Bitcoin cryptocurrency meaning

The latest buzz in the Internet and the investment world is cryptocurrency. Everyone is talking about how
they are planning to invest in it and how profitable the venture is. Before we go ahead, we need to know what
cryptocurrency is and how one can invest in it A cryptocurrency is simply a digital currency that uses
cryptography to enhance its security feature. There are different types of cryptocurrencies, and the most
popular one is Bitcoin. This article is going to delve into deeper details about Bitcoin.
What is Bitcoin?
From a general perspective, Bitcoin is just a digital currency that uses crypto technology. To understand how
Bitcoin works, we will have to define it from a technical standpoint. A Bitcoin is made up of two components;
the first component is a bitcoin token which is a piece of code that represents the ownership of the currency.
The second part is the bitcoin protocol. This is a distributed network that is responsible for maintaining all the
ledgers and balances of the currency.
As a digital currency, bitcoin makes it possible for the owners to make payments to each other without
involving a central regulatory body or an established financial gateway. Everything here happens
electronically. Unlike the fiat currencies like dollars and pounds, bitcoins are not printed. Instead, they are
generated by special computers, which are distributed across the world.
Where did Bitcoins come from?
Bitcoin was created by an anonymous software developer who used the alias Satoshi Nakamoto. Utill today,
nobody has ever recognized the real identity of this person. The original idea of bitcoin was to come up with a
digital payment system that is based on a mathematical proof. The system was to be completely separate
from any regulatory authority. The inventor also wanted a system that would offer a secure and verifiable
means of payment.
How bitcoin is different from the fiat currencies
Bitcoin is not the only currency that allows digital transactions. Conventional currencies such as dollars, do
the same. However, there are several glaring differences that separate bitcoin from the fiat currencies. Here
are some of them:
Bitcoin is decentralized
Unlike the traditional currencies that are regulated by specific authorities, bitcoin lacks this kind of
regulation. There is no single institution or organization that can lay a claim to bitcoin. Instead, the bitcoin
network is maintained by a group of people who access it from different locations across the glob. The
network is made of special computers that are dedicated to this function.
Fiat currencies are controlled by banks and governments of their respective jurisdiction. The end users are
left at the mercy of these two groups of people. When it comes to bitcoin, everything is controlled by an open
network as there is nothing to conceal.
In traditional currencies, the identity of all the parties involved is easily revealed. This is done to prevent
cases of money laundering and other illegal activities. Bitcoin offers some level of anonymity. First, the
platform does not have a central regulator who will ask for your details. This means that users don't need to
identify each other when making, sending or receiving bitcoins. The system will simply check the data of the
previous transactions before authorizing any payment.
Instead of personal details, bitcoin identifies users by their wallet addresses. This system makes it possible
to track down the parties involved in the transaction. However, when it comes to buying and selling of
bitcoins, most exchanges ask for personal details of the parties involved to prevent cases of fraud.
Transactions involving bitcoins cannot be reversed. This is unlike most digital currencies where one can
reverse the payment due to various factors. The immutability of bitcoin is due to lack of a central authority
that can analyze the problem and append or reject the reversal. It means that with bitcoin, there should be no
room for errors as you may end up losing your money.
Limited supply
The supply of bitcoins in the market is controlled by a specific algorithm. This algorithm ensures that only a
small number of new bitcoins is released to the market at a time. The limited supply that is countered by
insatiable demand makes bitcoins to be one of the most lucrative assets.
On the other hand, fiat currencies enjoy unlimited supply. Central banks in different countries can issue as
any currencies as possible, an act that can end up devaluing the currency and hurt the country's economy.
How to buy bitcoin
Now that you have learned the basics of bitcoins, it is time to learn how you can own this digital currency.
Before you buy bitcoins, you need to exercise some restraint. Cryptocurrency is a volatile business that
requires a cautious person. You can buy bitcoins on exchanges or directly from other owners in various
There are various ways of paying for the bitcoins that you have purchased. The common modes of payment
include credit/ debit cards, wire transfers, cash or even exchange with other types of cryptocurrencies. The
method you use depends on your geographical location and the person that you are transacting with
Create a wallet
Regardless of the mode of purchase that you will use, The first step towards the ownership of a bitcoin is
to set up a bitcoin wallet. Some exchange platforms provide bitcoin wallets though you can create one with
independent providers. Online wallets can be accessed through a desktop or any other computerized device.
There are also separate offline wallets which are simply separate hardware devices. Once you open a wallet,
keep its credentials safely.
Buying bitcoins online
The most popular method of owning bitcoin is through cryptocurrency exchanges. These platforms buy and
sell bitcoins on behalf of the people involved. There is some level of security and reliability that comes with
his method. However, you need to be cautious with the exchange that you choose. The most common ones
include Coinbase, Poloinex, and Bitstamp.
Buying with cash
Here, you need to look for people who sell bitcoins within your locality. You can use websites such as
LocalBitcoins( to locate such merchants.
Cryptocurrency is a lucrative venture that you should invest in without hesitation. The information in this
article is adequate to get you started with bitcoins.

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