There has been a lot of buzz around Bitcoin for the past few years all over the world. It is a new form of currency, a cryptocurrency, and is being considered as the future of money. It is used and distributed electronically.

What is Bitcoin?

Bitcoin is a digital currency that first came into existence in 2009 and is now being used all over the world. Since then, there have been many other forms of assets that have been developed in blockchain technology. Bitcoin can be explained as a peer-to-peer network in which there is no single person or institution that controls it. Bitcoins cannot be printed out in physical form and their amount is limited. Only 21 million bitcoins can ever be created.

Who Created Bitcoins?

Bitcoin was first created as an open-source software by a programmer or a group of programmers who chose to be anonymous but used the alias Satoshi Nakamoto. There have been a few rumors about the real identity of Bitcoin creators, but all those people mentioned in the rumors have publicly denied being Nakamoto. In 2010, Bitcoin came into the hands of a few prominent members and Gavin Anderson was named as the lead developer. It has been estimated that Nakamoto owns around 1 million bitcoins, which is about $3.6 billion as of September 2017.

Who Controls Bitcoins

Gavin Anderson claims that as soon as he became the lead developer, his focus was on decentralization. His main aim is for Bitcoin to continue its existence autonomously. For most people who invest in Bitcoin, the main reason is its independence from world governments, corporations and banks. No single authority can have a say or interfere in the transactions related to bitcoins, nor impose any fees or take people's money away. Moreover, the whole process of a bitcoin’s movement is quite transparent as each transaction is stored and recorded in a distributed public ledger called the blockchain.

How Does Bitcoin Work?

Bitcoins make use of the blockchain technology. Blockchain is a shared public ledger on which the bitcoin network relies upon. If there are any confirmed transactions or any newly added bitcoins, they are added into the blockchain. All transactions which the user initiates, where they send or receive the bitcoins, are verified on the blockchain network. Blockchain is public ledger which records all transactions and can be explained as a physical ledger maintained by banks. The difference, however, is that in this case it is being maintained publicly and anyone can use it to match a transaction. Bitcoin uses public key cryptography and the system uses two pieces of information in order to authenticate messages.

The digital records of the transactions on the blockchain ledger are combined into blocks. So if anyone tries to change a single number or a letter in the block of transactions, it ends up affecting the rest of the blocks. Since it is a public ledger, any mistake or any attempt at fraud can be spotted easily and corrected by anyone. The users have wallets where they store their currency and the wallet can verify the validity of each transaction. The digital signatures help to protect the authenticity of each transaction that corresponds to the sending addresses. Due to the verification process, and depending on the platform where they are trading, the bitcoin transactions may take a few minutes to be completed. The bitcoin protocol is designed in such a way that it takes around 10 minutes for each block to mine (or store).

How to Get Bitcoins?

Bitcoins are available at many different cryptocurrency exchanges and can even be bought directly from people through the marketplace. Bitcoins can be paid for in cash, debit card transfers, credit cards or with other currencies as well. For this, a user would need a bitcoin wallet.

How to Mine Bitcoins?

Even though the term "mining" may suggest the coins being dug out from the ground, in reality, bitcoin isn’t a physical asset. A bitcoin exists in the protocol's design and have not been brought out physically in the market yet. As per the protocol, there are 21 million bitcoins and the miners bring out the bitcoins in the "light" a few at a time. The miners get the bitcoins as a reward for creating blocks of transactions which are validated and then included in the blockchain.

Bitcoin Mining

The miners use special software to solve the problems and are then rewarded with bitcoins as a reward. This is done as an incentive for more and more people to mine and is a smart way of issuing the currency. Following steps are included in the process of bitcoin mining:

Verify that the transactions are valid.
The transactions are bundled in a block.
Select the header of the transaction which is the most recent and inserts it in a new block as a hash.
Solve the PoW (proof of work) problem.
When the solution is found, a new block is added to the blockchain and then propagated into the network.

What is PoW?

PoW stands for "proof of work" which is a method that helps to make sure that the information that is being created in a new block was difficult (costly and time-consuming) to make. The processing power can be converted into hardware, energy and time.

