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Everything you need to know About Bitcoin in 7 Questions

What are the key concepts for the digital currency that does not belong to any country, government, company or person, has no borders and is not controlled? All 21st century moms should know about this technology if they want to not get left behind.

What is Bitcoin?

Bitcoin is a digital currency based on an open source software. It is the first decentralized payment network, meaning that it is not a company or organization, it does not belong to any country, government, company or person, has no borders and is not controlled by anyone. In the Bitcoin network, which is based on a protocol, such as HTTP (i.e., interactive) and SMTP (i.e., e-mail), there are no intermediaries and transactions are made on the basis of peer-to-peer, that is, between peer users: virtually every User is in itself a “bank” that trades directly with other users.

Who created Bitcoin?

The paper titled ‘ Bitcoin: A Peer-to-Peer Electronic Cash System ‘ was published in October 2008 on a website called metzdowd.com and explained how Bitcoin works. The name he has referred to as his creator is “Satoshi Naamoto”, who has claimed to be a man living in Japan, born April 5, 1975.

In fact, the creator has never appeared and there is no way to know his identity. Satoshi Nakamoto may be the nickname of a man, a woman, a group of people, and many believe that Bitcoin was developed by a group of cryptographers and computer science specialists who were then living in the United States and Europe.

However, “Satoshi Naamoto” retired in 2010 from the project, which is undertaken by the global community of programmers dealing with it and continually improving the system in terms of its security, features and applications.

It should, in any event, be noted that the notion of “cryptographer” is earlier. It was first described in 1998 by computer engineer Dr. Wei Dai, who supported the idea of a new form of money, which would not have a central authority, but would use cryptography to control its creation and transactions.

How much is a bitcoin worth and how is its price fixed?

At the moment these lines are written, the price of a bitcoin amounts to 8,000 dollars. Of course, it is a currency with an extremely unstable price, since every second it changes, noting either a dramatic rise or a fall.

Since bitcoin is not controlled by an entity, but by all individuals and businesses that invest in it and use it for their transactions, its price is determined by the laws of supply and demand. Even the slightest transaction made in his system barely affects the price of the digital currency. Just like any other market in the world, and Bitcoin can be manipulated.

An important element is that, based on its source code, created by Satoshi Nakamoto, they can never “cut” more than 21 million bitcoins. This creates an alternative money ecosystem, with fully controlled inflation, in contrast to the financial system we know and the criticisms of causing inflationary pressures due to the fact that central banks They can print money.

How can one obtain bitcoins?

There are three main ways:

  1. One can choose to be paid with bitcoins for the product or service that it offers. Of course, he should have his wallet installed, which will be sent the price he has requested. More and more companies are starting to accept cryptocurrencies as a method of payment.
  2. The second way is the purchase of Bitcoins through the respective exchange websites that exist (e.g. Coinbase). In order to make a transaction through such a website, the user must have installed a wallet in an application form on his mobile phone (e.g. Wirex) and make a transfer from a bank account to it. Each purchase is based on the current parity of Bitcoin with the currency a user wants to exchange and one must be informed until the last minute before proceeding with the purchase, since its price changes every second.
  3. The third way is through so-called “mining”. Mining is a process in which users solve complex mathematical problems of the bitcoin system and are rewarded for their work with Bitcoins (now with subdivisions of Bitcoin, since its price has risen dramatically). Bitcoin mining essentially adds new bitcoins to the market (i.e. users have a role… Mint), but, as mentioned above, based on the open source that Satoshi Naamoto has created, no more than 21 million Bitcoins can be created during his “life”.

How are transactions made in the Bitcoin system?

Bitcoin is simple for the user, but the way transactions are made is quite complex. Money transfers are done immediately, regardless of time and day, without delay.

The user should install a software on his computer or an application on his mobile phone, the so-called wallet, through which he can make transactions within a few seconds.

Users who have large sums in Bitcoins prefer offline media, which are more secure than malicious attacks. Such are specialized devices (e.g. Trezor, Ledger Nano S) which keep the codes off the Internet.

However, at the heart of the Bitcoin network lies the blockchain, a distributed ledger technology. The blockchain is a database containing coded transactions made with bitcoins. It is 100% transparent and decentralized, meaning it is not stored somewhere centrally, but all users have access to it.

This prevents modification, alteration or deletion, while all transactions that are made remain forever recorded on this basis (as transfers of money between unique codes, one for each wallet). This way of recording and storage ensures complete transparency and anonymity. It is noted that the other cryptocurrencies, such as Ethereum and Litecoin, are based on this technology.

Are my personal data at risk when I use Bitcoin?

A key feature of cryptocurrency is anonymity. The creation of a digital wallet requires no ID or tax revenue or any other document. The identity of the user who makes a transaction remains unknown, but this transaction is forever recorded. A transaction cannot be undone or deleted, and can be accessed by anyone through the blockchain.

Is it a currency that has been created for illegal activities?

The anonymity of transactions is the main reason why many consider the bitcoin currency of traffickers.

As experts say, the percentage of bitcoin transactions used for illegal products or services is lower than those made with cash, credit cards and banking transactions.

This is because, while no cash transaction can be proven, Bitcoin transactions are always registered and can be discovered by searching the wallet to which they correspond. An additional advantage is that no counterfeit bitcoins can be created, as is done with the banknotes.

There are many articles online who have lists with real companies – both offline and online –that accept bitcoin or any other cryptocurrencies. Bitnewsbot.com  for example is one of them. They have a list with hosting companies who accept bitcoin and a list with domain registrars who accept bitcoin.

Wassay Ahmed is the president and Co-founder of Ideas Web Service, a company driven by results. With its top-class web services, the company claims to provide you with successful SEO campaigns for your business. Wassay has nearly 5 years of SEO, Digital Marketing, and Web Developments experience. Connect with him on LinkedIn.

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