Bitcoin (BTC) is a decentralized virtual payment network implemented from a digital concept known as a cryptocurrency, a digital currency or a virtual currency. Bitcoin is a peer-to-peer digital money that runs on the Blockchain which is a network of computers connected via the internet that generate, transmit and authenticate financial transactions.
How does bitcoin works ?
We will begin by looking at and understanding the key features you need to get Bitcoin working. As a new user, you need to install a Bitcoin wallet on your smartphone or computer. After complete installation, you need to understand the key characteristics of Bitcoin such as blockchain, mining, digital wallet, trading and exchanges.
An individual can make payments to a merchant or another individual using bitcoin without the involvement of a third-party such as banks, for validation purposes. Instead, blockchains clear and validate all the transactions within the system.
What is the blockchain?
Bitcoin is conducted and recorded on a public ledger known as the blockchain. The list of verified transaction records is called blocks, which contain cryptographic/ fingerprint hash of the previous blocks, timestamp and all transaction data since it was started. The blockchain publicly displays all transactions for transparency purposes during the validation process. It also helps in confirmation of both the spender and the receiver.
How to get bitcoins ?
There are four ways you can obtain bitcoins including:
Blockchain transactions or bitcoin trading
A transaction occurs when an individual transfers bitcoin from his wallet to the merchant’s wallet and gets recorded in the blockchain. Merchants and clients may decide to transact using bitcoins for peer-to-peer payment transfers or as payment for goods and services. Bitcoin wallets have a piece of secret data known as the private key that sign transactions, which is used as a mathematical proof to verify Bitcoins were sent by the owner of the wallet. The private key or seed also prevents anybody from altering with the transaction upon been initiated. Every transaction is broadcasted to the network and takes 10- 20minutes to be confirmed through a process known as mining.
Bitcoin Mining
So what's the deal with people mining cryptocurrencies, mining bitcoin how it works? The action and procedure of creating Bitcoins is known as mining. It requires computers with specialized hardware and software for bitcoin miners to verify and solve algorithms required to process transactions by adding them in the blockchain. All transactions must be loaded in a block for them to be confirmed.
Cryptocurrency exchange
Digital currency exchange is an online platform where traders buy and sell Bitcoins. It is a marketplace that matches the sellers with buyers of cryptocurrencies. It is certainly one of the quickest ways to buy bitcoin in UK with your paypal account or with a credit card. The buyer can deposit money via bank wires, bank transfers, debit/ credit card transfers, money orders, gift cards or bank drafts.
Bitcoin ATM Machine
Bitcoin vending machines are among the most convenient and straightforward ways to purchase bitcoins. The traders are required to verify their Bitcoin wallet via their smartphone QR code scanner. Then insert real-world currency into an ATM and obtain bitcoins immediately.
Bitcoins Profit, how to become a cryptocurrency investor?
Bitcoin has made the fortunne of many early investors who manage to buy the digital gold when the price was still trading under $1. Many cryptocurrency analyst forecast a bitcoin price above $1,000,000 in the coming year. Therefore there is still a lot of room for big price appreciation and plenty of Bitcoin profit. To securely store, spend and transfer Bitcoins, you need to install and set up a digital wallet on your smartphone or computer. Bitcoin wallets are secured using private keys that are used as signature and proof of transactions. The digital wallet contains unique keys (password) assigned to the owner’s Bitcoins and their recorded value during sending or receiving payments.
There are two forms of Bitcoin digital wallets including hot and cold.
- Bitcoin hot digital wallets are online and allow instant payment transfers while cold digital wallets are offline and stored on the owner’s computer.
- Bitcoin cold wallets have a high level of security; however, it takes longer and cumbersome during the transaction process.
To receive Bitcoins, you simply need to provide the sender with your Bitcoin address. The address contains a long sequence of both numbers and letters starting with a 1 or 3, which is a unique identifier that is used to send payments to only you. For every transaction, you can generate a new address to maintain and enhance financial privacy.
Buying bitcoin is one thing. Knowing when to sell for profit is another. To learn more on how bitcoin works and how to buy bitcoin in UK for maximum profit, watch our latest bitcoin copytrading guide.