Bitcoin Cloud Mining

The concept of cloud hashing or cloud mining enables a user to purchase the mining capacity of hardware in data centers. This helps people earn bitcoins without having to manage hardware, software, bandwidth, electricity or any other issues. This way, all bitcoin mining is done on the cloud. This prevents the users from facing problems associated with conventional mining of bitcoins such as hosting issues, heat, electricity, upkeep trouble or installation problems.

How to Buy Bitcoins?

Bitcoins is still the number-one cryptocurrency in the market, even after all the highs and lows. It is the easiest and the most convenient digital currency to purchase. You do not have to spend months mining bitcoins if you want to own them, you can directly purchase them in a matter of minutes and can be used as an investment or just as a currency. If you want to know how to buy bitcoins, you would need a place where you can access them from or store them in. This is where a bitcoin wallet comes in.

Where to Buy Bitcoins?

Since bitcoin is a digital currency and not a tangible "coin", they are not something that can actually be "stored". So a bitcoin wallet is not an actual wallet that you can attach on your jeans. It is merely a public key and a private key which allows a user to buy and sell bitcoins easily. Since it is just a series of keys, there is a large variety of different types of bitcoin wallets and different levels of security.

When selecting the best and the most reliable wallet to store your bitcoins, one must consider the following points.

Control Private Keys: It should be a wallet where you can own and control your keys.
Security and Back Up: It should have reliable features for seed backup keys and pin codes.
Developer Community: It should have an active developer community for better maintenance.
Ease of Use: It should be fast and easy to use.
Compatibility: The wallet should be compatible with different operating systems.

Bitcoin Wallet

Online and Mobile Bitcoin Wallets

When it comes to convenience, the best ones for the casual bitcoin buyers are online and mobile wallets. They allow quick and easy access to the digital currency but it does put your money in the hands of a third party as it stores it on a cloud based system. These wallets are fairly secure, but one must still be vigilant.

Hardware and Software Bitcoin Wallets

The hardware wallets are very secure and the best choice for your bitcoins, especially if you are buying them as a form of investment rather than for spending. The hardware wallets, also known as wallets on a secure device, are the safest choice for cryptocurrency wallets. The only drawback is that they cost money, unlike the popular apps and software wallets. Trezor is one such type of a hardware wallet for bitcoins that requires 2-factor authentication with a password and a PIN code that the Ledger wallet requires for access. The software bitcoin wallets, on the other hand, are not as secure as the hardware ones. If a hacker manages to get into your computer, they can steal your bitcoins. As such, you need to be careful and keep the laptop safe and malware-free. The popular software wallets are Electrum, Copay and Jaxx.

Paper Wallets

In paper wallets, you have your public and private keys printed on a piece of paper which cannot be hacked into. You can use your printed QR codes on an online or a software wallet for using. The risks involved in paper wallets is you losing the paper, the paper getting damaged or someone stealing it from you. As such, one has to be very careful with the paper wallets and keep them sealed tightly. It should be kept in a secure manner and folded in such a way that the private keys cannot be seen.

Buying Bitcoins

The first step in deciding where to buy bitcoins is to find a bitcoin exchange. If you want to buy bitcoins with cash or cash deposit, then it is the most private way of buying bitcoins. If you're going to buy a large number of bitcoins, such as 25 or more, then using a digital exchange is the best bet. The following are some of the best bitcoin exchanges:

Coinbase

This is one of the biggest and the most reliable platform for buying bitcoins in the US. It offers services of exchange as well as a wallet, both in one. This makes it quite easy for a first timer. This exchange also supports many other cryptocurrencies, such as bitcoin cash, ethereum, and litecoin. Once the user has signed up with the exchange and connected it with their bank account, they can easily transfer their funds in and out of their account and convert bitcoin to dollar or USD to bitcoin at their will. Coinbase exchange charges a percentage of a fee that is variable of 1% for US transactions, from a bank account or a USD coinbase wallet. A further $2.49% is added as a fixed fee if the transaction is being done through a debit or a credit card.

