Bitcoin has become increasingly popular since its launch in 2009. Critics thought it was a terrible idea that would fail, but considering several large businesses like Amazon and Subway now accept bitcoin as payment, we know it wasn’t a failure. While bitcoin remains highly volatile on the market, it continues to grow stronger each passing year. If you want bitcoin explained to you thoroughly, yet concisely, continue reading our guide below. We will cover what it is, who uses BTC, and how to obtain bitcoin.
Bitcoin Explained: What Is Bitcoin?
This is one revolutionary form of currency that isn’t controlled by a particular entity and isn’t printed. Bitcoin explained simply is a digital currency that’s created and held on a computer. Rather than having cash in a leather wallet, bitcoin is stored on your mining program’s “wallet”. Neither have a physical form. Bitcoin was the first type of cryptocurrency created. It was invented by someone with the alias Satoshi Nakamoto. The fact it was created by an unknown person increased intrigue around the new form of currency.
How it works is your computer “mines”, meaning it solves difficult math problems. Once a problem is solved, it receives what’s referred to as a bitcoin. A common misconception about bitcoin is you receive something for nothing. People who haven’t had bitcoin explained to them usually hold this misconception. However, mining requires use of hardware in your computer and extra electricity. Those who jump into bitcoin without learning about it are often shocked to see their high energy bills at the end of the month. Therefore, before you start mining, you should ensure you have bitcoin technology explained well to you. It will save you money and help you become profitable with this opportunity
Who Uses Bitcoin?
Bitcoin is commonly used by people who don’t like the fact that banks control their money and businesses that are willing to take a risk for greater profit. Those who are unhappy with banks love bitcoin because it’s decentralized, which means no single institution controls it. Banks control conventional cash. Many people like the additional financial freedom that comes with using bitcoin.
Some businesses have begun to accept bitcoin as a payment method. It’s not just large companies that are accepting BTC payments; several small businesses are giving it a try too. Accepting bitcoin for payment is risky because its value could decline suddenly suddenly overnight. If the business held onto a stash of bitcoin that it received from customers, they would lose a lot of money over the decrease in price on the market.
How to Obtain Bitcoin
Unlike banks that will print more money to manage the national debt, Bitcoin will not ever print more than it’s initial promised cap when it was launched. Only 21 million bitcoins will ever be created. Each bitcoin can be divided into smaller parts up to one hundred millionth of a bitcoin. There are several ways to obtain bitcoins; you don’t have to mine them yourself. You can buy them, exchange altcoins for bitcoins, or accept them as payment.
If you want to mine bitcoins with your computer, then check your computer’s hardware to ensure it can not only handle bitcoin mining but be profitable with it as well. Most computers can mine, but they can’t mine successfully. You would lose money mining on a computer that’s not equipped for it. Three potential pieces of hardware that are excellent for bitcoin mining are BPMC Red Fury USB, AntRouter R1, and Antminer S9.
You can buy sufficient hardware for bitcoin mining for only $30, which allows anyone to mine. But you should keep in mind that you’ll obtain bitcoin more successfully with better hardware. At the high end of the spectrum, hardware that’s good for bitcoin mining costs around $2,000. Once you have your hardware, create a bitcoin wallet and find a pool to join. A pool is a group of people who mine together and then divide the bitcoin among themselves based on computing power contributed. You should only go solo if you’re mining with numerous high powered computers.
Tips for Profiting with Bitcoin
1. Before even buying hardware for your computer to mine, you should calculate its potential profitability. That sounds complicated, but it’s easy to determine how profitable you would be with BTC mining by using a bitcoin mining calculator. To calculate mining profit, enter the hash rate, cost of hardware, and power cost. If you’re in the negative or don’t generate enough profit to make mining worth your time, then try with a different type of hardware until you find what would work for you.
2. Choosing a bitcoin wallet before mining is essential. A wallet is where your computer stores the bitcoins. If you choose to use a self-hosted wallet, you need to save a copy of the wallet.dat file on a thumb drive. We recommend printing out a copy and storing it in a safe place for extra security. You would lose all of your bitcoins if your computer crashed and you didn’t have the wallet.dat file stored elsewhere.
3. You shouldn’t join just any mining pool. Ask yourself several important questions before joining a bitcoin mining pool. How is the reward divided among members? Is there a fee for mining? Do they charge a fee to withdraw bitcoins? Is the pool stable? How often does the pool find blocks? To be clear, blocks are a good thing. Bitcoins are rewarded through blocks instead of individually.
Bitcoin isn’t as difficult to get started in as one may think after being exposed to the concept. You’ll hear terms that you aren’t familiar with, but don’t let that deter you. Once you understand the new vocabulary, it will make sense to you. We aimed to have bitcoin explained in simple terms in this guide for beginners. The most essential information for you to remember is you’ll need to buy good hardware to be successful in bitcoin mining and to join a good mining pool unless you have a host of high powered computers for mining. Also keep a backup of the wallet.dat file if you use a self-hosted bitcoin wallet to safeguard your bitcoins from disappearing during a computer crash.
How well did we explain bitcoin? Would you have bitcoin mining explained differently? Share your thoughts and experiences with BTC in the comments below.