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|Understand The Ideology Of Bitcoin (bitcoin for dummies) by puntmaniac: 7:51pm On Nov 13, 2016|
This post is meant for people who are new to bitcoin and interested in knowing more about it.
I knew about bitcoin some months ago, I did a little digging and decided to share it with folks who were like me on here. I call it bitcoin for dummies. I will be breaking it down for you.
What is Bitcoin and how does it work?
To put it very, very simply, Bitcoin is the Internet’s version of money.Bitcoin is at its core a cryptographic protocol, which is why it is also referred to as a “crypto-currency.” The protocol creates unique pieces of digital property that can be transferred from oneperson to another.
Bitcoins are generated by using an open-source computer program to solve complex math problems in a process known as mining (more on that shortly). Each Bitcoin is defined by a public address and a private key, which are long strings of numbers and letters that give each a specific identity.
This means that Bitcoin is not only a token of value but also a method for transferring that value.
How do you buy or sell bitcoin?
People commonly buy and sell Bitcoins through exchanges, though this isn’t necessary. In order to make transactions on an exchange, you must have a Bitcoin wallet (more about this later) to keep your currency in.
you need to have a bitcoin wallet then fund it either via black market or buying through a reputable bitcoinxchanger.
Bitcoin can also be earned via mining, investment platforms and can be used as a mode of receiving payment for services etc
How do you keep your Bitcoins safe?
Don't share your password and pin. There are some bitcoin wallet that allows you to link your phone to your wallet and enables a double verification security on the wallet.
You can also save the Bitcoins on a USB or external hard drive.You can even save them in a paper wallet by printing out a public address and the private key. Bitaddress.org is a popular service for doing this, but remember to generate the paper wallet offline so you don’t expose the private key to hackers and so you can keep the physical copy safe.When you want to spend Bitcoins that you have printed out, you have to load the private key backinto a digital wallet.
I will stop here then continue later.
|Re: Understand The Ideology Of Bitcoin (bitcoin for dummies) by puntmaniac: 10:41pm On Nov 13, 2016|
Yeah, Bitcoin can be confusing to you, that is normal. Bitcoin is best explained by this list of analogies.
Digest the following carefully:
- Bitcoin is just like digital gold.
- By design, there is a known, immutable,fixed supply of bitcoins, similar to gold being available in limited quantity on Earth. There are 2.1 quadrillion indivisible units of value (0.00000001 bitcoins), and not one more will ever exist
- Bitcoins are digital, therefore you can instantly transfer them to anybody across the world.
- Bitcoins are stored locally on your electronic device (mobile phole, tablets, computer), contrary to being stored in an account managed by a financial institution. This is similar to how you can store cash or gold in a physical location of your choice. This means there is no "Bitcoin account" that can be frozen by someone in power (eg. your spouse making malicious claims to seize a bank account during a divorce).
- Bitcoin transactions are technically irreversible. There is no mechanism to revert a transaction, other than convincing the recipient to send the bitcoins back. This solves the fraud problem for merchants, as all the payments they receive are final, whether fraudulent or not. (On the downside, like cash or gold, if bitcoins are stolen from you, the chance of recovering them is generally slim.) So guard your bitcoin from well, don't store your password on your phone or any accessible electronic devices most especially avoid autosaving your login details on your browser.
- Payments are sent directly from one party to another without going through a financial institution, similarly to how cash or gold can be handed directly to someone. You do so by sending them from your wallet, to the recipient's wallet, through the Bitcoin network (which is nothing more than other computers running Bitcoin). Since no one can realistically prevent a computer from getting Internet accessone way or another, no one can regulate or block transactions (eg. oppressive governments financially repressing activists.)
In addition, there is no financial institution, or bank, or company, operating Bitcoin, just like there is no company in charge of "operating gold". There is no Internet server to shut down to terminate Bitcoin. It exists merely as an application running on your computer/Mobile device , which communicates with other Bitcoin users over the Internet. This "mesh" Bitcoin network is called a peer-to-peer network, and this design makes it effectively indestructible, as long as the medium of communication (Internet) exists.
To be continued.
|Re: Understand The Ideology Of Bitcoin (bitcoin for dummies) by puntmaniac: 8:36am On Nov 14, 2016|
How are bitcoins priced?
Bitcoins are like any other currency: they fluctuate in value relative to other currencies. Similar to how the naira's valuation swung wildly against the US dollar this year, bitcoins have had drastic movements in price as well.
The value of a bitcoin is constantly changing, and there is no centralised exchange for it. Think of it this way: each time a bitcoin changes ownership from seller to buyer, the two parties need to agree on its price. There is no 'fixed' price. Usually, it's the seller's responsibility to give a fair price to the buyer based on what rate bitcoins are being traded in elsewhere. The difference between bitcoins and other currencies is that there is no centralised bank that prints the currency and sets relative values. Through transactions, the value of bitcoin fluctuates through supply and demand.
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