Bitcoin Comprehensive Guide

Are you new to Bitcoin or cryptocurrencies in general? Scroll down to find some resources and guides that will help you get started with Bitcoin and other cryptocurrencies. 

 

So What’s the Bitcoin? 

Bitcoin is a new digital currency. You can store, exchange, and pay with it just like any other money. Bitcoin is unique in that it has a decentralized structure and an opt-in model. What does this mean? 

Centralized ‘fiat money,’ which is literally money by decree, is a currency that is issued by central banks. Citizens are required to use the money of their country. Transactions are done through intermediaries such as banks and payment gateways, with the exception of cash which is becoming less common. 

Bitcoin is an opt-in currency, however, that is managed by the ‘consensus, or the will, of its users. It is made up of a growing number of people who have agreed to the Bitcoin protocol’s rules. They use decentralized infrastructure for peer-to-peer transactions and to store value without interference from any government, company or financial institution. You don’t need to ask permission to use Bitcoin and you are not at risk of being disconnected from the system. 

Importantly, the system is global and headless, so it is both durable and resistant to corruption. 

 

What is the value of Bitcoin? 

Two main reasons Bitcoin is valuable are: 

  • It is used by a group to store and exchange money. 
  • It is agreed upon by a group of people. 

 

People have used all kinds of money in the past, from bottle caps to seashells, but gold is arguably the most durable form of money. Why? 

Gold is a rare and durable metal that can be divided easily. This is why people chose it. These characteristics made gold a useful medium for exchanging and storing value. 

Because Bitcoin has many of the same characteristics as gold, it is often compared with that precious metal. Namely: 

  • There is a limit to its supply. There will be 21,000,000 bitcoins in the future. 
  • It is easily divided. One bitcoin can be divided into 100,000,000 pieces. 
  • It’s durable. Bitcoin ownership is tracked by a large global network of computers that are independently operated. This makes sure that no bitcoin is ever lost. 

 

Bitcoin also has some other key features that allow it to bring the monetary properties of gold to the digital age. These are: 

  • It is easy to send bitcoin. It takes just minutes to send bitcoin to any person in the world. You also get a 100% security guarantee. It is almost like sending encrypted emails. 
  • It is easy to confirm the authenticity of bitcoin. It’s virtually impossible to transact using fake bitcoin. 

The utility of gold allowed the gold network – to use a modern phrase – to grow over time until gold was almost universally recognized as having value. Bitcoin, which was founded in 2009, is a much more recent technology than gold. However, Bitcoin’s network efforts are aided by the speed and scale of the Internet. Since its inception, Bitcoin’s value has increased at an exponential rate to the point where it is close to gold’s. 

Learn deeper about Bitcoin: A Beginner Guide for Bitcoin, How Does Bitcoin Work? 

 

How to create a Bitcoin wallet? 

A Bitcoin wallet allows you to interact with the Bitcoin network. It can be used to send, buy, trade, send, and receive bitcoin. It is simple to create a Bitcoin wallet. Here are 3 ways: 

1.  Cold wallets or hardware wallets (we recommended way) are physical devices that are specifically designed to store cryptocurrencies. These devices offer the highest level of security for digital assets. They protect you from the Internet making it virtually impossible for hackers to access your wallet. 

To set up your cold wallet, please read this step-by-step guide:

Step-by-Step Guide to Setup Your Ledger Wallet 

 

2. Hot wallet or software wallet comes in the form of an app that can be downloaded to your desktop or phone for free. The app is easy to use and you can make Bitcoin transactions in a matter of seconds.  

Software wallets can be hacked because they connect to the Internet. It is recommended that you do not store large amounts of bitcoin in your software wallet. If you do decide to use the hot wallet, please make sure to read:

Cryptocurrency Ultimate Security Guide, You shouldn’t miss 

For a hot wallet for bitcoin, you may choose Bitcoin Core or Bitcoin Wallet, which you can get from bitcoin.org 

 

3. Centralized exchange (CEX) wallets, because they simplify the buying process, centralized exchanges (CEXs), have been popular places for newcomers to bitcoin. It’s similar to opening a trading account. 

The CEX retains full control of your funds. This puts you at risk of the exchange being hacked or going bankrupt. It also means that you will need to ask permission to withdraw bitcoins, wait longer for withdrawals, and pay higher transaction fees. 

CEX is convenient for buying, selling, and trading 

TIPS: CEXs do not provide a safe place to keep digital assets. If you do not plan to trade your bitcoin immediately after you have purchased it, it is a good idea to transfer it to your hardware wallet. 

 

How to buy and sell bitcoin? 

Get a guide about how to buy crypto currency (including bitcoin) by reading A Comprehensive Guide with Examples About How to Buy Crypto Currency 

 

How to send and receive bitcoin? 

It is easy to send bitcoin. All you have to do is choose the amount and decide where it will go. 

To receive bitcoin by providing your Bitcoin address to the sender. 

Read more: How To Send And Receive Bitcoin Safely? 

 

How does a bitcoin exchange work? 

The process of trading bitcoins for local currencies, goods, services, or other cryptocurrencies is called Bitcoin exchange. There are many options, from peer-to-peer exchanges to large centralized exchange services that look like stock trading accounts. 

Read more: How Does Bitcoin Exchange Work? 

 

What is Bitcoin mining? 

The process of mining bitcoins (creating new ones) is essential to the network’s ability to reach a consensus (agreeing on the truth) without having to rely on a central authority. The network’s security is ensured by mining. 

Read more: Introduction To Bitcoin Mining 

 

How does Bitcoin governance work? 

Bitcoin isn’t a static protocol. It can and does change over time depending on its environment. The process of improving Bitcoin is called ‘Bitcoin Governance’. It includes formalized procedures as well as a form known as rough consensus’, which derives its name from open-source software development culture. 

It is important to remember that Bitcoin is not a centralized organization. If we use that term, it is owned by all its users. It is unclear what Bitcoin is or how it develops. The answer is determined by many voices: miners, nodes, exchanges, wallet providers, and, most importantly, those who own and use bitcoin. 

Read more: How Does Bitcoin Governance Work? 

 

What are the tax implications of using Bitcoin? 

You need to know the tax laws of your country, whether you are investing in Bitcoin or getting paid in bitcoin. You may be exempted from tax in some areas. Some tax laws are so complex that you must keep track of every transaction. So be sure to understand your local tax laws about cryptocurrency 

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