The coinbase wallet is also quite secure and can be accessed from a website or even through a mobile app. Moreover, cash balances are insured for up to $250,000 against a breach of online storage or theft. They also hold 98% of customer currencies offline to keep them safe from hackers.

Binance

Binance is yet another bitcoin exchange that also supports a wide range of other cryptocurrencies as well. They charge a low fee of just 0.1% for trades. This exchange has a large variety of digital currencies that goes beyond the popular ones. They also offer to trade coins into a broad range of currencies at a competitive rate. There are, however, a few complaints that users have reported, such as bugs in the Android mobile app or delays in withdrawing certain currencies. This exchange is not insured and it could be a concern to many users.

CoinMama

This is an all-in-one exchange which provides a digital wallet as well. It is easy to buy bitcoins from this exchange along with a few other digital currencies as well. This website is quite popular all over the world and claims to be present in more than 188 countries and has a customer base of more than one million users. It allows the user to buy bitcoin in $100, $200, $1,000 or $5,000 increments with just a few simple clicks on their website. Their fees, however, are a bit on the higher end, around 5% and an additional 5% if you buy through a debit or a credit card. They do not have a mobile app, but their website is user-friendly and of high quality. The CoinMama exchange is registered in the US which provides legitimacy and recognition to the exchange as compared to many other cryptocurrency exchanges.

How to Buy Bitcoins with Cash?

It is good to know that you can also get bitcoins from hard cash. You may need to go out of your way for it, but sometimes it is worth it for the security. You may also have a chance of buying bitcoins from an ATM; Coin ATM Radar, has a map of all bitcoin ATMs all over the world. There are many such ATMs in major cities in the US, such as New York, Chicago, Atlanta, Los Angeles, Miami and Philadelphia. The other way of buying bitcoins for cash is through local bitcoins which connects the buyer and seller. Through this, you can potentially meet them in person and you can then pay them money directly. There are also specific websites such as Paxful and Bitquick which connect the buyer and seller where the seller provides their bank details and the buyer makes a cash deposit at the bank.

How to Buy Bitcoins from an Exchange?

Once you have decided on which exchange you want to buy bitcoins from and have already gotten yourself a bitcoin wallet to store your funds in, you are ready to buy bitcoins from a cryptocurrency exchange. You can buy from the exchanges mentioned above among the many options that you have. You would need to open up your account at the exchange in order to buy and sell the bitcoins. Most of the exchanges require verified identification for your account to be set up, due to the anti-money-laundering regulations. This means that you should have a photo ID and a proof of your address.

Most of the exchanges do accept payment through credit cards or bank transfers and some even accept Paypal transfers. Once you have signed up with your information and bank account details and the exchange has received payment, it will purchase the corresponding amount of bitcoins on your behalf which will be automatically deposited in your wallet on the exchange. This process can take minutes and sometimes even hours, depending on the network. Once you have the funds on your exchange, you should (if you prefer) move your funds to your own personal wallet.

Bitcoin Value

As of 30th March 2019, the value of bitcoin is $4,093.87, which has increased by about 0.4% from the last price. It mostly has an upward trend in rate and is expected to grow and stay around $4000 to $4100 price range. At present, the total supply of bitcoins remains at 17.62 million and its market capitalization is at $72.14 billion. When it comes to price expectation for bitcoin and its value in the future, most people expect it to rise further. One of the traders claims that it will go at least $100,000 within four years and could even reach $150,000 in that time.

Bitcoin Converter

This guide will help you know more about Bitcoin and how to trade in this digital currency. Whether you want to buy it and keep it as an investment, sell it or trade it, there are plenty of options. When you do decide to buy bitcoins, you should be aware of the current prices, as per any currency you want. This leads you to the Bitcoin calculator or Bitcoin converter which is readily available online.

As per the bitcoin converter, it states that the value of bitcoin has remained high and will continue to do so, as expected. The bitcoin converter is like a calculator which gives the user the latest rates to convert any amount of bitcoin into any world currency.

