“Bitcoin is a very exciting development, it might lead to a world currency. I think over the next decade it will grow to become one of the most important ways to pay for things and transfer assets.” – Kim Dotcom, CEO of MegaUpload
“Anything that is accepted as a medium of exchange makes it a currency” – Money Myth.
THE REVOLUTION THAT BROUGHT ABOUT BITCOIN
From time immemorial, things such as gold, silver, and precious metals were considered as money in exchange for what we wanted for ourselves.
This continued until there was a conclusion that everyone needed a universal commodity that will be accepted to measure the same worth as the value of goods we were giving out.
This quest was what brought about the evolution behind money.
What if there was no medium of exchange?
Simple. If the commodity wasn’t accepted or seen as money, then we would have still used the precious stones as a medium of exchange.
But down the line, we saw that the fiat – paper money of individual countries brought so much corruption from all angles and economic subversions.
A typical example was what happened in the 2008 which in a way resulted in an economic meltdown.
Inflation swept everything and those that had the opportunity to amass uncalled-for wealth did so because there was a hole in the economic system of money.
Because people accepted a particular precious stone as money and so, served as a medium of exchange, now, the evolution behind the creation of Bitcoin is almost similar.
Its mission was to solve a problem that was underneath.
Bitcoin was created to solve the economic syndrome we have been experiencing in many countries with transparency as a watchword.
The main essence was to solve the issue of Double Spending so as to prevent the currency from being copied.
What made it special?
This system is universal for everyone to see and also, it is enhanced through a platform known as the Blockchain.
Virtuality or Physical?
When it comes to money being virtual, your e-wallets (PayPal, AdvCash), and bank balance are all virtual. Why are they virtual? Because we can’t touch them.
If all those are virtual currencies, what makes Bitcoin so special, because we can’t see it? I doubt.
You may not be told, but if you are a crypto beginner, always go here first.
Again, you want to see How to be a successful cryptocurrency investor/trader in 35 steps; based on experts recommendations + 25 Questions on How To Be A Good Crypto Investor and divide your portfolio sparingly In 2018
Should you want to overcome fear and buy bitcoin on your own, then see this, and see the recommended safe places to buy crypto/blockchain projects in your country.
WHAT IS BITCOIN?
Bitcoin is an open-source virtual currency. Same way the paper currency came to be accepted by replacing precious stones, so, is the evolution behind the Bitcoin creation.
Bitcoin is a digital money. Like the Gmail is to a post office, so is Bitcoin to fiat currency.
Bitcoin is also known as a reserve currency for the altcoin ecosystem.
Bitcoin was designed to regulate itself to deal with inflation as witnessed in many countries.
The Language of Bitcoin
With Bitcoin, different parties can exchange value using the unique nature of the computer language.
By computer language, I mean, they are based on complex computer encryption (mathematics) rather than the known traditional money and banking system.
Also, Bitcoin technology is not owned or controlled by anyone. Meaning that everyone can take part no matter where they are from.
Bitcoin is mostly abbreviated as BTC or XBT on an exchange like Bitmex. For an example, one bitcoin can be short written as 1 BTC.
Each Bitcoin is divisible to the 8th decimal place, meaning each Bitcoin can be split into 100,000,000 pieces. And each unit of Bitcoin, or 0.00000001 Bitcoin is called a Satoshi.
This is what the last line means.
Satoshi is like a fraction of your local currency. For an example, the Satoshi can be likened to Cents in terms of Dollars, the Pennies in terms of Pounds, and Kobo in terms of Naira.
You will see the segments as we go on.
What is Bitcoin – Video Clips
What is Bitcoin version 1
What is Bitcoin version 2
4. THE VARIATION OF BITCOIN
The variation of Bitcoin defines how they are segmented or broken down in fraction.
Remember I said that each Bitcoin is divisible to the 8th decimal place, right? Also, remember that Bitcoin fractions are called satoshi(s).
Now, Satoshi to Bitcoin – 8th place
|1 Satoshi||= 0.00000001 ฿|
|10 Satoshi||= 0.00000010 ฿|
|100 Satoshi||= 0.00000100 ฿||= 1 Bit / μBTC (you-bit)|
|1,000 Satoshi||= 0.00001000 ฿|
|10,000 Satoshi||= 0.00010000 ฿|
|100,000 Satoshi||= 0.00100000 ฿||= 1 mBTC (em-bit)|
|1,000,000 Satoshi||= 0.01000000 ฿||= 1 cBTC (bitcent)|
|10,000,000 Satoshi||= 0.10000000 ฿|
THE CURRENT VALUE OF BITCOIN
The truth about the value of Bitcoin is based on the demand and supply chain.
However, since the release of Bitcoin by Nakamoto, Bitcoin has been called “digital gold”, and for good reason, till date, the total value of the currency is close to $200 Billion.
You can find that on the Coinmarketcap.
THE MAN BEHIND BITCOIN
Bitcoin as a digital form of payment was founded by a mathematical proof.
It was introduced by a man named Satoshi Nakamoto.
He unveiled the idea on 31st October 2008 to a cryptography mailing list and later released its open-source software the following year, 2009.
The Inspiration That Led To The Creation Of Bitcoin
What gave Satoshi Nakamoto the inspiration to create Bitcoin was Faucets. What are faucets if you may ask?
Faucets are websites where you earn usually Satoshis (a subdivision of the bitcoin) for a certain amount of time.
In there, you can also earn solving a captcha or doing some tasks such as managing a faucet-game. You shall learn more about it with examples.
WHO WAS SATOSHI NAKAMOTO?
The answer to this question should have been very simple. Maybe just one or two lines. But unfortunately, that’s not the case.
The issue of really trying to find out who Satoshi Nakamoto was a mystery in itself.
According to Jeff Garzik, a core developer
“Satoshi published an open source system for the purpose that you didn’t have to know who he was, and trust who he was, or care about his knowledge,” he points out.
Open source code makes it impossible to hide secrets. “The source code spoke for itself.”
While there may be some pieces of truth with the above, let’s see the universal belief.
It is widely known that Satoshi Nakamoto was a pseudonymous developer that published a paper describing the Bitcoin protocol in detail via the Cryptography Mailing List in November 2008 who later released the first version of the bitcoin software client in 2009.
About his Japanese name, Satoshi in Japanese means wisdom or wise, Naka – relationship and Moto – origin.
BITCOIN FOUNDER FOUND!
It has been found that the mysterious Bitcoin creator is Gavin Andresen.
Upon many attempts to truly identify Nakamoto, this truth was revealed using Eder’s bootstrap stylometry method.
How They Came About the Revelation?
Based on details by zycrypto, the methods used showed that Satoshi’s email text was the nearest to be traced wherefore the real identity of the Bitcoin creator was discovered using the stylometry method – OWLTMarket.com
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THE FIRST BITCOIN SOFTWARE CLIENT RELEASED
The first version of the bitcoin software client released in 2009 can be found here
THE HISTORY OF BITCOIN
All right, let’s see the overall view of how Bitcoin began…
According to Legend, Satoshi Nakamoto began working on the Bitcoin concept in 2007.
While he was on record as living in Japan, it was also speculated that Nakamoto might have been a collective pseudonym for more than one person – that aside since his identify was revealed (if it is as found).
On August 15, 2008
There was an interesting patent application…
In a quest to know the hands behind the scene of Bitcoin, these men, Neal Kin, Vladimir Oksman, and Charles Bry file an application for an encryption patent application.
All three individuals denied a connection to Satoshi Nakamoto, the alleged originator of the Bitcoin concept.
On August 18, 2008
The official Bitcoin domain was registered. That is Bitcoin.org.
Theoretically, we can say that Bitcoin.org was born! The domain was registered at anonymousspeech.com, a site that allows users to anonymously register domain names and currently accepts Bitcoins.
On October 31, 2008
The Bitcoin white paper was published.
Nakamoto published a design paper through a metzdowd.com cryptography mailing list that described the Bitcoin currency and solved the problem of double spending so as to prevent the currency from being copied.
