Everyone is talking about Bitcoin. You know little about it, but enough to understand that this cryptocurrency is changing the way we think about money, and now you want to know how to get Bitcoin.
Am I right? I thought so…
Each Bitcoin is worth more than 7000 US Dollars and some people think they could be worth more than 60,000 US Dollars by the end of 2019. That’s a lot of money, so let’s find out how to get Bitcoin!
There are a few different ways how to get Bitcoin. You can buy Bitcoin from an online Bitcoin exchange and pay with a credit card. Or you can meet a seller in person and buy Bitcoin with cash. You can even create your own Bitcoin through a process called mining!
In this guide, I will teach you about what Bitcoin is, how it works and where to find it. I’ll also teach you the right way to store all the information you need to access your new Bitcoin safely.
The first things all beginners need to know are; what is Bitcoin and how does Bitcoin work? So, let’s get started…
https://www.bitdegree.org/tutorials/how-to-get-bitcoin/
What is Bitcoin?
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Bitcoin is;
Digital currency: It’s money that only exists digitally
Peer-to-peer: It’s sent from one person to another. There is no bank or PayPal — these are called middlemen or third parties. Bitcoin has no middlemen or third parties
Public: All Bitcoin transactions are recorded on a public ledger called a blockchain. All users with access to the internet can view the Bitcoin blockchain and all the Bitcoin transactions that have ever been made.
Encrypted: Transaction information is encrypted using cryptography. This means that special codes are used to hide the account information of users. Crypto means hidden so Bitcoin is hidden money!
Decentralized: Bitcoin has no center. It’s controlled by its users and computer algorithms. No one person, group or government decides how it works.
Distributed: This means that the Bitcoin blockchain is stored on thousands of computers (or nodes) around the world. This makes it very difficult to hack.
Immutable: This means that once a transaction is added to the Bitcoin blockchain, it can’t be changed or deleted. Ever!
So, now if anyone asks you, “What is Bitcoin?” You can tell them it’s a decentralized peer-to-peer digital currency which uses a public ledger called a blockchain to record all its transactions. This is what Bitcoin is, but how does Bitcoin work?
The answer to this question is a very important part of Bitcoin. It’s also the first on our list of how to get Bitcoin. It’s called mining — so let’s get digging, shall we?
How Does Bitcoin Work?
Let’s use an example to make this a bit more fun…
Dionne owes Warwick 10 US Dollars (USD). Dionne doesn’t have any money in her account but she tries to send 10 USD to Warwick’s account anyway. The staff at the bank check to see if Dionne has 10 USD in her account. They stop the transaction from happening when they realise that Dionne doesn’t have any money to send.
This is called verification. It’s one of the most important jobs a bank has. Bitcoin also needs to verify the transactions on its blockchain. This makes sure all the transactions that get added to the blockchain are real and valid. Bitcoin has special users called miners who verify transactions. This is how it works using the example of Dionne and Warwick;
Dionne has 10 BTC that she wants to send to Warwick
Miners encrypt this information and add it to other transaction information. They keep doing this until they have enough information to form a block.
The new block needs to be given a code number that will connect it to the rest of the blockchain. All the miners work really hard trying to guess what that number is. It’s like a lottery!
When the winning number is found, all the other miners check the information in the new block against the information that already exists on the blockchain. If the information is valid, the new block can be added to the blockchain.
Warwick receives 10 BTC from Dionne.
Bitcoin doesn’t pay miners to do this job like a bank pays its employees. Instead, the miner that guesses the code number of the new block wins new Bitcoin. A reward of 12.5 BTC is given to the winning miner of each new block of transactions that is verified and added to the blockchain.
As you can see, becoming a Bitcoin miner is a great way how to get Bitcoin!
Mining Bitcoin
Bitcoin miners need very powerful computers to do the work involved in verifying transactions and adding new blocks to the blockchain. More powerful machines have a higher chance of guessing the winning code number than home computers like laptops and PCs.
Most Bitcoin miners use special equipment called ASICs which are designed to do one job, mine Bitcoin. ASIC miners aren’t cheap! Let’s have a look at some prices;
Bitmain Antminer V9: 15 USD
Halong Mining DragonMint: 2,226.92 USD
Bitmain Antminer S9: 5,999 USD
The reward for each block mined is 12.5 BTC. That’s worth about one hundred thousand US Dollars! However, ASIC miners are expensive, noisy and get very hot! And even with an Antminer S9, your chances of guessing the code number by yourself are quite low. This is why most miners join mining pools. So, what are Bitcoins mining pools?
Mining Pools
Mining pools are groups of Bitcoin miners who use their combined computer power to mine Bitcoin. Miners then share the reward when new blocks are mined. You don’t even need to buy any mining equipment. You can rent mining power from a pool on sites like HashFlare. This means you get a share of the reward without any of the hard work!
Whichever way you choose how to get Bitcoin, you’re going to need a place to store the information you need to access your Bitcoin. This storage is called a Bitcoin wallet. Wallets are pretty important so let me tell you more…
Bitcoin wallets
A Bitcoin wallet contains two kinds of information. They are; private key and public key. Think of a Bitcoin wallet as being like your email address.
When someone wants to send you an email, they use your email address, right? Well, when someone wants to send you Bitcoin, they will use your public key. You can share your public keys with anyone.
If you want to read your emails or send a new email, you use your password to open your account. Your private keys are like a password for your Bitcoin. This means that only you should see your private keys! There are different kinds of Bitcoin wallets. Bitcoin wallets can be;
Mobile: You can use a mobile phone to access your Bitcoin. Copay and Airbitz both offer mobile Bitcoin wallets for iOS and Android phones. Using a mobile Bitcoin wallet will give you a very good reason not to lose your phone!
Desktop: This is a software wallet that you install directly onto your laptop or PC. Electrum is a popular desktop wallet available for Mac, Linux and Windows systems. Other desktop wallets worth thinking about are Exodus and Armory. Desktop wallets are only as safe as the computer they’re installed on.
Online: This kind of wallet is usually offered by Bitcoin exchanges (and I will talk about those in a moment!). Online wallets can be useful when buying and trading Bitcoin. You should never leave your Bitcoin in an online wallet though.
Hardware: You can store your keys on a removable hardware wallet. These are like USB sticks for Bitcoin. They can be expensive but are also very safe. Top brands include the Ledger Nano S which you can buy for 80 USD or the Trezor wallet which is around 100 USD.
Paper: One of the safest ways to store your Bitcoin is with a paper wallet. These are printouts of your public key and private key. You can make a paper wallet for free here. The good thing about paper wallets is that they are very safe. The bad thing is that they’re made of paper! Don’t get them wet or let your Aunt’s dog play with them!
Each kind of wallet has pros and cons. This is why it’s important to have more than one. Wallets that are connected to the internet are called hot storage. Wallets that are offline are called cold storage. The best way to store your public and private keys is in a mixture of hot and cold wallets. And whatever wallet you use, keep them away from that dog!
Now let’s look at some other ways how to get Bitcoins to put in your wallets…
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