act of holding onto bitcoins believing that the value of it would rise in the future. The word was first used as a typo in the Bitcoin talk forum in 2013, where the person meant he’s holding onto his bitcoins despite the collapse, hoping they would increase in value.
What is the next bitcoin?
It’s obvious that people are in search for what is the next bitcoin. The answer is no one knows, for any virtual currency could make it big for any reason. However, according to the Forbes magazine, ripple (currently trading under $1 US) could be the next bitcoin, since it offers fast transaction fees and low fees. Hence, it has the potential to move up in 2019.
Some other cryptocurrencies that could also be the next bitcoin are Litecoin (LTC), Cardano (ADA) and Ethereum.
Hopefully, this article on bitcoin for dummies has been an informative journey into understanding topics as diverse as what is hodl to how to cancel bitcoin transaction thus now you must not only be familiar with the lingo of the industry but also feel quite confident in your knowledge and investing abilities.