Whitepaper: this is simply a write-up that shows the mission and vision statement of a new coin or project.
On November 9, 2008
The Bitcoin Project hit SourceForge.
On November 2008, the Bitcoin project was registered on SourceForge.net, a community collaboration website focused on the development and distribution of open source software.
On January 3, 2009
The Genesis Block was mined
Image source: blockexplorer.com
On January 3, the Block 0 of the genesis block was established at 18:15:05 GMT.
On January 9, 2009
Bitcoin Version 0.1 was released
The Version 0.1 Bitcoin was released. The resources was compiled with a Microsoft Visual Studio for Windows.
The resource lacked a command line interface and was so complete that further speculation was that thought to be developed by more than one person (or by an academic with little programming experience and a great deal of theoretical know-how).
As a matter of fact, it included a Bitcoin generation system that would create a total of 21 million Bitcoins through the year 2040. We will come to the 21 million Bitcoins soon.
On January 12, 2009
The first Bitcoin Transaction
On January 12, 2009, the first Bitcoin currency transaction took place.
The transaction was stalked in block 170. And the transaction parties (peer-to-peer) was between Satoshi and Hal Finney, a developer, and cryptographic activist.
On October 5, 2009
An exchange rate was established.
On October 5, 2009, the New Liberty Standard published a Bitcoin exchange rate that established the value of a Bitcoin at US$1 = 1,309.03 BTC.
The equation used included the cost of electricity to run a computer that generated Bitcoins.
On October 12, 2009
#bitcoin-dev hit freenode IRC
On October 12, 2009, the #bitcoin-dev channel was registered on freenode IRC, a discussion network for free and open source development communities.
December 16, 2009
Bitcoin Version 0.2 was released
Image source: historyofbitcoin.org
On December 16, 2009, the version 0.2 of bitcoin was released.
December 30, 2009
The Bitcoin difficulty increased
The first Bitcoin difficulty increase occurred at 06:11:04 GMT on December 2009.
February 6, 2010
A Bitcoin currency exchange was born.
On February 6, 2010, The Bitcoin Market was established by the Dollar as a Bitcoin currency exchange.
Editing this point, I found out that this post is already at 11,624 words, and frankly, it is getting to 12,000 but I don’t wish to make it 13,000 words. So, you will learn more if I give you the complete Bitcoin history checklist.
From the checklist, you will see
“The first Bitcoin ATM in history (with a video to show how it worked),
How Nakamoto Project affected Coinbase Bitcoin exchange,
Where the Satoshi Forest is located,
How Bitcointalk.org was hacked and replaced by a choral master,
The biggest early heist in history, how Bitcoin currency was ruled by Texas judge, the list is detailed from 2007″.
HOW BITCOIN WORKS
Bitcoin works in a p2p; peer-to-peer system.
What does it mean?
Bitcoin is an electronic cash system that allows payments to be sent directly from one party to another without going through a financial institution or third party (e.g PayPal or Local Banks).
In a simple term, it means that you can send Mr. Philips money without it passing through a third party.
Also, Bitcoin is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units of the currency.
Cryptography: this is an encryption system of programming – protecting your privacy/total security.
Again, all Bitcoin operations are recorded in a public ledger, and so everyone is always aware that transactions are going on.
“For the first time in history, people can exchange value without intermediaries which translates to greater control of funds and lower fee” – Blockchain Wallet.
THE TOTAL NUMBER OF BITCOINS ON EARTH
There shall be a total of 21 million Bitcoins on earth. The illustration.
Let’s see Bitcoin as Diamond. It may be that there are just 500 million pieces of Diamond on earth. And after the 500 are mined, that will be the end.
The same concept holds for Bitcoin. This is it. When the 21 million Bitcoins are mined, then, there will no more Bitcoins to be mined.
I know what you want to ask.
What will happen after the 21 million Bitcoins are mined? See below.
WHAT HAPPENS AFTER THE 21 BITCOINS MILLION ARE MINED?
This is a technical question to answer. But the answer is that I think, we will be using the 21 million available in circulation. If this truth holds, then we shall soon see the price of Bitcoin selling at an enormous price.
The Total Bitcoins mine now?
Currently, about 17 million of the total 21 million are mined – Cointelegraph.
Alright, having established that, let’s go ahead and see how Bitcoins are actually created.
HOW BITCOINS ARE CREATED
Bitcoins are created by a process known as mining.
We mine gold, diamond, and all other precious stones, so is Bitcoin. In fact, it involves the same processes but different methods.
The difference here is that in Bitcoin creation, you need to solve mathematical equations to generate them. If you can proof that X + 2Y = 20, then you get a Bitcoin for your solution.
The concept in one line?
Solve mining equations and you will get new Bitcoins.
Bitcoin mining is the process by which transactions are verified and added to the public ledger, known as the Blockchain, and also the means through which new Bitcoins are released.
Anyone with an access to the internet and suitable hardware can participate in mining. The mining process involves compiling recent transactions into blocks and trying to solve a computationally difficult puzzle or algorithm.
The participant who first solves the puzzle gets to place the next block on the Blockchain and claim the rewards (gets a Bitcoin currency, his to keep as a reward).
Mining is the process of creating blocks for the blockchain, which requires an inordinate amount of energy.
The cost of mining?
It consumes a lot of energy – electrical power.
Infact, according to figures from The Bitcoin Energy Consumption Index, nearly 10 U.S. households can be powered for one day by the electricity consumed for a single Bitcoin transaction – CBSNews,
Who Are Those That Mine Bitcoin?
They are called miners (using a miner or a mining machine as a mechanism to solve the mathematical equations).
A computer participating in any cryptocurrency network performing proof of work. This is usually done in order to receive block rewards – Bitcoins.
A Bitcoin that has been received by a miner as a Block reward, and thus has never been “spent” before.
Why Do They Devout Their Precious Time To Mining?
Finding and publishing new Blocks is what Bitcoin miners do to earn Bitcoins.
Bitcoin miners keep the network secure, and this is how they are rewarded.
What it means?
This is it. If I am able to use dynamite and my physical power to mine diamond, I get rewarded for my work maybe by selling it for fiat currency or as the case may be.
You see, most scientists created tools to manage systems such as sports, health sectors and etc. but what about the financial sector?
It’s worthy to note that millions of people in the world had access to financial tools, but before our very eye, the very financial institutions we so much trusted were collapsing.
As if those weren’t enough, these financial institutions take millions of fees from us.
This and more contributed to the birth of a super digital currency known as Bitcoin.
You need to relax here and see the truth.
Cryptocurrencies are designed on technical terms. Often at times, you will hear that Cryptocurrencies are created using either SHA-256 method, Script or Hybrid.
Yes, very true.
But I will avoid all those in order for you to understand the true nature of it.
As it stands, I will rather choose to use characters and mining generations of DIAMOND to explain the concept of Bitcoin creation.
(As you read this Blog or Subscribe, you will definitely grow to understand the Bitcoin structure better.
Do you really want to even be more Relevant on the Current Data in the Crypto & Blockchain Positions?
Here we go,
• Diamond – Bitcoin
• Digging Diamond – Mining Bitcoin
• Diamond Miner – Bitcoin Miner
• Mining Machines – Specialized Computers and Software.
• Dynamites – Intelligence
• Diamond Testers – Giant Rigs
Let’s assume it’s only you and a handful of people in a newly created earth. Let’s call the earth Disney Land.
The earth surface is covered with vegetation and abundance of natural resources. In our case study – diamond is the natural resource.
Here, diamonds are in abundance without a struggle. It’s just a matter of handpicking them like manner as was for the children of Israel.
But over time, reproduction and evolution “takes” place and as a result, more people are born and the chance of handpicking diamonds on the earth surface becomes a little bit scarce/competitive.
At this point, people would have started tilling the ground surface to find diamonds – an initial process of mining.
Again as evolution goes on, the whole earth surface is filled with more people and so, the chance to get diamonds becomes even more competitive and difficult.
