Ultimate Guide to Blockchain and Bitcoin : The Basics
what is a blockchain the blockchain is a public distributed Ledger that keeps permanent record of all the transactions that has taking place in a chronological order offering transparency and immutability now let’s break down this definition into each individual elements for first a blockchain is a ledger this means that it is like a book or a file that keeps record of all the transactions chronology here means that it is arranged in order that transactions happen or come to be by transparency it means that transactions are able to be seen or open then by immutability it keeps track of transactions permanently in other words once a transaction goes in it can’t be changed so the blockchain is a technological advancement unlike anything seen before what is bitcoin a Bitcoin is a type of digital asset that can be purchased sold or transferred between parties securely over the Internet also Bitcoin is a form of digital currency and it can be used to buy products services and a mix of exchanging values electronically Bitcoin or BTC as it is sometimes known is different from other types of traditional currencies such as dollars Euros there are no physical coins or paper for Bitcoin and because of this using Bitcoin does not require a bank or credit card or any party to process your payment instead Bitcoin is sent or exchanged between parties directly over the internet in a secure way when transfers are made in the Bitcoin ecosystem there is need to be able to verify that both parties have done the needful for a ret transfer as a matter of fact there were attempt to create a sustainable digital currency but all those attempts failed because one major issue with sending digital money over the Internet is that transaction can be copied and spent twice this issue is commonly known as the double spend problem and why we need the bank or other institution to act as intermediary in these types of transactions and without an intermediary or agent it should be difficult to determine if the transaction is real or not so since digital money presents such a problem of double spending and Bitcoin is a digital money how is it that you can send Bitcoin to someone else over the internet without a bank or other intermediaries to certify that a transfer took place the answer lies in a global networ network of thousands of computers called the Bitcoin Network and a special type of decentralized Ledger technology called blockchain so the blockchain manages the double spending by implementing a confirmation mechanism the blockchain technology uses math and cryptography to protect and store data across network of computers by decentralized means it is not regulated by Central Bank and this makes it more secured and less prone to fraud Bitcoin miners are group of people within the Bitcoin Network they process and confirm transactions anybody can apply to become a minor however it is resource intensive and difficult especially over the past few years this miners uses a very powerful computer designed to M Bitcoins and the way they do this is by solving and resolving mathematical equations and cryptographic problems because every one of these transactions need to be encoded cryptographically Bitcoins are not created or issued by the central bank but they are generated through solving mathematical equations as this is done by miners the miners are rewarded or paid in Bitcoin and this is one of the key components of Bitcoin creation so the role of a miner is to generate the blockchain of records that form The Ledger Bitcoin each block contain every transactions that has taken place new blocks are added every 10 minutes as new Bitcoin transaction take place unlike Trad TR Fiat currencies and what I mean by Fiat currencies are like the US Dollars euros and other countries currency in which the government around the world can simply print more bills whenever they want Bitcoin has a limited supply of coins and that limit is set at 21 million and will not be reached until 2140 as these miners are processing different transactions they build a block and when a block is verified it gets added to the blockchain and all the blocks that form the blockchain is built all the way back to the initial transaction in Bitcoin known as The Genesis Block in 2008 there was a financial crisis people from all over the world felt a deliberating economic effect as this Global Financial system teered on the point of collapse many central banks engage in qualitative easing so in the middle of all of this crisis there was a white paper published on October 31st 2008 by Satoshi Nakamoto titled Bitcoin a peer-to-peer electronic cash system as a matter of fact Satoshi nakam states in the white paper a purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution when Satoshi nakam came up with the idea of Bitcoin one key factor was decentralization decentralization means we are all part of the Bitcoin ecosystem instead of relying on the government bank or middle man Bitcoin belongs to everyone the Bitcoin price is determined by each users under the principle of supply and demand the Bitcoin Supply is limited to 21 million in total to be reached by 2140 however the story might change as Bitcoin continues to mature so the more people and raise Bitcoin use it as a payment by buying products and services with Bitcoin or offer it as an exchange for product and services the better it works there are common misconception about blockchain and Bitcoin these are little things that people misunderstand about blockchain and Bitcoin the first misconception people think of Bitcoin is that it is anonymous now I want to say that Bitcoin is not Anonymous Bitcoin is actually simous and this is because when you in the Bitcoin Network your Bitcoin address is your identity and every transaction done on the Bitcoin Network keeps a permanent record on the open block blockchain so whenever you move money using your Bitcoin address anyone can access that information and your information is collected through the kyc process which stands for know your customer with a Bitcoin exchange company and without kyc you may not be able to exchange your fiat currency with Bitcoin in a n share your kyc identity always matches your Bitcoin address that’s why your C Anonymous not Anonymous