In February 2021, the price of 1 Bitcoin skyrocketed to USD54000+. That alone signals that Bitcoin has become more of an asset rather than a currency. Well, let me dive deep into what is a bitcoin , how it works and how to make money through Bitcoins.
What is Bitcoin?
It’s a digital currency used mostly for online purchases and as an investment, albeit a very risky one. It is not sponsored by any government. Instead, it works through a system where people in the Bitcoin community can earn coins from “mining,” or using their computer to complete calculations. You can also buy them with dollars or nearly any other currency.
Bitcoin, often described as a cryptocurrency, a virtual currency or a digital currency – is a type of money that is completely virtual.
It’s like an online version of cash. You can use it to buy products and services just like the way you use PayPal to purchase products online.
Bitcoins aren’t printed, like dollars or euros – they’re produced by computers all around the world using free software and held electronically in programs called wallets. The physical Bitcoins you see in photos are a novelty.The smallest unit of a bitcoin is called a satoshi. It is one hundred millionth of a bitcoin (0.00000001). This enables microtransactions that traditional electronic money cannot perform.
Bitcoin, often abbreviated by the ticker symbol BTC, was the first example of what we now call a cryptocurrency. We will use the term Bitcoin and BTC interchangibly. Cryptocurrencies are a growing asset class that shares some characteristics with traditional currencies except they are purely digital, and creation and ownership verification is based on cryptography.
Bitcoin Wallet
A bitcoin token is held in a bitcoin wallet that is identified by a string of numbers and letters such as “1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa.” When someone wants to send you BTC, that person will send it to your particular, public wallet address. Sending and receiving of funds via BTC wallets is as easy as sending an email to someone’s email address.
Then there’s Bitcoin the protocol, a distributed ledger that maintains the balances of all token trading. These ledgers are massive files stored on thousands of computers around the world. The network records each transaction onto these ledgers and then propagates them to all of the other ledgers on the network. Once all of the networks agree that they have recorded all of the correct information – including additional data added to a transaction that allows the network to store data immutably – the network permanently confirms the transaction.
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What can be paid using Bitcoin?
BTC can be used to pay for things electronically, if both parties are willing. In that sense it’s like conventional dollars, euros or yen, which can also be traded digitally using ledgers owned by centralized banks. Unlike payment services such as PayPal or credit cards, however, once you send a bitcoin, the transaction is irreversible – it cannot be called back. Bearing this in mind, please make sure you cross check if you’re sending Bitcoin to the correct address. We advise you to copy and paste the BTC address to avoid typing errors.
That said, BTC does not depend on a centralized system of banking. Because each node on the network is owned by a private entity, the entire network is responsible for maintaining the accuracy of the ledger. When you send a bitcoin – or a fraction of a bitcoin – to another person, the entire network takes part.
Decentralisation
The process of verifying BTC transactions by every user is called decentralization. It is one of the Bitcoin network’s most important characteristics. No single institution controls the bitcoin network. The protocol is maintained by a group of volunteer coders, and run by an open network of dedicated computers around the world.
Since there is no central validator in this network, users do not need to identify themselves when sending bitcoin to others. When a sender initiates a transaction, the protocol checks all previous transactions to confirm the sender has the necessary bitcoin as well as the authority to send them. Put another way, bitcoin users theoretically operate in semi-anonymity and the network is self-policing, ensuring that bad actors cannot be rewarded.
Bitcoin Practises
Bitcoin is also pseudo-anonymous. In practice, each user is identified by the address of his or her wallet, which can be used to track transactions. Law enforcement has also developed methods to identify users if necessary. Most exchanges are required by law to perform identity checks on their customers before they are allowed to buy or sell bitcoin. This means an exchange-assigned wallet address is most likely connected to a particular user. However, cryptocurrency wallets are not limited to exchanges or other online services, and a wallet generated by an anonymous user on a single computer is fairly difficult to trace.