The situation now prompts some to apply dynamites and physical energy (muscles) in order to explore diamonds by tilling beneath the earth crust.
(Meaning: if you don’t have dynamite or physic, simply forget about it).
Down the line in evolution, the use of dynamite and human energy are no more enough – because more people are eating Mc Donald’s pizza wherefore fast growths are enhanced.
For you to mine diamond, you must use sophisticated tools.
(Meaning: without your mining machine, you’re out!)
The process continues…
At this point, all chips are down.
(Meaning: human energy, dynamites and mining machines are not enough to pull a diamond from the earth surface.
Because more people were able to buy their sophisticated machines for personal mining.
The time has so advanced such that for you to qualify to mine diamond, you will need to combine both your sophisticated machines with another intelligent computer– to be at an advantage.
Why the intelligent machine?
Remember we said that Bitcoins are based on mathematical protocol – format, so, you need some intelligent computer to solve the mining equations.
(Reason: the competition is so high such that mining has become so difficult, complex and intelligent-wise requiring higher mining machines and computers).
Mining Machines + Intelligent Computers > Math Equations? = Diamonds
At this point, the mining difficulty overpowers the intelligent computers by becoming unbearable even with the best software to figure out the math equations.
Now the only viable solution to mine Diamond is to use Diamond Testers.
The Diamond Testers are Super Intelligent Computers.
In Bitcoin mining, the Diamond Testers are Giant Bitcoin Rigs.
This Giant Bitcoin Rig is usually called Bitcoin mining Farm.
Bitcoin Mining Farm: this defines a computerized network of Super Intelligent Computers joining up to solve Bitcoin maths in order to get rewards – generate Bitcoins.
Bitcoin Farm: (intelligence + software + electrical power) > Math Equations = Bitcoins.
So, based on the population of Diamond MINERS, for you to generate Diamond now, see what you need to do in order to have an advantage over others.
Dynamites + Mining Machines + Diamond Testers > Math Equations? = Diamond
Coming back wholly to Bitcoin in technical terms,
Since mining is done via a proof of work, the algorithm used is called double SHA-256.
With these super mining computers, every 10 minute, about 12.5 or more Bitcoins are created by solving the mathematical equations and the journey continues.
The 12.5 Bitcoins goes to the miner that solved the equation. (You can see why mining is rewarding but costly)
This value will halve every 210,000 blocks. It takes four years for the same process to repeat itself.
The process will eventually continue until the final Bitcoins are created in 2040.
So, in conclusion, this is typically how Bitcoins are created.
THE BITCOIN BLOCK SIZE
The block size of Bitcoin is 1MB. Comparing to Diamond mining, it defines the number of Diamonds that can be contained based on the refinery’s size. Goingback to Bitcoin, the Block size is the elastic measure of how many Bitcoin transactions that can be contained/processed.
Just to note, it takes approximately more than 10 minutes to mine/process a Bitcoin Block.
BITCOIN MINING PROGRAMS
Should you be interested in mining Bitcoin, there are many types of mining programs out there in the market to make things simpler for you.
• Cgminer – not beginner friendly
• Guiminer – beginner friendly
• Bgfminer – not beginner friendly
A Mining pool is a collective network of computers that are all working together to solve blocks of information to receive bitcoins.
In one line, a bitcoin mining pool is a bitcoin sever.
Types of Mining pools
There are many types of mining pools, but the basic ones are the following
1. BTC Guild
10. EclipseMC and more…
The Bitcoin network difficulty is the measure of how difficult it is to find a new block compared to the easiest means possible.
Remember what we talked about how difficult it will be when the population yearning to mine increases. Here, as more miners join, the rate of block creation will go up. And as the rate of block generation goes up, the difficulty rises to “compensate” thereby pushing the rate of Block creation back down.
Any Block released by malicious miners that do not meet the required difficulty target will simply be rejected by everyone on the network and thus will be worthless.
The 2018 Difficulty
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COMMON TERMS IN BITCOIN MINING
Mining speed is measured in hash. Usually denoted as Mhash/sec. Meaning – mega hash per second.
Mining stale is just like a canceled or null mining solution which means you won’t be rewarded for your effort.
The big picture,
It means that you were given a mining mathematical questions to solve. After finding the solution you sent it in but it was either late or the answer was wrong.
The algorithm used by a cryptocurrency to sign transactions.
These algorithms may vary across different cryptocurrencies.
For an example, Bitcoin’s mining algorithm is SHA256, whilst Litecoin & Dogecoin’s are Scrypt.
Like I said before, this is a group of miners who have decided to combine their computing power for mining. This allows rewards to be distributed more consistently among participants in the pool.
A method of investing in bitcoin mining hardware, allowing anyone to rent out a pre-specified amount of hashing power, for an agreed amount of time.
The mining service takes care of hardware maintenance, hosting and electricity costs, making it simpler for investors.
Proof of Stake (POS)
An alternative to Proof of Work, providing an alternative method for deciding who signs transactions into the blockchain.
In Proof of Stake, the resource held by the “miner” is their stake in the currency. So someone holding 10% of a proof of stake currency is equivalent to controlling 10% of the network hash rate of a Proof of Work currency.
In other words, more investment in the coin will lead to more gain when you mine with this protocol.
Mmore so, in the Proof of Stake, the resource held by the “miner” is their stake in the currency.
Proof of Work (POW)
This is the type of mining algorithm Bitcoin uses and is a method of determining who signs transactions in the blockchain. The Proof of Work scheme used by bitcoin is SHA256, a cryptographic hashing function.
In a simpler term, it means doing more “work” or in other words, providing more computational power in order to get rewarded with more coins.
Bitcoin Mining Calculator is used to calculate mining profitability for Bitcoin mining.
How it works (Mining Calculator)
When you enter your Bitcoin mining hardware hash rate in GH/s along with the power wattage and your cost of electricity – dollars per kilowatt hour ($/kWh). The current Bitcoin difficulty, Bitcoin block reward, and Bitcoin price will be entered automatically.
How to check your bitcoin mining profitability
As was stated above, you can smoothly check your bitcoin profitability using a calculator to ease your process.
And one of such is using CoinWarz
The Determination of Your Mining Profit
You can actually use a mining calculator to check your profit. But your profit or amount of bitcoin that will be mined is directly dependent on the following:
1. Your hash rate
2. Watts Used – ( power used by your computer)
3. Cost Per Kwh (cost of power – electricity)
4. Difficulty change
5. Cost Of Hardware (mining software)
6. Time Frame – (it can be 24 hours, 30 days, 1 year and etc.
7. Value per BTC – the current rate of bitcoin.
In conclusion, to gain more, your hash rate needs to be higher than what you’re spending on power – electricity.
The hash rate practically determines your profit. That is to say, the higher your hash rate, the higher your profit if other costs are relatively moderate.
As a matter of fact, a high hash rate can be increased if your computer graphics card is extremely fast.
So, if interested in mining, you need to gird your loins properly before going into it.
And also be careful of the cloud mining you join. While some are pure Ponzi scheme, do make proper research before going into it.
This defines a reduction of minable reward for so many blocks.
As designed, every 4 years, the “reward” for successfully mining a block of bitcoin is reduced by half. This is referred to as “Halving”.
With Bitcoin, the reward is halved after the first 210,000 blocks are mined and then every 210,000 thereafter.
For instance, the initial reward for mining a BitCoin Block was 50 BitCoins, which was reduced to 25 in 2012 after the first “halving” and half again to 12.25 bitcoins after the next halving.
This mechanism ensures a finite amount of coins are created for a cryptocurrency. The actual time span is not 4 years, but rather the amount of time taken to mine 210 000 blocks.
This is a mathematical process that converts inputed data into a fixed length string, usually 32 characters.
In the world of bitcoin, a hash must follow certain rules and formats and is formulated using very specific information and must contain the previous hash and block information within itself together with some “dummy data” (a nonce) to produce a randomized hash.
Note, not all hashes will be accepted. Even the slightest modification of the original input data would result in a completely different hash. A hash is “rehashed” thousands of times over per second until a suitable hash is found.
