Bitcoin basics – A step-by-step guides for newbies

If you want to know Bitcoin basics, when it came into existence and how can you get one then this guide is definitely for you. We will give links to more resources for more details.

Introduction to Bitcoin

Bitcoin was introduced by a person (or a group) called Satoshi Nakamoto in 2008. Yes, just after the global financial crises of 2007-2008. It is a cryptocurrency and a decentralized payment system without a central authority. Bitcoin eliminates the need of middleman’s, brokerage fees, banks etc. Bitcoin is a peer to peer digital payment system and you can control your funds.

In just a few years, Bitcoin has captured interest from all over the world. From major companies such as Microsoft to new start-ups have started accepting Bitcoin as a legal payment option. There are several questions about its legitimacy, however, on the other hand, few countries are creating regulations for using Bitcoin.

bitcoin-basics

Bitcoin in-depth

To help you better understand, let’s break into multiple pieces-

  • Bitcoin – a digital cryptocurrency
  • Bitcoin wallet – a digital wallet to store and transact Bitcoins
  • Blockchain – this is the technology which is important to understand if you are a technical geek

Bitcoin currency is a piece of encrypted code which cannot be forged, duplicated. It can be transferred to different entities and the transaction can never be reversed. Each transaction is stored in added into a block which further chained to the previous block Nodes on the network validates the transaction and create a new block, the process called mining. Nodes get regarded if they mine any block successfully.

In order to get your Bitcoin, you need to first create a wallet. There are many websites which offer free Bitcoin wallets. You can check the list here. Once you have your own wallet, you can either mine the Bitcoins or you can exchange it with some other currency e.g. USD, EUR, INR etc.

Bitcoin wallet

Bitcoin wallet can hold necessary information to transact Bitcoin. There are providers which offer apps, web wallets and that can store information for multiple currencies. You can choose an online Bitcoin wallet that offers currency exchange services. You can create your own wallet by downloading in on your device, it requires some technical food.Bitcoin wall

Each Bitcoin wallet comes with a unique address. One can make transactions by using this address. Technically, a wallet stores the digital credentials – two cryptographic keys, one public and one private/secret key. As Bitcoins are inseparable from the transaction ledger, no Bitcoin is stored in the wallet.

Blockchain

Blockchain and Bitcoin are two separate things. For instance, the Internet is not Google, Email or WWW. The Internet is an interconnected network of multiple nodes. In the same way, the blockchain is a technology in which each block is chained together. A complete chain of blocks can hold some data or asset such as Bitcoin currency. Chain of blocks along with the asset forms a database. Each node on the network can store the copy of the blockchain database.

More information is given in various technical documents all around the internet. Few of them are mentioned below-

Bitcoin wallet wiki
Official Bitcoin website

Leave a Reply

Your email address will not be published. Required fields are marked *