Bitcoin 101: A Detailed Guide for Beginners

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Bitcoin being the first digital and decentralized currency, is computerized (thus without any physical form) and not owned by any central bank, government or any form of central financial entity. Bitcoin value is basically calculated in USD rate anyways.

What is Bitcoin?

Bitcoin beginners guide

It is a digital coin that has gold-like value. Bitcoin is easy-to-use, stored in cryptographic wallet addresses, and can be securely transferred from one point (i.e. wallet) to another.

Due to the fact that bitcoin is decentralized, the value is determined in a free market without manipulations from any financial central bodies that mostly hold fiat currencies.

Why doesn’t bitcoin have any centralized body?

In the world today, bodies like major banks alongside governments, must stand behind any currency (mostly fiat) to maintain its distribution and economical stability.

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The fact is that, we’re currently living in the Debt Economy Era, where central banks including other financial body of most countries print new bills (fiat money) at will, and without tangibly having linkage to any base asset (e.g. Gold).

This is exactly one of those practices causing inflation in most countries’ economy up til date: unpredictable rises continues, and the prints gets worn-out over time.

Note: Before this era, fiat currencies was not controlled by any government or central bank which made people of then, to have totally control over how much they can control or hold just like bitcoin.

Who created bitcoin and when was it created?

Bitcoin is a cryptocurrency that is established by Satoshi Nakamoto, but there are still disputes to who he was since when bitcoin evolved.

However, since 2009, the BTC Project has been gaining popularity and also accumulating users worldwide.

Enthusiasts also helped by contributing their time and efforts in developing and distributing this particular asset throughout the whole globe.

How was bitcoin created, and how can it be gotten?

The bitcoin creation has exactly the same analogy like gold mining, and this is to say that, bitcoin first came into existence through the same process known as mining (Popularly called Bitcoin Mining).

Bitcoin creation

However, the term ‘Bitcoin Mining‘ necessarily, does not mean that you have to start digging the earth in search to find bitcoin just like the way gold is been mined and discovered.

In bitcoin’s case, the mining is actually done using some couple of special computer powers and gadgets to solve some mathematical calculations involved, which in return is rewarded by the created bitcoin.

The computational power is exactly what determines how fast bitcoin is been created as the mathematical solutions creates what is known as block in the network (blockchain). This is also the environment that makes transfer of bitcoin swift for existence.

Getting bitcoin

Bitcoin distribution is simply done with the process of buying the mined bitcoins online or bitcoin ATMs, and they can be located in some parts of the world.

How to store and hold bitcoins?

Bitcoins are stored in secured and dedicated cryptographic materials, digital software or devices called wallets. Each wallet has a public address which is used publicly to send and receive bitcoins.

This address is made of alphanumeric 30 character string of codes. There’s no cost, or limit to creating and having new wallets.

There are different types of wallets that can be used to store bitcoin cryptocurrency, without loosing it to theft or hacks. Read my post content on step-by-step guide to BTC wallets and how to use them.

How is bitcoin transferred between wallets?

Bitcoin transactions are digitally signed and encrypted from the wallets that is sending it out with its private key (not distributive), and it gets broadcasted to the blockchain network on the internet, which then gets listed on the Block Explorer.

The transaction log keeps tracks of all bitcoin transactions made throughout its existence. This log is also divided into blocks, and each of the blocks contains commands that guides the transaction till it’s closed after completed transactions.

How much does it cost to send bitcoin?

Miner’s fee is the only transaction cost for transferring bitcoin from one point to another (with physical distance being neglected entirely).

The fee is always paid to a miner for each order added to the blockchain to close the block during mining.

Comparing to the means of money transfers, bitcoin is always cheaper in a way, not minding how much that is involve in each transaction.

However, the fee is not fixed and most digital wallets automatically, can calculate the fee required for each transaction.

It’s necessarily to note that the higher the fee, the faster the transfer will become (i.e. your bitcoin transfer will be on the priority list that is handled by the miner who prefers to take the higher fee transactions).

How possible is it to buy or send less than 1 Bitcoin?

It is absolutely possible to send any amount of bitcoin, as long as, it doesn’t affect the miner’s fee (which may be very higher than the amount to be transferred) for the transfer.

The cryptocurrency has 8 numbers after the decimal point (i.e. the smallest bitcoin is 0.00000001 BTC), and the most unit of measurement for bitcoin is known as Satoshi. There is a post i wrote on how to buy bitcoins with USD.

Advice: Never send lower amount of bitcoins to avoid paying bigger amount of bitcoin to the miners than the amount that is being transferred.

What exactly affects bitcoin price?

As we’ve stated earlier, bitcoin is an open source project and that means the price increase or decrease in price is affected by supply and demand just like every other market commodity.

Political news, FUD and most other events can result to the graphical shift in demand or supply of the cryptocurrency.

How do i buy bitcoins?

Buying bitcoins is very easy and simple. Currently, there are decentralized bitcoin exchange platforms that you can actually use to get any amount of bitcoin, depending on its present price value as the market worth is always volatile. Buy your first Bitcoin to get started with making investment in the cryptocurrency trading world.

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