How Hashes are Created?
The hash is created by the computers trying to find a suitable hash out of hundreds of thousands. Once a hash is created, it is then stored at the end of the blockchain.
The computer that is responsible for submitting a working hash is allocated a reward in the form of bitcoin.
This is the measuring unit of the processing power of the whole Bitcoin network.
Hash rate is all about calculations for a mining process.
The network must make difficult mathematical operations for the purpose of security.
For example, when we speak about a hashrate of 1Th/s, it means you are producing 1 trillion calculations per second.
And the bigger the hashrate, the better and more of the coins mined.
THE BLOCKCHAIN TECHNOLOGY BEHIND BITCOIN
Let’s me refresh your memory.
The Blockchain is a non-polluted distributed, public ledger that contains the history of every bitcoin transaction that ever occurred. These transactions are recorded through the creation of new blocks.
Meaning, anyone can download a copy of the Blockchain, and it can be inspected to trace the path of Bitcoins from one wallet to another.
I guess it is technical. Let me break it down.
The Blockhain is a universal public ledger where all transactions that ever occurred are recorded via the creation of new blocks, from the very first genesis block until the latest block.
A Blockchain is a platform that records all the activities that take place in the Bitcoin world.
If you are in a formal meeting, see the Blockchain as a secretary taking the minutes. If during the census, the Blockchain is the mechanism (tool) whereby the total number of citizens counted are recorded.
And at this point, it cannot be edited or deleted. What is written is written – as King Herod to the Jews about captioning Jesus Christ as the King of the Jews.
(You will understand more about the Blockchain Tech and its applications with what Billionaires are saying about it and the impacts).
WHAT MAKES THE BLOCKCHAIN?
The Blockchain is created via what is known as the block.
This is the truth,
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A Block refers to a recorded set of Bitcoin transactions from a certain time period. Better put it, they are files which the transactional data are permanently recorded on the blockchain network.
These transaction Blocks are “stacked” on top of each other in such a way that one block depends on the previous. In this manner, a chain of blocks are created, and thus we come to the term “Blockchain”.
A Block records some or all of the most recent transactions that have not yet entered any prior block.
Thus a block is like a page of a ledger or record book. Each time a block is ‘completed’, it gives way to the next block in the blockchain. A block is thus a permanent store of records which, once written, cannot be altered or removed.
Let’s assume we are to welcome 10 guests to sit on a long bench.
After the first guest arrived, we directed him to sit at the extreme of the bench.
Now, each guest seated were recorded in a Ledger or an exercise book.
Lets’s say after about 20 seconds, about 3 more guests showed up, and like this, the long bench was filled, not forgetting to record all of the guests seated in the ledger or an exercise book.
Now, comparing it to a Blockchain,
Each of the guest seated was seen as a Block. And when the whole long bench was filled, it became a chain of guests.
Technically, the chain of guests is what is known as the Blockchain.
Guests – Blocks
Chain of guests – Blockchain
For more explanation, you can take a block as a receipt you received and recorded after buying a product at a grocery store.
When the list of products bought builds up, say 40. It becomes a big list making it a Blockchain of receipts you’ve received.
These receipts which you recorded is now known as a Blockchain.
Should you come across Bitcoin fork, it simply means the process whereby parts of the Bitcoin is seeking independence.
There are basically two types of forks. The soft and hard.
Let’s say we had a country called Zealand. Part of the country wanted independence from the parent country such that they can control their regional natural resources or just that they needed more percentage of the National budget.
With the knowledge that if they split, they won’t have nothing to do with the parent nation anymore, should they go on, it means the only thing standing before them is a fight.
For them to break out, they must put up a fight. The fight will either be a cool war or civil war).
Let’s assume that at the end of the war, using the cool war strategy, they had won. Successfully, they were granted her independence and so, we had a new country called New Zealand.
Now, if another region in the parents’ country tries out and fails (with a civil war method), that attempt to break out can be considered as a treason or coup, and so, all of them (actors) must be put to death.
Comparing to Bitcoin.
The fight: fork
Cool war: soft fork
Civil war: hard fork
The quest for independence – upgrade
Success for independent: Split or forked
WHAT HAPPENS WHEN BITCOIN GET FORKED?
Technically, Bitcoin split takes place when hardware implementations, its mining protocols, and procedures are upgraded.
That is to say, once a user upgrades, it terminates all transactions from the other software. As an end result, a new branch of Blockchain is created.
As we know, Bitcoin has been forked multiple times. And of course, each fork gives it a new name.
Some of the new breakouts are the following. Bitcoin Classic, Bitcoin Gold, Bitcoin Diamond and etc.
I shall enlist all the forked new Bitcoins.
THE DECENTRALIZATION NATURE OF BITCOIN
Probably, you have heard that Bitcoins are decentralized currencies. The question is, how come about the decentralization, and what does it really mean?
It means that if I am decentralized, I am independent. In financial terms, no matter the economic crisis of countries, I am not moved because I am not operating at their economic level.
Now, replace that with Bitcoin. Bitcoin is decentralized because it is not influenced by the economic, political, and even socio-cultural systems of countries.
Decentralization means the situation where value relies on to break the centralized authority. That means, no one is deciding on which rules are to be applied on each moment but they must be agreed – Albert Lacambra
Decentralization in few Lines
• Bitcoin uses a peer-2-peer system (the payer & payee only).
• Bitcoin is not regulated with the help of a third party.
• The price is not determined by any government of countries.
• It’s not controlled by any financial institution.
• No economic condition can affect it.
• You’re in total possession of your bitcoin (100% control).
• There are no arbitrary transfer limits.
• Your wallet cannot be frozen.
• It cannot be frozen or locked up by nobody.
THE ESSENCE OF BITCOIN DECENTRALIZATION?
This decentralization nature of Bitcoins avoid the currency being affected by inflations seen with local currencies and also enhancing its prices heights determined solely on a demand and supply ground and not on any political or economic grounds.
BITCOIN VS LOCAL CURRENCIES (FIAT)
Let’s consider why Bitcoin is different from our traditional currencies.
|Bitcoins are virtual currencies||Fiats are physical.|
|Bitcoins are digitally generated||Fiat currencies are not digitally generated|
|No one can freeze your account||Banks or e-wallets can freeze your account|
|You can mine bitcoin independently and it has no set value.||This is not possible with fiat currency|
|Bitcoin does not require any “trust” to work because it relies on mathematical equations||Your money is safe based on trust of the financial institution|
|You don’t owe nobody nothing, it based on your ownership.||The financial intuitions are there to regulate your activities.|
|Bitcoin is a worldwide currency accepted worldwide.||Fiat currency is not accepted worldwide based on country’s variation.|
|Bitcoin is a true decentralized currency that nobody can control||Fiat currencies are not decentralized. Therefore can be influenced by the political arms.|
|Bitcoin works a lot like cash, you receive it instantly…||Fiat currency processing can’t be received really instantly, some may take ages.|
HOW BITCOINS ARE STORED
The revelation is that Bitcoins themselves are not files stored on your computer’s hard drive like MP3s or PDFs.
Rather “owning bitcoins”, means owning a Bitcoin address, which has a balance recorded on the Blockchain.
What it means to own a bitcoin address is to control the associated Private Key, and therefore allow the signing of transactions.
This control is overseen by storing it in encrypted wallets secured with a private key (password).
I guess you might be confused here. The simple answer is that we store Bitcoin in a wallet.
TYPES OF BITCOIN WALLETS
Remember that Bitcoin is a currency, so, as fiat is stored in our wallets, so is Bitcoins but in an encrypted wallet secured with a private key.
In Bitcoin, we have many types of wallets. We have cold wallets, hot wallets, and desktop and so on.
Just to stress a little bit, we have mobile wallets such as copay, mycelium, GreenBits and more.
Let’s go into the detail.
All Bitcoins are stored in Bitcoin wallets, sometimes known as Bitcoin vaults, storage and so on.
Your Bitcoin wallet is an application that stores, sends and receives bitcoin and it is all you need to use bitcoin.