Bitcoin Trading

Since most investors are aware of the importance and the value of Bitcoins, it has become a rapidly growing currency against the dollar. Many traders, as such, prefer to trade in the bitcoin derivatives because of its highly volatile nature which also makes it the best choice for bitcoin CFD trading.

How Does Bitcoin CFD Trading Work?

There are two ways through which a trader can deal in bitcoin. They can either buy the currency or hope for it to increase in value so that they can sell it on a profit. Alternatively, they can speculate on its value without knowing the token; this is how CFDs work. It enables you to trade a contract that is based on prices in the market. You can put down a small initial deposit, making it a leveraged product and still be able to gain exposure of a more significant position. This can increase the profits and may even have an effect on the losses.

How to Trade Bitcoin CFD?

First, you would have to open your trading account and it only takes a few minutes to set up.
Fund your account.
Fill in the amount that you prefer to trade in.
Buy (go long) or sell (go short) on bitcoin.

Bitcoin Trading - Bitcoin Futures

When it comes to bitcoin trading, it is important to mention another vital development of bitcoin - Bitcoin Futures. Bitcoin Futures have been available since the end of 2017 and are readily available on regulated cryptocurrency exchanges. They may also have an impact on the regulatory decisions on other instruments for bitcoins such as bitcoin ETFs. For the investors, who want to speculate on the price of bitcoins without actually buying any directly, Bitcoin Futures is their ideal choice. It provides them with a regulated and viable means to do so quickly. Bitcoin Futures also help to hedge against risk during volatile price fluctuations of bitcoins. One of the most popular Bitcoin Future trading platforms is "Bakkt" which offers physical delivery of the asset for the contracts, but it remains under their custody, rather than in the custody of the purchaser, which eliminates the need to purchase the bitcoins on the exchanges.

Bitcoin ETF

ETF, which stands for exchange-traded funds, is an investment vehicle that tracks the performance of a specific asset or a group of assets. Through this, the investors can diversify their investments without owning the assets tracked by the ETF. For those people who are only interested in gains and losses, this form of investment is better than the actual buying and selling. A Bitcoin ETF means it mimics the price of bitcoin and allows the investors to buy the ETF without actually going through the process of buying bitcoins and not worry about the lengthy process of doing so and there is no need to learn about the cryptocurrency at all.

Bitcoin in the News

There have been plenty of times when there has been a lot of bitcoin news. This included the many breakthroughs that it has had, such as:

November 2012 – WordPress started accepting bitcoins as a means of payment.
July 2013 – A joint project in Kenya was launched, that linked bitcoin with M-Pesa, which is a popular East African mobile payments system.
September 2014 – TeraExchange, LLC, received approval from the United States Commodity Futures Trading Commission began listing an over-the-counter swap product that was based on the price of a bitcoin currency, which marked the first time in the US a regulatory agency had approved a financial product based on bitcoin.
March 2016 – virtual currencies were recognized by The Cabinet of Japan such as Bitcoin for having functions which are similar to real money.
August 1, 2017 – The first fork in Bitcoin was launched, known as Bitcoin Cash
October 24, 2017 – The second fork in Bitcoin created: Bitcoin Gold
December 10, 2017 – CFE (Cboe Futures Exchange) started offering Bitcoin Futures trading
December 28, 2017 – Third fork in Bitcoin launched: New coin on SegWit2x chain called B2X

Conclusion

Bitcoin is one of the pioneers in the cryptocurrency market. It has seen many highs and lows when it comes to its value and price, and yet, its price has maintained an upward trend. Bitcoin is a unique form of an alternative currency which is free from any interference from a third party and lets a user have complete control. It is true when it is being called the "future of money." The influence of bitcoin on international trade, however, is still in its infancy, but it will surely have an important role to play in it. The international trade is a multi-trillion-dollar industry which needs a financial system that is robust and secure. Bitcoin may not be there ultimately, but as the technology stabilizes, it will eventually become a top player. It is only a matter of time when bitcoin takes over the entire world.

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