What Is Bitcoin? [How It Works Explained]

Bitcoin is another kind of Cryptocurrency.

It is also known as digital currency or electronic cash. It is a different segment of electronic cash which minimizes the intermediates to execute any monetary activity.

The cryptocurrency type of bitcoin can be easily transferred from one end-user to another user.

This transaction is executed through the peer-to-peer bitcoin blockchain network. The network through which the transactions are made is also known as Cryptography.

Bitcoin was the first cryptocurrency that was invented.

After its invention, numerous other cryptocurrencies were launched in this digital market. Bitcoin is still one of the preferred and popular type of cryptocurrency.

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In this article we will explain how bitcoin works, how you can buy bitcoin, the history, the advantages it has and the pros vs cons.

How Bitcoin Works

Bitcoin is one of the most fortunate experiments in creating digital money. It is a type of software, a perfect combination of processes, codes, and protocols.

The trading symbol or commonly used symbol of Bitcoin is BTC or XBT. Bitcoins are the digital currency the same way it can be stored only in digital wallets. Bitcoins can be transferred as like real cash. You can easily send and receive the bitcoins through its secured network.

The only condition to execute the successful transaction is that both the sender and receiver must be the users of it. Each transaction is monitored and recorded on the interface known as Blockchain.

To send and receive the bitcoins in your digital locker or wallet you must know your private and public key codes to make it a successful attempt.

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How to Buy Bitcoin

Despite being into the investment field for long, yet people do not know how to purchase bitcoin. If you want to buy bitcoin, then you need to go through certain processes. These are as follows:

  1. Register on Digital Wallet.
  2. Submit the documents.
  3. Secured internet connection.
  4. Fill all the details, correctly and completely.
  5. Bitcoin exchange.

If you want to start investing in bitcoin or want to make certain transactions through its network, then you need to first register yourself.

You need to register on the software named ‘Wallet’.

The transaction and the balance of the bitcoin wallet are maintained by using the codes which are known as keys.

There are 2 types of keys that are used for sending and receiving the bitcoins in your wallet. These are Private keys and Public keys.

History of Bitcoin

No one exactly knows who invented the bitcoin. But yes, in 2008 an individual or the group of people named Satoshi Nakamoto came in light who worked on the software of Bitcoin. The pilot version of bitcoin software was released on 3rd January 2009.

Since the day bitcoin was originated, it has been through several highs and lows. It was the first type of cryptocurrency which was created. But who created it, how it was created, and why it was created is still a mystery for all of us.

After bitcoin, several other types of cryptocurrencies are launched in the market, but still the importance and worth of bitcoins have always been the same and highest.

Advantages of Paying with Bitcoin

There are some fundamental benefits of using digital currency. Bitcoin was designed to deliver some special benefits to its users. Some advantages of paying with bitcoin are as follows:

  1. User Freedom.
  2. Discrete in process.
  3. Transactions are made with ease.
  4. The transactional fees which were charged by the banks are zero or minimum.
  5. Easy to access through your mobile as well.
  6. Everyone is connected. Anyone can register on it.

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How to Store Bitcoin

Bitcoins are the form of digital cash, so you can easily store them in your digital wallet. There are 2 types of wallets to store bitcoins. These are:

  • Hardware-based wallet
  • Web-based wallet

You can keep these wallets either on your desktop or on your mobile. To keep the bitcoins safe, you need to keep in mind that the private and public keys are used safely and securely. You can keep your bitcoins safe by various methods. Some of them are as follows:

  1. Desktop Wallet
  2. Hardware Wallet
  3. Paper Wallet

You can also take some other measures to safeguard your bitcoins. The ways which you can follow to safeguard them are:

  • Backup
  • Software Updates
  • Multi-Signature

Worth of Bitcoin

Every currency has its worth or value. Bitcoin is as worthy or valuable as Diamond and Gold are. The Bitcoin is Valuable because of its distinctive features. These are:

  • Scarcity
  • Divisibility
  • Utility
  • Transportability
  • Durability
  • Ability to counterfeit

The Cons of Bitcoins

There are a few cons of Bitcoins, which I think you should know before you start investing in them or use them as your payment method.

These are:

  1. The price of bitcoins changes unpredictably. They can be at their highest value and also they can be at the lowest anytime. It cannot be predicted.
  2. Some hacking concerns are also associated with the storage of bitcoin. Although it is said that the network uses the most secure way, but these days the hackers have been more interested in hacking blockchain.
  3. Bitcoins usage is limited. They can only be used when both the users that are the recipient and the sender both have their digital wallets for bitcoins.

The Pros of Bitcoins

There are some benefits as well of using the bitcoins as your preferred method of payment. These are:

  1. Private and secure transactions can be made anytime, anywhere.
  2. They have the potential to grow rapidly.
  3. No involvement of intermediates.

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