There are basically 5 types of bitcoin wallets depending on what you want. We have the hardware, paper, software (desktop), mobile and web wallets. But currently, we ERC-20 token wallets, and even bitcoin debit card wallets – not for storing bitcoins per se, but for easy spending (daily transactions).
Let’s consider the various bitcoin wallets with their security strengths listed in a descending order of security.
1. Mobile Wallets: These are wallets that work as normal mobile applications when installed on your mobile devices.
They are the most insecure bitcoin wallets. Meaning, the wallet can easily be compromised (hijacking of your bitcoin).
Some flexible mobile bitcoins include electrum, armory, BitcoinQt, Multibit and etc.
2. Web Wallets: These are basically wallets that are hosted online. They are sometimes called hot wallets.
Being online, these wallets are prone to compromises if the security bases are not solid. An example was the Mt.Gox experience and the latest in Japan.
Some examples of web wallets are Spectrocoin, Bitfinex wallet, Bitstamp and etc.
3. Desktop wallets: These are wallets that are installed in our computers.
To use them, you need to install the appropriate software before working on it.
Although Desktop wallets before now were mostly preferred. But due to its security proof, people tend to forgo it for safer wallets.
e.g., you can lose your bitcoins if your computer is affected by malware, virus, hijacked or can even be formatted if the system wasn’t backed up.
4. Paper Wallet: These are manual wallets that store your bitcoins. They are a form of cool wallets.
This is the most secure of the last three considered.
Your decision to use this wallet is wholly based on your management capacity.
That is to say,
If you are not careful, your Bitcoin can be swept by Virus. Also, if you miss your seed, they are gone.
More details on wallet security and safety
5. Hardware Wallets: These are wallets that store your bitcoin offline just like the paper wallet.
Hardware wallets are the safest wallets you can possibly use. They put you in total control of your bitcoin.
Total control here means that you ban all managers and do it alone. With Hardware wallets, no one can compromise your vault and the good news is that they are affordable. Some go for as low as €59.
Trezor 1 & T,
Ledger Nano S,
Digital Bitbox and etc.
What makes them preferred are some features such as plausibility, passphrase recovery, FIDO protection, storage of altcoins and etc.
COMMON TERMS COVERING BITCOIN WALLET
Bitcoin address: A Bitcoin address is a 160-bit hash of the public portion of a public/private ECDSA keypair.
Using public-key cryptography, you can “sign” data with your private key and anyone who knows your public key can verify that the signature is valid.
An address is the long encoded number you copy to the person that wants to pay you.
A Private Key: Private Key generates a public key.
It is a number which is required in order to spend the bitcoins which are stored in a customer’s account. That is, only the private key will allow you to sign in transactions.
To understand better, if you consider a private key as a password, you won’t be wrong. So, it is the only thing that will give you acccess to your Bitcoin. And note, you can’t recover if you lose it.
Address: An address is a product of one-way hash160 transformation of the public key. Just forget about the hashing concept, I mean how they are generated. What is importat is to see an example for easy recognition.
So, if someone ask for your Bitcoin wallet address, what you need to copy and send is something similar to the below alpha-numeric strings – 1DipSsz4YYnjufGqVkHcbjrJEyHnxsY3Ec
Also, note that every Bitcoin address starts with either 1, 2 or 3.
300 CRYPTOCURRENCY TERMS 2018
After 5 days of work, These 300 Cryptocurrency Terms will Break forth CRYPTO light in you.
How Bitcoin Addresses Are Gotten
To get a bitcoin address, the process is known as hashing. But never mind the process. All you have to do is go to your wallet and copy your address to the recipient and you’re good to go.
If on Coinbase, see below.
Although we are no talking about Ripple, I just feel you should know. If it is Ripple, it usually starts with and ends with an Alphabet. See below.
Does it sound interesting? Check out the 300 words..
THE BENEFITS OF BITCOIN AS A CURRENCY/GROWTH SUMMARY
Since Bitcoin is a new currency with all amount of decentralization, let’s see what it hold for us.
1. YOU OWN IT
There’s no joy compared to owning a thing of value.
Having been used to electronic cash systems (e-wallet) such as PayPal, Advcash, SolidTrustPay and so on. We used them and endured whatever happened because we had no choice.
Some of us had to open more than 10 e-wallets. Reasons being let down or dealt with (Frozen account) by these electronic financial institutions- so to speak.
For instance, a payment processor based on your mode of usage may decide any time that your account has been misused and for that reason, it’s locked up. That’s your hard earned money being frozen.
These stories are not rare, they are very common…
The worse is that some countries are not allowed to transact using some of these payment processors.
But on the contrary, with cryptocurrency like bitcoin, you are the driver of your wallet. You own the key!
No one, I mean no one has the power to freeze your money or wallet. In essence, your wallet address is to yourself.
2. DIGITALLY FRIENDLY
Since the introduction of bitcoin, the knowledge to properly transfer money to other parties does not require one to be a computer savvy. In fact, with a simple 1 to about 4 clicks navigation, you’re done.
The steps is so simple that a user said “A new user can get set up to receive bitcoins in just seconds’.
Another user puts it like this ‘Create a wallet (similar to a bank account) in seconds, no bureaucratic staff. Easy and fun to use!’
That’s how simple is it to use and transact in bitcoin.
3. A TRIANGULAR PAYMENT METHOD
Bitcoin works a lot like our normal day to day cash. You receive it instantly when it’s being sent.
Gone are the days whereby, some transfer systems took ages for your money to be delivered. With bitcoin, it is as apt as the speed of light. Did I just say speed of light?
It is as a speed of sound. Let’s settle for that…
Since bitcoin is a software program protocol, computer network, and movement enabled currency, it takes seconds to deliver to the end user.
You may transfer wealth internationally right now without an intermediary (financial systems: banks & e-wallets) and anonymously.
“I do think bitcoin is the first (digital currency) that has the potential to do something like change the world” – Peter Theil, co-founder of PayPal
4. ACCESSIBLE TO EVERYONE
The usage of bitcoin in this 21st century is opened to everyone, irrespective of your color and race.
While there are approximately 2.2 billion individuals with access to the Internet and mobile phones, many of them do not have access to traditional exchange systems.
Therefore, with the flexibility and accessibility of this digital currency (bitcoin), financial horizons can be attained.
5. ALTERNATIVE TO E-WALLETS
As was earlier reviewed, bitcoin money serves as a great alternative to online payment processors. At least, you’re safe and it takes lesser time.
6. INTERNATIONAL MONEY TRANSFER
Since bitcoin exist on the internet, which itself is a global and borderless market, international transactions can be carried out at the go. With bitcoin, who needs cheque as a means of payments, or even local remittance?
As matter of fact, there are a lot of people all over the world that send remittances.
Remittance; the quantity of money which someone sends from overseas back to his home country.
As one user put it:
Have you tried paying someone with a cheque or receiving payment with a cheque?
A lot of banks still hold the money for 3 to 5 business days, sometimes even more! Why? Because they want to be sure the funds are already available.
And no matter how you try asking them to “please release the funds”, they will not.
Their customer service will tell you the same thing all over again if you try. So, with this scenario, you’d know exactly what I meant.
Using bitcoin is faster! Transactions using bitcoin as payment can be really quick if it is zero confirmation. It would take at least 10 minutes if it requires confirmation.
So, this will depend largely on who the merchant is. Some merchants are accepting the transaction even without the confirmation.
But to the detriment of others, Africans pay the highest money transfer fees in the world just to send and receive at home from abroad. This is pathetic…
7. SECURITY & PERSONAL DATA PRIVACY PROTECTION
The use of software program protocol helps secure digital currency compared to other currencies.
With the technology behind bitcoin, you don’t need to worry about stolen payment information or data compared to the usage of credit cards and cheque cards.
Well, if you have tried purchasing at any e-commerce websites using your credit cards, you would know the risk involved.
With a credit card, your information such as the CSV, pin and maturity date of your card are vulnerable, and as such your money can be stolen easily.
