What is Bitcoin?
What is Bitcoin is the first question that comes to mind, you heard the name but you have no idea what it is, who created it, how to use Bitcoin, etc…
So let’s see first what is Bitcoin.
A DIGITAL CURRENCY
Bitcoin is a money transfer and verification system.
It uses a totally decentralized network in that it uses Peer to Peer and does not depend on any central authority.
The Bitcoin protocol originally aims to provide an experimental alternative to electronic payment online. Its unit of account has eight decimal places and it is written bitcoin. It works with software that allows users to create payment email addresses that can send or receive bitcoins.
Its code is fully open since it is Open Source, it allows a universality of media, but can also be a problem during updates. Bitcoin is therefore a new protocol for making payments online, but also a new store of value. It is this new protocol that makes it so interesting because it promises a lot of future innovations.
Some people say that Bitcoin is the new gold, the digital gold of the future.
AN IMMATERIAL CURRENCY
Bitcoin is totally immaterial.
The possession of bitcoins can only be expressed immaterially by sequences of numbers and letters that are in a wallet.
Portfolios consist of addresses to receive bitcoins. Each wallet holds a certain amount of bitcoins which is searchable by everyone on the blockchain.
On the other hand, the emission of bitcoin requires the private key coupled with the public key which serves as address. The keys can be stored in any way (USB, CD, paper, head, …) because of their nature which is a series of numbers and letters. Many software with user interfaces exist for a multitude of media.
A CLEAR CURRENCY
The bitcoin is decentralized, its good functioning is then entrusted to all its users. It is self-regulating thanks to exchanges on market places.
All exchanges are visible on the blockchain, so that its anonymity is relative (pseudonymous). If you have bitcoins and are linked to your public address, you are therefore identifiable. To be a Bitcoin holder, you must have obtained them either by someone or by monetary creation. Monetary creation is done through the mining of bitcoin. The other way is to buy bitcoins from someone on an exchange platform or in real life, or to be paid in bitcoins for a service or a good.
The creator of Bitcoin Satoshi Nakamoto describes in his white paper its peculiarities, which can be advantages or disadvantages.
He imagines this functioning from a monetary concept of Wei Dai called B-money. He will create with Bitcoin what people have been trying to create since the 90s. This idea is conceptualized in 2008 and implemented in 2009, but Satoshi withdraws in 2010 from the project. If you want to know more about this man whose identity remains unknown, consult our page which is dedicated to him.
HIS 6 COMMANDMENTS
• The system must be decentralized, and must work in pairs. Thus the number of Bitcoin created is known in advance as well as its inflation.
Bitcoin will be distributed through the mining network to the tune of 21 million following a well-defined cycle. There will be no more and no less bitcoin.
In addition, no bitcoin can be destroyed or replaced. The issue is strictly limited to the number fixed in advance. The system is protected from the traditional instabilities of the fiduciary currencies: A bank or a state will not be able to influence its course by monetary creation, devaluation, destruction …
• It must be easy to open a Bitcoin wallet. There must be no selection as for a banking establishment. It must be open, no proof of residence or anything else. All you need is an internet connection and a computer that does not even have to be powerful. Bitcoin avoids the bureaucracy and the troubles that accompany it.
• It must be anonymous.
You can create as many addresses as you want without disclosing them to others. The circulation of money is therefore relatively anonymous.
• But everything must be transparent.
So anyone can look at the source code. And all network transactions are visible. Anyone can view an address and know all the receipts or cash issues of it. On the other hand if he can not link the address to a person it remains anonymous.
• Transaction fees are minimal.
State limits do not exist with Bitcoin. You will not have to pay huge sums to send money to any place in the world.
Indeed even for very high transactions, the price of the expenses remains minimal, moreover it is not refunded to an organism, but to the minors who contribute to the stability and the reliability of the network.
Transactions are fast.
Bitcoin knows only one continent, it is the internet.
It is so very fast. You can transfer money from one address to another with a single click. The transaction appears directly before being confirmed. In addition it is not possible to cancel a transaction. Once the bitcoins are sent you can not go back. This prevents it from being compatible with paypal or with traditional bank payments for the moment.
The lightning network will make Bitcoin even faster.
Transaction blocks contain a list of end-to-end transactions.
The first computer that creates this block receives a bitcoin reward for participating in the smooth running of the system. The length of the blocks grows more and more, so there are fewer and fewer bitcoins created.
This goes up to 21 million as we specified above.
The generation of bitcoins follows an algorithm defined in advance: thus the first four years, 50 bitcoins are generated every 10 minutes, then the value is divided by two for another four years, since November 2013, 25 bitcoins are created every 10 minutes , and this division takes place every 210,000 blocks, which roughly corresponds to four years. The figure of 21 million bitcoin should be reached in 2040, if the currency survives so far.
Take a look below at the Bitcoin Emission Curve.
Those who get bitcoins are minors.
They confirm the transactions and generate the new blocks. It is thanks to these computers that generate computing power that the system is secure. Initially, a normal computer was enough to mine bitcoins, but since its price has risen engineers have developed specialized machines in the bitcoin mining. They are very expensive, so that bitcoin mining is now reserved for people who want to invest in its value. The computing power solves a cryptographic problem called SHA-256, which is extremely hard to find but extremely easy to verify.
Bitcoin is therefore a POW mining coin, Proof Of Work protocol.
The security of Bitcoin lies in this principle.
The block chain is taken in a chronological way which prevents to spend several times the same sum.
Transactions to be confirmed must be included in a block, a single confirmation is enough to consider the security of a transaction, but for those above $ 1000 it takes more than six confirmations. With this organization it is impossible to modify a previous block and nobody can control or falsify the network. To validate a transaction it must be public, shared with the network. You can not do computer-to-computer transactions without going through the internet and the Bitcoin network.
To make these transactions, Bitcoin uses key pairing cryptography or asymmetric cryptography.
Thus all bitcoins contain the public key of its owner. In order for a bitcoin to be transmitted from one user to another, the first must put the public address of the recipient and sign with his own private key. This key is hard to find and easy to prove. For there to be falsification all these operations are public, except of course, the private keys.
HOW TO START?
To start using Bitcoin you need to get some.
You must first own a portfolio or a wallet, there are different kinds of wallets to hold Bitcoin.
Then you will need to get bitcoins.
To go further you can watch this video of Andreas Antonopoulos: Introduction to Bitcoin.
Andreas Antonopoulos is a Bitcoin Expert and Evangelist.
You can also read Bitcoin White Paper here in PDF format: Click Here.
And visit the website dedicated to Bitcoin: https://bitcoin.org.
Let’s see now how to buy Bitcoin: https://bitcoincryptoadvice.com/how-to-buy-bitcoin
Bitcoin and cryptocurrency maximalist. Alexander follows Bitcoin and crypto since 2015.