Imagine being at a dinner party with friends and suddenly someone pronounces the word ‘BITCOIN’. The faces of those present, and perhaps yours too, say it all…
“Bitcoin… mmm… I don’t know what it is, but mmm… I’ve heard of it.”
Suddenly, the avant-garde guy jumps up and says: “What do you mean you don’t know what it is? Bitcoin is a crypto coin!”
And that’s when someone asks, “But what’s a kryptomonkey?”
The vanguardist (who was not so avant-garde) is sincere:
“Well, it seems to me that Bitcoin is a digital coin, or something similar…”
Most likely, in situations like this, no one could explain what a kryptomoney is, and at least half the people you’re spending the night with couldn’t even explain what a coin really is.
If you’ve found yourself in a similar situation, and you don’t want to look bad or even want to be a true avant-garde capable of explaining what Bitcoin is, what it’s for, or what the difference is between cryptomoney and a fiduciary coin without dying in the attempt, in this post we’ll clarify it for you once and for all.
Are you ready?
Bitcoin is a digital coin/cryptomoney created in January 2009 by the mysterious and pseudonymous Satoshi Nakamoto, whose identity is still unknown.
Its definition and purpose are described in the famous whitepaper, written by Nakamoto himself, who defines Bitcoin as: ‘a person-to-person electronic cash system, a form of purely peer-to-peer electronic cash that would allow online payments to be sent directly between parties without going through a financial institution.
Fiat (fiduciary) money or legal tender is characterized as a currency that has no intrinsic value. In fact, since 1971, and with this controversial announcement, coins are no longer backed by the corresponding gold reserve and are simply based on a legal value guaranteed by the state and accepted by the community. Therefore, their value is generated by the relationship between supply and demand.
A crypto currency is a type of digital or virtual money used as an exchange medium, which uses cryptography as a means of ensuring the security of transactions.
crypto currencies is used as trust money but, unlike the latter, it has no physical counterpart, no legal tender and no government support, but is based on a distributed ledger (the famous ‘blockchain‘).
Like cash, digital currencies are accepted as a means of payment and can be used to purchase goods and services. They can be transferred between accounts and can also be redeemed for cash.
But above all, crypto currencies have been created to address the centralization, confidentiality and security problems associated with conventional currencies.
As you may have understood, bitcoin is a crypto currency, THE FIRST CYPTO CURRENCY IN HISTORY, but it is not the only digital currency.
Today there are thousands of crypto currencies on the market and, without a doubt, Bitcoin turns out to be the most popular of them all and that’s why it’s considered the digital gold.
Bitcoin is the first crypto currency based on a reliable and secure transaction platform, which was born in 2009 to respond to the uncertainties and gaps in trust money and financial scandals.
However, before its creation, there were other attempts to create a system for exchanging cryptos.
In fact, the first online platform for crypto-currencies dates back to the 1980s with Digicash, also based on cryptography and created to issue and exchange crypto currencies.
In the 1990s there were other attempts to create a system for exchanging crypto currencies. One example is systems such as Flooz and Beenz which, like Digicash, used the Trusted Third Party (TTP) approach (i.e. the company itself undertook to facilitate and verify transactions).
However, all these attempts failed and made it impossible to create a digital currency system.
Finally, years later, Satoshi Nakamoto, an alias used by a mysterious programmer or a group of programmers, created Bitcoin, an open source software based on a totally decentralized technology, without any control authority, which aimed to solve some of the main problems that trust money brought with it:
Bitcoin or bitcoin?
As you may have seen, the crypto ecosystem is full of technical jargon that sometimes makes some concepts difficult to understand. This is the case of the words bitcoin and Bitcoin….
“Why, is there a difference between uppercase and lowercase Bitcoin?” 😲🙄
Of course! And now I’ll tell you why. First of all, Bitcoin (with a capital “b”) refers to the software that allows the custody and transfer of bitcoin (BTC) crypto-currency (with a lowercase “b”).