According to mlive, on April 20, 2017, at 2:37 PM.
DENHAM, UNITED KINGDOM — Credit card data may have been stolen from hundreds of hotels across the United States, including at 42 properties in Michigan, according to a notice issued by the InterContinental Hotel Group.
As one user puts it:
“When you give your credit card to a merchant, you give him or her access to your full credit line, even if the transaction is for a small amount.
Credit cards operate on a “pull” basis, where the store initiates the payment and pulls the designated amount from your account.
Cryptocurrency uses a “push” mechanism that allows the cryptocurrency holder to send exactly what he or she wants to the merchant or recipient with no further information”.
8. CHEALPER & FLEXIBLE
Bitcoin is cheap and flexible enough for anyone to use when considering the charges paid per transaction.
While a normal transaction with e-wallet or fiat currency would demand a pretty amount of service charge, with bitcoin technology, the extra chargers are absent or lesser.
“There are many people around the world who send remittances. When you use this service, once again the money transfer agencies charge huge amount of money. Sending remittances through Bitcoin has hence become quite popular because these service charges can be saved” – A Bitcoin user.
“Using your credit card in a transaction means paying your card issuer service fees, annual fees and which can be really depressing at times, especially when you try to check your online bills. Using bitcoin is a lot cheaper” – Aeron Hall
9. SEGREGATED CONTROL
There’s is an absence of constraint or monopoly by anybody or organization when considering bitcoin (transaction).
With a system of peer to peer transaction, no individual, financial institutions (banks) or governmental body can influence its rapid flow.
With your unique wallet ID and password, you’re good to go, no monopoly, no stopping by of any sort.
Again, in some countries, there are limits attached to some certain amounts of bank transactions. But using a system of bitcoin, you can transfer as much as you have, and the amazing thing is that the delivery is first class. Surely, this is a true age of technology!
“Hence, Bitcoin is an ultra-private mode of payment, without any financial institute’s interference or government red tape. Therefore, it’s quite beneficial to use Bitcoins in the growing market of an early 21st century” – Mishra, Techie
“Purchasing real property typically involves a number of third parties (Lawyers, Notary), delays, and payment of fees. In many ways, the bitcoin/cryptocurrency blockchain is like a large property rights database,” says Gallippi.
10. SHOPPING/INSTANT PAYMENT FOR GOODS & SERVICES
The ease to pay for goods and services online cannot be more interesting as compared to now.
With Bitcoin, you can exchange value online at no extra cost compared to the use of credit card and e-wallets.
Even though a lot of countries are yet to accept Bitcoin, the good thing is that a lot of business institutions are accepting Bitcoin thereby making spending and circulation of it spread.
Nowadays, many companies like Microsoft, eBay, Amazon, etc. have started accepting Bitcoins, hence direct products and services can be bought through them.
Also, South Korea, Estonia, Sweden, Denmark and the U.S are reported to be the top Bitcoin Friendly Countries. They all embrace technology that’s for sure! (More on the list).
See this. The Blockchain.info has over 20,000,000 bitcoin wallets and still counting with daily transactions of over 160, 000.
In January 2017 alone, they provided support to over 12 million wallets quests. This shows the engagement of the Bitcoin revolution.
11. TRADING & INVESTMENT
With the mistrusts posed by certain e-wallets electronic systems, the art of trading and investment has been enhanced by this super digital currency ‘bitcoin’.
As a matter of fact, since the introduction of bitcoin, it has been reported to be the most used digital currency to date.
Notably, in 2015, bitcoin was observed to perform better than stocks, commodities and bond yields as was a top performing currency of 2015 by a whopping 35%.
BITCOIN GROWTH SUMMARY
As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment.
Research produced by the University of Cambridge estimates that in 2017, there were 2.9 to 5.8 million unique users using a cryptocurrency wallet, most of them using bitcoin.
Besides being created as a reward for mining, bitcoin can be exchanged for other currencies, products, and services.
THE PRICE SHIFTS OF BITCOIN SINCE 2010
The following shows all the price shifts of Bitcoin from 2010 till late 2017.
Note: all the $ signifies 1 Bitcoin. For an example, $0.17 = 1Btc on Sept 2010.
|4th September – 8th October 2010||$0.17|
|6th November -10th November 2010||$0.50|
|10th February – 4th April 2011||$1.10|
|13th May – 21st May 2011||$8.45|
|8th June – 17th November 2011||$32|
|10th April – 7th July 2013||$266|
|10th March – 24th March 2017||$1326|
|1st June – 16th July 2017||$3025|
|2nd July – 15th July 2017||$5014|
|8th November – 12th November 2017||$7879|
|12th December – 17th December 2017||$20,000|
Reference: Coindesk [email protected]
TOP BITCOIN EVENTS YOU MAY NEVER HAVE KNOWN
• The value of Bitcoin is not determined by any individual, the government of a country or any political class.
• There is a finite supply of bitcoin. The last will be mined in 2140 where there will be 21 million bitcoins.
• Only 0.003% of the world (250,000) are estimated to hold at least 1 bitcoin.
• You can mine bitcoins independently.
• The computer power of the network that runs & mining bitcoins as at 2013 is 256 times more powerful than the world’s top 500 supercomputers.
• The FBI was the first to hold the world’s biggest Bitcoin wallet with over 144,000 bitcoins.
• A man named James Howes accidentally threw away 7,500 bitcoins.
Bitcoin exchanges are websites wherefore you can buy and sell Bitcoin.
These websites are designed based on the mode of specific operations. For an example, we have peer to peer exchange (only Bitcoin) and non-peer-to-peer Bitcoin exchanges.
Some examples of peer-to-peer Bitcoin exchanges are the Universal LocalBitcoins, Remitano, and non-peer-to-peer Bitcoin exchanges we have Coinbase, Binance and a lots more.
All you need to work on these websites are your wallet account and funds and you are good to go.
For an example, if I create my crypto4 wallet on Coinbase, fund it, I can transact easily. Don’t worry, you will get more examples than you think.
THE QUALITIES OF A GOOD BITCOIN EXCHANGE
While our taste for a Bitcoin exchange differs, one thing you want to look out for is the quality and the desire to be treated with priority.
So before using an exchange, you would want to consider some viable qualities:
1. Security: Is the Bitcoin exchange trustworthy enough to safeguard your bitcoin or will the Mt.Gox experience handcuff it?
2. Privacy Options: Will your privacy in terms of personal data be protected, else, what could be the worst if misused?
3. Swiftness: As crypto enthusiasts, we love to be given priority. So before using an exchange, consider how they will be swift. If you’re not comfortable, go for the next option.
The good thing is that there are so many good exchanges to choose from.
LIST OF BITCOIN EXCHANGE HACKS
Hackers are a great torn in the flesh for Bitcoin exchanges.
It has been established that when we are dealing with various crypto exchanges, one maxi problem is the issue of a hack.
Should you never heard the word hacking? In a simple tense, it means a situation whereby an authorized person gains access to your personal data or property.
This access can either be for good or bad. And unfortunately, in most cases, it is always for bad.
Note: a person who has this access is called a hacker, and if many of them, we say a group of hackers. If you like, call them legions of hackers and you won’t be wrong either.
Let’s look at some series of the bad news about this gaining of access to personal data without approvals.
But before that, I want to tip you. This is it, the greatest theft in history happened this year in January.
It was the Coincheck exchange theft experience.
What was the amount stolen? $520,000,000+.
Okay, let’s head on.
|Exchanges||Year Hacked||Amount Taken Off|
What have you noticed?
I have excluded the popular exchanges hacks. Why?
You deserve to know all of them, so, I will compile a full list for you (up to 30+).
IMPORTANT MILESTONES OF BITCOIN
• On May, 22nd 2010 – Laszlo was the first to buy pizza with Bitcoins agreeing upon paying 10,000 BTC for ~$25 worth of pizza courtesy of Jercos.
• July 12, 2010 -Beginning of a 10x increase in exchange value over a 5 day period, from about $0.008/BTC to $0.08/BTC.