Further, every transaction on the network is fully transparent, a fact that concerns some privacy advocates. Ultimately, tracing a bitcoin transaction to a specific person is difficult but not impossible, and any statements describing the “anonymity” of bitcoin are inaccurate.
Creating a Bitcoin wallet…
For you to be able to buy and sell BTC, you need a Bitcoin wallet. Just like you need an email address to receive emails or a phone number to receive Ecocash or One Money from another user, so you need a Bitcoin wallet.
Recommended Bitcoin Wallets
1.Binance
Binance is an excellent wallet and trading platform for all the major cryptocurrencies including Bitcoin. Opening a Binance wallet is as simple as creating a Gmail address. To sign up for a Binance wallet, visit the official Binance website.
Once you have visited the Binance website, a pop up like below appears. You must enter your email address or phone number (without the country code).
Alternatively, you can sign up using your Google or Apple Account. Furthermore, you can open a Binance wallet as an organisation.
Soon after entering your email address , the next step is choosing verifying your email address. Check your email address and enter the 6 digit code that you will receive via email.
Subsequently, create a very strong password that you will remember. Your password must remain unique and easy to remember.
After that, follow the onscreen instructions and complete creating your Binance wallet.
2.Paxful
Paxful is another Bitcoin Wallet that you can make use of. Unlike Binance, Paxful allows you to buy and sell Bitcoins to your peers.
Once you have a Paxful account, you can start purchasing Bitcoins from whoever has them based on a mutual agreement of both the amount and the payment method.
Choose the amount of Bitcoins you want to buy. Choose the currency you want the exchange rate to be in Select a payment method (there are dozens) Choose a seller and click “Trade” Follow instructions for payment and click “Mark as paid” Wait for the seller to release the Bitcoins.
It’s worth mentioning that some trades can be concluded instantly while others might take longer, depending on the payment method and whether the seller is online or not. Paypal and gift cards, for example, are instant. Bank deposits, Western Union and Moneygram can take some time, as you must leave your home to their branch to deposit cash.
3. CoinMama
4. Local Bitcoins
5. Changelly.com
How to make money with Bitcoins?
There are three main ways people get Bitcoins.
1.Buy Bitcoins and hold them.
This is a long term investment. The most common form of “investing” in Bitcoin is buying the currency in hopes it will appreciate in value. You can buy Bitcoins at a lower price and sell them when they have accumulated value. A typical example is what people do when they buy and sell shares. In 2009 when Bitcoin started, it was almost nothing. The price rose gradually to USD $0.003 in March 2010. As of today, the price of Bitcoin is around USD 20 000. Incredible!!
Strictly speaking, Bitcoin has become more of an asset than a currency. Imagine having purchased say 100 Bitcoins in Mar 2020 and kept them till 1 Dec 2020. You will have purchased them for just USD 0.30 and they will be worth around USD 200 000 as of now. Since this is a long term investment, you should be very patient. The price of Bitcoin goes up and down just like the exchange rate of any country’s currency.
If you do decide to Hold, the most important rule of thumb is this: Don’t take anyone’s advice about what will happen with the currency. Do your own homework, learn about Bitcoin and come to a conclusion for yourself.
2. Trade Bitcoins via Forex Trading
Most Forex trading brokers now accept BTC as a deposit method. Once you have your BTC, you can check Forex traders like Deriv or FBS.
3. You can sell things and let people pay you with Bitcoins.
4. Bitcoins can be created using a computer.
Where to get Bitcoins?
There are three main ways people get Bitcoins.
1.Buy Bitcoins using ‘real’ money.
2.Sell things and let people pay you with Bitcoins.
3.Create them using a computer.
Conclusion
To sum up, the best time to have Bitcoins was yesterday. The next best time is now! Purchase your Bitcoin now and secure your hard earned money. The United States Dollar is slowing losing value and those who will be holding cryptocurrency like Bitcoin are better of!