So Bitcoin is the network, and bitcoin is the cryptomoney
As we said, the fundamental characteristic of Bitcoin is that it allows everyone in the world with a computer/smartphone or any other device connected to the Internet to send/receive money in a totally independent and decentralized way.
This means that bitcoin does not need a central entity (e.g. bank) to control its distribution, circulation and cost.
Bitcoin works through blockchain technology, a single, agreed upon record distributed over several nodes in a network that can be compared to a ledger in which individual transactions are recorded.
Do you want to discover how the revolutionary technology called Blockchain works? Then don’t miss the post dedicated to this interesting topic.
Cryptography is used to make the network secure and allow users to gain some anonymity.
Speaking in slightly more technical terms, Bitcoin is based on a P2P (peer-to-peer) computer network with several nodes, computers that can act as clients and servers and whose task is to initiate or complete bitcoin crypto currency transactions.
It is important to know that there are no central nodes that have a control role in the transactions or in the operation of the network, since the network controls itself based on some mathematical algorithms on which the same block chain is based.
This is why there are no control bodies such as central banks or money transfer intermediaries, which ensures that the costs of using the system are actually reduced to a minimum. In addition, anyone with a device and an Internet connection can use this technology without having to open a current account.
The security and reliability of the Bitcoin is guaranteed by the “blocks” mechanism that allows verification of the transactions made by the Network nodes and by the fact that each block becomes an immutable file that cannot be modified without the approval of the other Network nodes.
Another characteristic of bitcoin is its limited availability.
In fact, at the time of its creation, Satoshi Nakamoto set a limit of 21 million Bitcoins to avoid inflationary behavior in the currency. This, today, is one of the features that increases its purchasing power.
After all this information, you may feel a little confused. So if you still haven’t understood what Bitcoin is for and what its advantages are, I’ll explain it to you below.
Bitcoin allows you to do:
Among its main advantages are the following:
We’ve already repeated it many times… one of the main characteristics of Bitcoin and of cryptos in general is that they are decentralized. This means that their operation is not controlled by any entity or body such as banks or governments.
I don’t have to tell you… As you know, opening a bank account means entrusting this institution with all your information: addresses, phone numbers, credit history, consumer habits.
The history changes if we use Bitcoin, since every transaction made with BTC is stored in the Blockchain and the wallet we use to keep these crypto currencies is not linked to any personal information. There’s only a number that represents your public key and that doesn’t allow you to track your personal identity.
That’s why one of the main characteristics of bitcoin is anonymity.
As already mentioned, the transactions made on the Bitcoin network are stored in a public accounting book that is registered in the Blockchain and is visible to anyone who wants to access it.
This implies that all the amounts of the transactions made within the network are public, but it is not possible to know who sends those amounts to whom. In short, you can’t trace the particular property of each Bitcoin that people have within the network.
The operations performed in the Bitcoin Blockchain are destined to be resolved in a few minutes, which guarantees an unparalleled speed of transaction execution compared to that offered by traditional banking services.
Once a transaction has been made within the Bitcoin Blockchain, it cannot be cancelled.
In the Bitcoin whitepaper, Satoshi Nakamoto explains that one of the biggest problems that have arisen when creating digital coins, was the double expense. It’s a type of attack where people could use and spend the same amount of crypt coins several times.
Bitcoin’s Proof of Work blockchain is designed to prevent this type of attack and is based on the expectation of a series of confirmations, before validating a transaction, that would make this transaction irreversible.
Bitcoin has had a very volatile trading history since it was first created in 2009.
Initially, bitcoins were traded for almost nothing.
If we think that the first transaction in history that occurred with bitcoins dates back to May 22, 2009, when a user bought a pizza paying 10,000 BTC, then equivalent to about $30.00, we can understand the magnitude of the evolution of the bitcoin price in the following years.
