Can we Talk about Bitcoins?

Currency has always been a huge part of everyone’s lives.

21:05 04 July 2021

since early civilization currencies have been used until today; however, there is not one single global currency, countries or groups of countries all around the world that just use common money.

 

Now, there is no denying that crypto is more and more present in everyone’s lives, maybe you have been hearing more about it every day, on the news or heard your friends and family talking about it.

 

Explaining Bitcoin

 

Bitcoin is an electronic or digital currency, that, unlike government-issued currencies, there is no single entity that issues Bitcoin or is in charge of processing its transactions, which means that it is operated by a decentralized authority.

 

Before Bitcoin, it was impossible to make electronic payments without having to go through a third party, such as a bank or payment processor. This can make payments slower, expensive and not available to everyone. And as a way to solve these problems, Bitcoin operates without a trusted third party, but instead, it works as a purely peer-to-peer electronic currency, which means that the payments are sent directly from one person to another.

 

How does it work exactly?

 

To put it simple, computers all over the world use mathematical functions to independently verify all Bitcoin transactions, this is then added to a public permanent list of transactions called the Blockchain. The Blockchain is stored on all of those computers, working as a secure universal record, detailing who owns what. But let’s get into Blockchains later.

 

Very early on, there were very few transactions processed by the network; however, as time went by, more and more people started using Bitcoin, increasing the number of transactions to the point where the Bitcoin network needed to be updated to keep transactions fast, cheap and reliable.

 

But because there was no consensus on how this update should be performed or whether it should be implemented at all, Bitcoin ultimately had to split into two separate currencies for that update to happen. The version that implemented the originally planned update is called Bitcoin Cash and is listed on exchanges using the ticker symbol BCH. The other version, which made different updates to the network, kept the name Bitcoin and the original ticker symbol BTC.

 

Where can you buy Bitcoins?

 

Currently, there are tons of cryptocurrency trading apps that have made the process of trading cryptocurrencies friendlier for users. Some of the top trading apps that people use to buy, sell or hold Bitcoins are Coinbase, Kraken and Gemini.

 

If you want to set up an account on Coinbase, for example, you will need to provide a phone number, your name, a valid email address and a strong password. And after your photo ID is verified, Coinbase will give you $5 in free Bitcoins.

 

If you are worried about sharing a lot of your personal information online, a way of bypassing phone verification is by using Non-VoIP numbers, which are real phone numbers that are not attached to a physical location.

 

Now, let’s explain what Blockchains are

 

Like it was mentioned before, there is an easier way to complete transactions without having to deal with online wallet banks and third-party applications, and that is possible thanks to Blockchain, let’s get into it.

 

There are lots of ways a bank transaction could fail; for example, it could be due to technical issues at the bank, one of the accounts was hacked, or even daily transfer limits being exceeded.

 

And to solve these problems, the concept of cryptocurrency came into existence. Cryptocurrencies are a form of digital or virtual currency that runs on a technology known as Blockchain.

 

Thanks to Blockchain, cryptocurrencies are immune to counterfeiting, they do not require a Central Authority and they are protected by strong and complex encryption algorithms. Plus, you can find thousands of cryptocurrencies, such as Litecoin, Ethereum, Zcash and everyone’s favorite, Bitcoin.

 

Blocks, keys and miners

 

When someone wants to send Bitcoins to another person, a record is created in the form of a block. In this block, all the transaction details between them are permanently inscribed in it. This record also holds the number of Bitcoins each of the friends own.

 

A new block is created for each transaction, and these blocks hold the transaction details as well as how many Bitcoins every person has in reserve. These blocks are linked to each other as each of them takes reference from the previous one for the number of Bitcoins each brand owns. And this chain of records or blocks is called a Ledger; this forms the basis of Blockchain.

 

What happens when someone tries to send more Bitcoins than they actually have? Well, the transaction will simply not go through, because all of the friends have copies of the ledger and can see how many Bitcoins that person has left, they will flag the transaction as invalid.

 

Every user in the Bitcoin network has two keys: a public key and a private key. The public key is an address that everyone in the network knows of, think of it as an email address of a user. And the private key is a unique address that only the user knows, you can think of it as a password.

 

And finally, these transactions are validated and then added block by block, and the people who validate these blocks are called miners. For a block to be validated and then added to a Blockchain, miners need to solve a very complex mathematical problem, and the first miner who solves it – this process is called Proof of Work – adds the block to the Blockchain – this process is called Mining – and the miners are rewarded with 6.25 Bitcoins.

 

Fall in love with cryptocurrencies, fall in love with Bitcoins!