• October 7th, 2010 – Exchange rate started climbing up from $0.06/BTC after several flat months.
• December 9th, 2010 – The generation difficulty passed 10,000
• April 27th, 2010 -The generation difficulty passed 100,000
• June 24th, 2010 – The generation difficulty passed 1,000,000 with Block
• February 9th, 2010 – Bitcoin reached parity with the US dollar, touching $1 per BTC at MtGox
• June 2nd, 2010 – The exchange rate at MtGox touched 10 USD per BTC
• April 1st, 2010 – Bitcoin price breaks 100 USD on MtGox and other major exchanges. (Referenced from https://en.bitcoin.it)
• The super digital currency started breaking more grounds around 2013 and appreciated to over $1,200.00 per bitcoin in November 2013 ( 1 BTC=$1200.00).
• On December 17th 2017. Bitcoin reached his all-time high, skyrocketing at $20,000.
At the time of writing, the value of a bitcoin equaled $7,600.
BITCOIN COMMUNITIES TO JOIN
Bitcoin Communities, just like I explained in the cryptocurrency guide, these are communities you can learn more about the Bitcoin technology.
HOW TO TRANSACT BITCOIN
The transaction of Bitcoin here means – the buying and selling of Bitcoins. If you are on the same page with me, then great.
The transactions of Bitcoin is very simple. All you need are three things.
1 . Your Bitcoin wallet
2. Your wallet address
3. The recipient wallet address.
Your Bitcoin Wallet: where you will receive and manage your own Bitcoins.
Your Wallet Address: this acts as an account number whereby Bitcoins are sent wherefore you can receive.
The Recipient Wallet Address: this is a wallet of the other party you intend to send (sell) Bitcoins to.
Note: if you are sending Bitcoin, you will have to fund your account.
Funding your bitcoin account is just like recharging a Netflix or DSTV account. You have to transfer your local currency for an exchange to Bitcoin. I know what you are waiting to hear; Deposit.
Yes, you have to deposit some money into your wallet account.
Good enough, great Bitcoin exchanges that allow you to connect with your credit cards are Coinbase, CoinMama, and Changelly, just to mention a few.
As a matter of fact,
I like and use CEX. I simply didn’t include it because I said just to mention a few; lol.
So, with your credit card, you can easily fund your Bitcoin wallet for instant transactions.
HOW ARE BITCOIN TRANSACTIONS CONFIRMED?
The answer to this question simply defines how you get a confirmation when your Netflix or DSTV account subscription (payment) has been deposited and confirmed?
With Netflix, you can get an email, same as DSTV. With Bitcoin, it is just the same but wait, there is a little awareness I have to let you know.
Hmm. I guess you may want to worry about the little awareness of a thing. No, in fact, see my confirmation (deposit) email to be sure that it’s the same process.
The little awareness I meant is to calm you down should your deposit-confirmation via email notification takes more time you had expected.
How Are Bitcoin Transactions Confirmed?
Now, if you’ve ever waited for a new bitcoin transaction to be confirmed, you were simply waiting for a block to be published containing your transaction.
When that happens, the bitcoin network has deemed your transaction valid. From there, you will get a notification of confirmation.
For an example, Coinbase currently requires 3 network confirmations before the transaction is considered finalized. However, this number will vary with other Bitcoin exchanging services.
Note: Bitcoin is capable of processing up to 3-7 transactions per second.
Let me still explain should you need help. Still using Netflix.
If you want to pay for a Netflix subscription (buying Bitcoin), your payment will first land on the accountants’ desk, from there to the auditors’ for confirmation, and lastly to the subscription room for final verification.
When confirmed, your Netflix account will be activated which you will know via an email.
Now, the same thing happens with Bitcoin. If you deposit an amount, say $200 to buy Bitcoin, it will drop on the table of the first network confirmation manager, the second, and lastly the third.
From there, when fully confirmed to avoid stories, you will get an email that your Bitcoin has been deposited.
Hellooooooooo, hope you are still with me? See another confirmation email below.
HOW TO SPEND YOUR BITCOIN IN LOCAL CURRENCY
Here comes probably the most important question we want to get answered. How do I spend my Bitcoins in my local currency?
While there may be other ways of doing it like using a Bitcoin ATM and rest. But for now, let’s use the simplest means.
In here, all you need to do is send your Bitcoins from your wallet to another Bitcoin exchange Wallet in exchange for local Currency.
This is what I mean.
If I have Bitcoins, I will send it to a Bitcoin merchant that will exchange for my local currency based on their exchange rate.
For an example, if I have Bitcoin, I will go to localBitcoins and sell it for Naira – my local Currency.
At this point, as a beginner, the first place you want to make that happen is LocalBitcoins or Coinbase.
Note: if you sell your Bitcoin to them, the correct term is “trading”, so, don’t be confused if you hear the term in another place.
The Whole Steps: If on Coinbase
1. Open a Coinbase account.
2. Verify your account (as per exchange by email),
3. Set up your 2fa – very important.
4. Link or transfer the Bitcoin from your wallet to the exchange wallet
5. Place an order to sell off your Bitcoin,
5. Wait for the money to be exchanged to your country’s’ denomination.
There is no other step. All you have to do is exercise patience for the delivery – remember the network confirmations I talked about.
If you want to try it out on a universal exchange, a good place to start with (as a beginner) is LocalBitcoins, else, use any local Bitcoin friendly exchange in your country.
USING A BITCOIN DEBIT CARD FOR EASY SPENDING
Still on expending you Bitcoins. You can easily use a Bitcoin debit card wallet to buy anything you want. By anything you want, I mean, places accepting Bitcoin debit card.
Bitcoin debit card is just like your normal MasterCard. By using it, you don’t have to worry about the conversion to local currency. The program behind it will do everything – yours is to expend.
How It Works
1. Open an account – with a debit card company of choice
2. Apply for a Bitcoin debit card,
3. Deposit some money into your card
4. Start using it.
As a beginner, I find the Coinbase Shift card – Bitcoin debit card reliable for use.
Another Bitcoin debit card that is beginner kindly is the WageCan card.
What precautions do you need to take when using a Bitcoin debit card?
1. Only transfer the amount of Bitcoin you want to use for the main time.
2. Do not keep a stash of bitcoin on your bitcoin debit card.
Also, remember that your bitcoin debit card is just like your normal local bank MasterCard, so, treat it as important.
BITCOIN MARKETPLACE PLACE – WHERE TO SPEND BITCOIN
Bitcoin Marketplace is simply a platform you can easily spend or buy products and commodities with Bitcoin. Check out Cryptoblizz.
HOW TO EARN A LEGITIMATE FREE BITCOIN NOW!
Perhaps by earning legitimately you may be wondering what I really mean. I will explain because that is what I love to do.
This is it.
There are so many ways to earn free Bitcoins. You don’t need to tell me to enlist them for yo because I shall.
However, the about to be enlisted Bitcoin earnings are always in Satoshis and so, it may take a little time like 5 job executions to make up to $1 or $2.
But this legitimate Bitcoin earning gives you $10 instantly, seriously.
This is how it works.
You will have to deposit or buy a minimum of $100 worth of Bitcoins, and you will be given extra $10, yours to keep. Your total account will now worth $110.
Where do you get the bounties? At Coinbase.
Why You Should Invest In Bitcoin?
Really, why should you invest In Bitcoin?
I am w ondering why I included this sub-topic because as this is a beginner’s guide, you might need more time to decide if you want to give Bitcoin a ride or not.
With that established, I will lay it down here. I shall write more on that when you are convinced of the Bitcoin story.
Let’s take a walk with Kristoffer Koch should you have doubts about Bitcoin.
Kristoffer Koch invested 150 kroner ($26.60) in 5,000 Bitcoins in 2009, after discovering them during the course of writing a thesis on encryption.
He promptly forgot about them until widespread media coverage of the anonymous, decentralized, peer-to-peer digital currency in April 2013 jogged his memory.