The first real increase in the price of BTC occurred in July 2010, when the valuation of a bitcoin went from about $ 0.0008 to $ 0.08 for a single currency…
Seven years later, on December 16, 2017, Bitcoin reached $19,786.24, its historical high. Although many thought this upward trend would last a long time, gold in the crypto currencies suffered several collapses and recoveries until the day we write, when bitcoin broke its historical high of over $23,000.
There are currently more than 18.5 million bitcoins in circulation and now the first ever cryptcoin has a market capitalization of more than $428 billion.
The philosophy behind bitcoin is based on the idea that you are the owner of your money and only you can control it, without the need to store it in the bank or use a bank account to send the money to someone else.
Now you’re probably asking yourself, “Where do I keep my bitcoins?
If you don’t know yet, you can save and store your bitcoins in a virtual wallet, also called a wallet (not a physical wallet, as in the case of the fiat wallet).
Wallets can be of various types: paper, desktop, mobile application, or device.
If you want to know which type of wallet to use to store your bitcoins safely, we recommend the Bitnovo Crypto Wallet.
This is a free app, available in App Store and Google Play Store and is the easiest and safest way to store, send, receive and manage your bitcoins.
That’s because most of the wallets offered by exchanges don’t guarantee you the complete custody of the funds. Instead, the Bitnovo wallet (BIP39 compatible), makes you the only owner and custodian of your cryptos.
When Bitcoin was born in 2009, the mining process needed little more than a home computer and didn’t need to be very fast and efficient.
Today, the evolution of the crypto ecosystem has made mining a somewhat more complex process.
When we talk about mining or bitcoin extraction, we refer to the generation of new blocks for the Bitcoin Network (BTC).
The construction of the blockchain is carried out through this activity, which allows maintaining a peer-to-peer network based on an updated and secure blockchain technology.
All the miners in the network compete to be the first to find the solution to their block’s cryptographic problem, through a test work system (POW), which consists of solving a problem that requires several repeated attempts.
To validate each block, the probability of a miner solving the mathematical problem depends on the calculation power he brings to the network in relation to the calculation power of all the nodes combined (this allows the system to work in a decentralized way).
When a miner finds the solution to the cryptographic problem of his block, he passes it to the rest of the nodes to which he is connected. If that block is valid, the remaining nodes add it to the chain and retransmit it. This process is repeated indefinitely until the block reaches all the nodes in the network.
The block chain contains the possession history of all the coins, from their issuance to the current owner’s address.
Do you want to become a bitcoin miner but don’t know how to start? We explain it in the complete guide about: “How to mine bitcoin“.
We have reached the end and hope to have awakened your interest to the point where you want to invest in bitcoin.
Do you want to get your first BTC tokens but don’t know where to start?
Then Bitnovo is the solution to your doubts. If you still don’t know, Bitnovo is the leading brand in buying and selling bitcoins and other crypto currencies, since it allows anyone, even the most novice, to buy crypto without having any knowledge of the sector.
To get your BTCs you only have to follow a few simple steps:
BUY BITCOIN WITH CASH:
BUY BITCOIN ONLINE:
If you prefer to buy bitcoin online, you only have to go to the Bitnovo website, choose the crypto you want to buy, the amount you want to purchase and, once you have filled in the requested information, you can choose whether to pay by bank transfer, crypto currency or card.
Once the payment is made and the transaction is confirmed in the blockchain, your BTC will arrive to your wallet in a few minutes.
It’s that easy!
If we had to explain in simple terms what Bitcoin is, this would probably be the best way:
Bitcoin is not simply a currency, but a revolution.
As Wences Casares, entrepreneur and founder of Banco Lemon, said, “Right now Bitcoin is like the Internet before the browser.
Who would have imagined a few decades ago that the Internet would become our daily bread?
We believe the same thing is happening with Bitcoin and thousands of other crypto-currencies… the revolution is already underway and crypto-currencies are here to stay.
Do you want to be part of this great revolution?