What a beginner needs to know about Bitcoin before giving it a shot

Bitcoin has no ownership. Anyone around the world can use it as it has no centralized system. Once you have transacted, you will not be able to reverse it. No institution or government can stop you from engaging in bitcoin transactions.

Even though freedom is appreciable, you have to bear the authority as well. If anything goes wrong, you have to take the cost and responsibility of it as you can’t report to any institution or government. If you want to protect your bitcoin wallet, you should make sure to keep it safe, like physical cash.

Ways to getting started with bitcoin

If you want to understand what bitcoin means, you need to accept the fact that it is different than what it looks like. If you’re going to use bitcoin, you need to know a lot of things about it. If you focus on these things, you will be able to avoid the regular problems that every beginner faces.

What does bitcoin mean?

2008 was the year when Satoshi Nakamoto introduced bitcoin. Virtual currencies are Bitcoin. They can also be called digital currency. The cryptography rules are applied in regulation and generation, as well.

You have to look at bitcoin as an asset that can be traded with the help of the internet. It is possible to store the values of different investments, including silver, gold, and much more in bitcoins.

Apart from this, you can also purchase services and products using bitcoin as the payments can be electronically activated.

By now, you would have figured out that bitcoin is not similar to traditional money. But even traditional currencies can be utilized for purchases. You are not going to witness physical money when you are handling bitcoins because there is no such.

When you are making payments or sending bitcoins, you don’t have to use bank cards. Instead, you can send bitcoins directly.

How does bitcoin procedures work?

After you understand what bitcoin is, the next question would be how it works. Every beginner’s concern is about the way it works. So, let’s see how it works.

When you are communicating on the internet, you are likely to face a lot of problems. One such issue is the double-spend. This is an annoyance as it questions your privacy. The double-spend problem means whatever you communicate will have a copy of it, which means, privacy is questionable. Right?

Hence, bitcoin has become famous. It has broken the barrier of double-spend and made communication simpler.

With bitcoin, it is impossible to handle the double-end problem because finding the transaction’s reliability is itself ambiguous. If you can access bitcoin, you don’t need the support of banks or other intermediaries. The bitcoin network and the decentralized blockchain technology have made this happen.

The bitcoin transaction will be secured with cryptographic. Thus, your data will not face the double-spend problem. Instead, it will be verified and safeguarded throughout the network.

You don’t need banks to bear witness as the blockchain technology is involved in the transaction. After confirmation, the decentralized network will study, verify, and record the transactions. You will not witness any issues with the blockchain.

Therefore, frauds and fraudulent will be less with bitcoins.

How to choose your bitcoin wallet?

You can easily find free bitcoin wallets that are available on all the operating systems. These accounts are available for different needs, and you can assess it quickly. But when selecting a wallet, you have to be careful as there are various choices and platforms available. You need to consider the features, security levels, ease of use, and many more things.

You must select a bitcoin wallet that suits your pocket. Before you begin selecting a particular bitcoin wallet, you should think about whether you want to dig deeper into the concept. If yes, continue reading!

If your wallet is technical, it means there will be higher security. But then, handling the funds in your account would be stressful.

On a side note, if your account is more comfortable to handle, the security will be fragile.

How to find the right platform?

If you have decided on the type of account, the second thing that you need to consider is the platform. But how can you determine the right platform to use bitcoin wallet wisely? There are different methods to select the right platform. The best way is to shop around on the internet while asking the ones who are experts in it.

In the meantime, you have to be considerate of the costs associated with the platform. If the charges are unreasonably high, you should opt for other available options. But that’s not all. You need to be considerate of the security, user-friendly features, and efficiency.

Once you have decided on the right platform and right wallet, you can do the rest of the procedure quickly.

After you have learned the basement of bitcoin, you need to step a little higher and focus on the following details.

What does Bitcoin address mean?

Bitcoin address or address, you can call it, either way, this is an identifier representation that includes alphanumeric characters of 26–35. This is a unique address, and the address will start from 1 or 3. These numbers are mentioned to show the destination of specific bitcoin payments.

Any bitcoin user can generate the address without bearing additional costs. If you are using reputed bitcoin exchanges, you don’t have to worry about the procedures. They would have included a simple click option to generate the bitcoin address.

Or you can get the address from online wallets using your account. Also, you should remember that the address will change for every transaction. However, standard address formats are:

  • P2PKH: Starts with number 1

What are the features of the bitcoin address?

