What is Bitcoin? All you need to know about Bitcoin and Crypto as a beginner

All You Need to Know About Bitcoins

Bitcoin image - what is Bitcoin

In this piece, I'm going to run through all that you need to know about bitcoin, as well as the advantages of using it as a form of payment. There are undoubtedly going to be some points that you will find that are very relevant and useful.

However, before we begin I should probably clarify something: in this article, I'm not intending to discuss the pros and cons of using bitcoins or crypto as a form of payment. Rather, I'd like to take a look at the way in which this virtual currency works.

To start with, the basic function of the system is to process transactions on the worldwide web. Transactions can be executed between two parties, or across the globe.

Bitcoins are generally thought of as being ideal for conducting money transfers. This involves getting payments from one place to another. For instance, a vendor in Nigeria could pay for a product from a merchant in Australia.

You can think of the system as being similar to traditional post offices. However, instead of cash being transferred via the post, it's converted into a digital currency (known as bitcoin). this transaction is both fast and anonymous.

One of the benefits of this arrangement is that there is no need for any intermediary.

Bitcoins work on an open-source network.

This means that anyone can access the technology and perform any transaction that they want. At the same time, the costs associated with any such transaction are low or nonexistent.

What this means is that anyone can start buying and selling.

However, there are some transaction fees that will apply to specific users. For instance, a user will be required to pay transaction fees when making transfers to other members. At the same time, any user will be required to pay a standard tax on any sales that they make in some countries.

Now that you know about the Bitcoin Blockchain, let's get into Bitcoin and Cryptocurrency

Cryptocurrency or Crypto for short is a decentralized digital currency.

That's the most accurate and simple way to look at it.

Crypto like Bitcoin, Ether... are just like our very own Nigerian Naira.
And the same as the US Dollar.

However, because it's a digital version of money, many see it differently.
To the level that some governments are forcing it to be used as a store of value, or digital asset.

But that doesn't make it anything an asset.

In the US, the government is making it an asset, because they want to tax people who make profits from it.

You may be wondering why.

Well, Bitcoin is used for trading just like many other things like stocks, bonds, and fiat currencies...
And since the US Government classifies it as an asset instead of a Currency, all the taxes applied in making a profit from it are classified under an Asset category.

But that is in the US and not in all countries.

In Nigeria, Bitcoin is considered alegal.

This means there are no laws against it, and yet there is no law supporting it.

That is to say, there are currently no constitutions governing it.
But on a global scale, crypto was created to fulfill one thing and that is to replace money on the internet.

I will be focusing more on Bitcoin, which was the first-ever cryptocurrency and is currently the most popular of all.

Bitcoin is a decentralized digital currency.

As I mentioned earlier, it is just like Naira or Dollar

Some get confused about its price volatility (Rising & Falling)
But that's normal for any Currency.

The reason you don't think like that about Naira or Dollar is that it's in your pocket.

And you care less about what it's worth at the moment as far as the person selling to you, accept it for what you want to buy.

But just like Bitcoin and other Cryptos, the Dollar and all currencies are volatile.

They rise or fall every minute just like crypto, the only difference is that you care less about the latter.

Bitcoin is not just an investment as most of us see it.

When you hear someone mention Bitcoin the next thing that follows is that the price is dropping or going high.

Bitcoin is not supposed to be viewed like that.

It is a currency like our Naira.

You might be asking, well then why did I need it, when we have Naira and Dollars?

The short answer is that your Naira and Dollars are controlled by your governments.

They can decide whatever happens to it.

That was the reason Bitcoin was created.

To give control back to us citizens.

With Bitcoin, you regain control of your money.

You're your own bank.

There is no central authority that controls Bitcoin, that is why it is called a decentralized Currency.

If you look at Fiat currencies (Government currencies)

You will notice that there is a manipulation on it, called inflation, what this means is that a dollar in 1990 is valued up to 70% more than the current dollar.

The same with Naira

In 2012 we could buy things like razor blades and books for 5 Naira.

Fast forward, just 10 years later, in 2022 all a 5 Naira can get you is frustration.

but the jobs we do are paying almost the same as 10 years back, and the minimum wage has not inflated as high as our Currency.

That is why it is believed that government-issued currencies are built to keep us working longer for less money with the use of inflation.

And that is why Bitcoin was created.

It was created decentralized by anonymous founders who to this day are still unknown
with the intention to give back the power to people.

To do this, founders Satoshi Nakamoto created a rule that they will only be 21 million Bitcoins ever.

That means no matter what happens only the price of Bitcoin can change, they won't create more.

And with the use of blockchain

It is maintained with computer algorithms by people just like you and me who solve mathematical problems to keep the blocks accurate and unhacked.

Those people are called miners.

Also, the price of Bitcoin is not controlled by anyone.

That is why you can see that since it was introduced, it has gone from 5 cents to thousands of dollars.
As of today (22/08/2022), the price is $23,000, it can be up or down by the time you are reading.

To sum up, Bitcoin is a Currency, Ether and other cryptocurrencies are Altcoins meaning alternative coins.

and the reason why Bitcoin is perceived as an investment option is that it is developed with a fixed supply.

What that means is we already know how many Bitcoins will ever be created.

That will be 21 million Bitcoins.

Unlike our currencies that are printed whenever the government wants.
which leads to devaluation (inflation)

And lastly, the reason why Bitcoin is Guaranteed for safety and decentralization is because of the Blockchain.