Bitcoins are being stored in encrypted wallets secured with a private key, something Koch had forgotten. After eventually working out what the password could be, Koch got a pleasant surprise:
“He said I had 5,000 Bitcoins in there. Measuring that in today’s rates it’s about NOK 5MLN+ Koch told NRK.
In today’s rate, that’s is 5,000 BTC X $7,600 – $38,000,000.
Before you go, even if you don’t believe in Bitcoin, let your first investment be the $10 free you will get from Coinbase, or the free earning below.
The good news?
That $10 worth of Bitcoin shall proof a great coin of value towards December 2018 (check back on the price shift).
To earn more, go to Earn.com and start earning some few dollars – in bits.
HOW TO GET STARTED WITH BITCOIN
If you now believe the concept of what bitcoin can do for you, then I think, I can say, get started.
The cost to get started? Zero $, but fEaR. No worries, this might be a new concept to you, so, I won’t blame the fact that you need more time to see what it really means.
Nevertheless, If you are convinced with some of my proofs, then TODAY can be a turning point – not instant rewards though.
The Tools to Get Started?
• Internet connection
• A new Email address (reasons shall be unvieled on the crypto saftey + life story of holocasut).
• Crypto vault/Password manager – not compulsory
I guess you know how to open an email account if not, I shall show you.
Also note, you need the hackers type of password. If you don’t also know how to, I shall show you how to create one later on.
And lastly, you may need a crypto vault to save your password. You can use the free versions or paid ones. All these, I shall experiment and show you in this Crypto Educational Blog for Beginners.
About your Bitcoin wallet account,
As a beginner, you don’t just need a friendly Bitcoin wallet, but one which is highly secure.
My first choice has always been Coinbase, and I don’t have any reason for doubt having use it for many years now.
Coinbase is free to get you started.
Another friendly Bitcoin wallet to get started with is Luno. Like Coinbase, it is beginner friendly.
Binance is another great place to get started. Although other crypto people say it is friendly, personally, I don’t see it that much as a beginner exchange compared to Coinbase, but heh, the security reason is why you want to go for it.
Please, don’t quote me wrong. I opened my account without a hassle, so, it may be super friendly for you as beginner.
Don’t worry though, I shall review the exchange with the simplest language for you to understand, and also, how to get the attention of the customer supports should you have a challenge.
BITCOIN WALLET SECURITY
Bitcoin wallet security is the most important question in Bitcoin discussions. Why?
You may have the Bitcoins, but if you don’t have the keys, “you gat nothing”
Now, hackers showed up to 30+ Bitcoin exchanges the importance that should be placed on security. And as a matter fact, I purposely left this part to this end so that when you open your wallet, you can take immediate action.
Before you open your wallet account, you need a strong password.
After opening your account, you need to set up a 2FA authentication to tighten up the security. But you know what?
Setting up 2FA sucks. Personally, I always found it cumbersome. But immediately I set it up, I ended up saying no, it wasn’t a sucker anyway; the process was simple.
If you know how to go about it, just do it now. If not, I shall show you how to activate it on over 300 cryptocurrency exchanges.
Note: you want to use Google Authenticator or Authy. SMS is also an option (better than none). But the recommended authentication tool by Google is Yubikey.
Yubikey is a physical key that locks your account from head to toe. With it, you simply say bye to hackers and password phishers.
Also, note; I am not trying to sell you yubikey.
I presume that a Bitcoin beginner is reading this post, and so, the free version of any tool is always recommended.
So, the recommended for starters: Google Authenticator or Authy.
FREQUENTLY ASKED QUESTIONS
How do I Check Current Bitcoin Price?
You can always check out the current price of Bitcoin here at Coindesk.
How do I Convert Bitcoin Value to Any Currency Worldwide
To convert bitcoin to any currency worldwide, you can use Preev. All you have to do at Preev is click on the stroke navigation to select your country’s currency, and then enter to see the equivalent worth.
An alternative is keying in Bitcoin to local currency on Google. When the result comes out, enter the Bitcoin amount and click to search out in your local currency.
Can Bitcoin Be Bought In Parts?
Yes, Bitcoin can be bought in parts known as Satoshis. Most exchanges let you buy as little as $3 worth of bitcoins at a time. An example is Luno after you verify your account.
On LocalBitcoins, you can buy $25 BTC
Can My Bitcoin Be Hacked?
Going by terminology, the simple answer to the question is NO! Bitcoin, in essence, can’t be hacked.
The only vulnerability comes when someone has your wallet private key thereby having the chance to break in and transfer your coins.
Must I Have A Bitcoin Wallet Before Possessing Bitcoins?
Yes, you need a Bitcoin wallet.
What Happens If I Lose Or Forget My Private Key (Password)?
This is a very important question.
Losing your bitcoin wallet password can lead to a complete loss of your digital assets. So, unfortunately, you may not be able to recover them.
Yes of course. The simple hope is if you had backed up your bitcoin wallet access key upon opening your account.
In essence, always have a backup of your private key – password. You can use a private crypto vault or password managers if you trust them.
Another tool worthy of backing up is your recovery phrase. As the name implies, a recovery phrase will be your last hope FOR accessing your Bitcoin wallet should lose your private keys.
So, copy it and preserve it.
FINAL BITCOIN PRECAUTIONARY MEASURES
• Cross check the first 5 and last 5 digits of the recipient wallet address before sending your coins. You can go further more if you need more carefulness.
• Always use a new address for all Bitcoin transactions.
• Don’t share your Bitcoin wallet access keys – private keys.
• Backup your private keys and recovery phrases.
• Run a malware check if you want to use a desktop computer to access your Bitcoin wallet.
• Be 100% careful if you are using a Bitcoin paper wallet else, it is riskier than all Bitcoin wallets.
• Clear your computer cache after Bitcoin transactions.
• If mobile wallet, avoid giving out your device anyhow.
• If hardware wallet, make sure to copy out and backup your security phrase.
• As a beginner, always start with simple Bitcoin wallet like Coinbase.
“Bitcoin is a remarkable achievement” – Eric Schmidt, chairman of google
“Bitcoin is a very exciting development, it might lead to a world currency. I think over the next decade it will grow to become one of the most important ways to pay for things and transfer assets.” – Kim Dotcom, CEO of MegaUpload
“The Colombian Senate held a debate on cryptocurrencies and blockchain as “mechanisms to modernize the digital economy” on Wednesday June 7 2018 – senado.gov.co/news
Do You Know The Top 7 Bitcoin Billionaires you should actually follow in 2018? I guess no. If so, you want to SEE THE CURRENT 7 BITCOIN GENERALS OF 2018.
After writing a post like this, I don’t even know how to end. That is if I should recommend you get started with the Bitcoin revolution, or sleep over it and think about its worthiness or even read its history again.
The good news?
I am not confused either, so, I know what to do.
To show you that I am not confused, I will define Bitcoin again for you. Lol.
Alright, having gone this far, and having seen the prospects, as well as the mission of Bitcoin. The question here is not “when will you get started?” it is rather, which wallet and Bitcoin exchange do you wish to get started with.
Personally, I got started with Blockchain wallet but switched to Coinbase’s crypto4 wallet. If that delights you, you can join me.
Also, if you want my second in rank, Binance crypto300+ wallet is what you want.
You may ask why I spent a lot of time to write this kind of post. Up to 15 hours to finish up.
The truth is that I purposely deleted all my Blog posts even after making it to the Google’s first pages and also having up to 2,000 reads in 1 month since 29th April 2018.
I wanted to build a Cryptocurrency Educational/Valuable Dynasty where the language of cryptocurrency is dissected and explained for complete beginners.
To this end, I have put more hours on this for every nerd reading this now, reaching up to 12, 500+ words. (an average 12 or 6 giant singular posts).
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Great, you have seen Bitcoin 2018 Broken down for Dummies, the question now is, what do you think about Bitcoin and the impact it will or can create?
(Let me know your thoughts if you care. Don’t worry, comments are spam free!)
Resource Codes: Visit faucethub, Dailymotion, HistoryofBitcoin.org