If you are planning to use bitcoin, you must remember that you need the address to send and receive payments. If you are a naïve user of bitcoin, you might not know the features of a bitcoin address. This is why we are going to help you do it. Keep reading:

  • Offline creation- you don’t need an online connection 24/7 to create the address. Instead, you can create it offline, too. Therefore, you don’t need to verify the email or follow any other online procedures to generate the address. Use the free software tools to create an offline address, and make sure to build in bulk, so it’s easy.

These are some of the primary features of a bitcoin address. Learning these features will help you trade or use bitcoins better. However, you would have already figured out that bitcoin learning isn’t easy because you have a lot to learn. Hence, the next step is to understand the bitcoin price.

Things you need to know about bitcoin price

Even though you understand how bitcoin works and how to purchase and sell it. It is crucial to know about the way it is priced. What are the things that you need to know about bitcoin price? Let’s check some of the critical points below:

How is the bitcoin price set?

You can categorize bitcoin as a commodity. Based on the trades, the bitcoin price will be decided. It is about the payment that the traders or users are willing to offer for the bitcoins. The price set by the market will be the same as sugar, oil, gold, grains, and much more. Just like all the other markets, the bitcoin market is subjected to demand and supply rule.

  • When the demand is more, and the supply is less, the price will go up.

However, the price of bitcoin is not specific to a certain amount. Nor it is traded in one place. Every exchange/market will determine the bitcoin price by considering the demand and supply.

To carry out bitcoin trades, you need to select the right exchange and the time. You should note that bitcoin will not be taken into consideration if you set a high price. If you want your bitcoin to be traded, you should set a reasonable price.

What are the reasons for the bitcoin price change?

The most straightforward reason is the volatility of bitcoin. The circulation of bitcoin is limited. Therefore new bitcoins are introduced to the market. The demand should cope with inflation to hold the price stable.

However, the bitcoin market isn’t significant when compared to other markets. Hence, there will not be a substantial change. Yet you are going to experience volatile price changes.

The prices and exchange rate will become volatile due to different reasons. Some of the reasons are:

  • The adoption rate will change when there is bad news. The government statements from the ones who regulate bitcoin and geopolitical events will affect the bitcoin users.

However, these reasons are some of the points that you need to consider. Before you go ahead with the decision to invest or use bitcoin, you should get a clear understanding of how things work. Therefore, let’s take a look at how bitcoins network works.

How does Bitcoin network work?

If you want to carry on your bitcoin journey, you need to have a clear picture of how the network works. So the peer to peer network or decentralized network could be the right terms for the bitcoin network. There will not be any third party interference for commands or issues. You are not going to face hierarchy issues or equality problems.

The nodes collection will run the protocol of bitcoin along with other protocols. Even though this is a flat network, the nodes are equal.

Full node focuses on routing, protecting the copy of the blockchain database, wallet services, and bitcoin mining. If any nodes need to get connected to the network, proving routine is essential. Routing means the nodes allow and pass transactions by discovering and connecting other nodes, despite the fact they are full or not.

However, to be compatible with other users, you need to follow the software that applies the same rules. If there is complete consensus, bitcoin mining will work. If not, it will not work. Hence, all developers and users focus on maintaining the consensus.

Now, let’s take a moment to understand more about bitcoin mining. What is the hype about bitcoin mining? Let’s see!

What should a beginner know about Bitcoin mining?

This is not a simple process. Specialized computers are essential to carry out activities related to mathematical algorithms. Expensive and high power consumption computers are used in bitcoin mining.

The results obtained from bitcoin mining are:

  • Initially, the complicated issue is solved to create new bitcoins.

Simply, bitcoin mining is utilized to back up trust because, unlike fiat currency, there is no centralized system. So, once you understand how bitcoin mining works, you can go on with the next important point- the Bitcoin app!

What is a Bitcoin app?

Just like other apps, this is also introduced to make things easier and more comfortable. With the help of the bitcoin app, the investors and users of bitcoin can make their transactions more straightforward. You should dig through the options available to find the ideal bitcoin app that will suit your needs.

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Shanika Wickramasinghe

Written by

Senior Software Engineer and Freelance Technical Writer. I write about any Computer Science related topic. https://www.linkedin.com/in/shanikawickramasinghe

The Startup

Get smarter at building your thing. Follow to join The Startup’s +8 million monthly readers & +793K followers.

Shanika Wickramasinghe

Written by

Senior Software Engineer and Freelance Technical Writer. I write about any Computer Science related topic. https://www.linkedin.com/in/shanikawickramasinghe

The Startup

Get smarter at building your thing. Follow to join The Startup’s +8 million monthly readers & +793K followers.

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