next transaction is reversible this is not always the case as I said earlier blockchain is a type of Ledger or database which keeps a permanent record in a chronological order in other words it is immutable so when you carry out a transaction you cannot go back and make any reversal like Bank does so every transaction on a blockchain is permanent and immutable another misconception is that people think that blockchain is Bitcoin this is not correct blockchain has extended above Bitcoin so blockchain is one of the Technologies being used in Bitcoin blockchain is also used in other fields such as Supply Chain management and a re estate so blockchain is not Bitcoin finally people think that you need to buy full Bitcoin in order to get started with Bitcoin this is not true and as you will learn later in this course you will understand that you don’t need to buy a full Bitcoin in order to get started or start Bitcoin trading Bitcoins are divisible so these are some of the most common misconception about blockchain and Bitcoin before now we have covered a lot about the fundamentals of Bitcoin and blockchain so in this lecture I will show you how you can get started in using Bitcoin I’m assuming that you don’t have any prior experience with Bitcoin at all to get started with Bitcoin the first thing you need is a Bitcoin wallet this is a type of software that you install on your mobile device or on your computer or even through a web platform and this will allow you to create your own addresses an address in Bitcoin is similar to an email and this Bitcoin address is what you use to receive Bitcoin once you have your wallet opened you’re going to you receive two valuable pieces of information a public key and a private key the public key can be shared with anyone but the private key is the key that only you know once you have your wallet the next thing is how to obtain or get Bitcoins although you can do so using several methods you can obtain or get Bitcoin by doing a job or get getting paid but the most obvious choice is to buy Bitcoin that would mean you could exchange with dollars or whatever currency so where do you go when trying to buy Bitcoin in exchange for fiscal money we go to platforms called exchanges Bitcoin exchangers exchanges your local currency for Bitcoins as well as Bitcoins for local currency or schol money trading cryptocurrency like Bitcoin is all about buying and selling Bitcoins using different Fiat currencies or altcoins there are good exchanges out there but when it comes to choosing an exchange you need to consider your geographical location and the type of fiate currency you use the first one I want to point out is www.coinbase.com the coinbase platform allows you to trade cryptocurrencies such as Bitcoin Bitcoin cash ethereum Litecoin and ethereum classic coinbase has a lot of cool features they also have a mobile app so you can stay on top of the market as at the time of making this course they have over 20 million customers in 32 countries and they’ve carried out more than $150 billion of currency exchange anyone can create an account with this Exchange without having to buy Bitcoin beforehand so when you sign up for a user account by providing basic information once you’ve activated your account and gone through the registration process then you should be able to sign into the coinbase using your email or password and sometime you may be asked to enter a verification code sent to your mobile phone for security reasons and here we have our dashboard note once you have your account being set up a wallet is assigned to that account also so you can start receiving sending and storing your Bitcoin coinbase also allow you to set up your local bank account so you could make withdrawal to your bank account it’s very important you choose a Bitcoin exchange that supports your currency the next exchange is luno luno is one of my favorite exchange luno has most of the featur offered by coinbase luno makes it easy to trade with Bitcoin and ethereum by also providing offering a mobile app and a price chart for trading analysis so to get started with luno there are three basic steps you sign up you deposit money using your credit card or transfer into your wallet then you start trading trading with Bitcoin or ethereum another great option I want to show you is local Bitcoins local Bitcoins is more of peer-to-peer exchange platform unlike coinbase and luno peerto peer means that you have data related to the person you are interacting with in other words it matches buyers and sellers without holding any fund during the trade it also depends on the kind of trading experience you prefer peer-to-peer trading like local Bitcoins may be more suitable for your need than a regular exchange like luno and coinbase this is because peer-to-peer trade do not require you to provide any document regarding your identity in local Bitcoins you’re dealing with with other Traders directly so it is important to know a little bit about Traders previous history or feedback before going into transaction with them another peer-to-peer trading platform is bitmex all you need do is register deposit and start trading apart from using the cryptocurrency exchange another alternative to convert your Bitcoin to fiat currency is to use a Bitcoin debit card this can be topped up with Bitcoin or linked to an existing Bitcoin wallet which allows you to spend digital currency wherever major credit card are accepted for instance coinbase offers a Visa Bitcoin debit card and you can actually be paying anywhere Visa is accepted using your Bitcoin debit card you can also go to an ATM and you can actually withdraw funds in your local fiat currency against your Bitcoin another option to convert your Bitcoin into a fate currency is to sell it to someone else this is a way of transferring or sending Bitcoin to a person without involving a third party such as a bank or a credit card all you need do is to find someone who wants to buy Bitcoin and you can process a transfer directly into his wallet and you get paid in your local currency note in this type of business there are some security risk involved because when you affect a transfer of Bitcoin to someone that transfer or transaction is irreversible in other words if you send your Bitcoin to someone else and the person does not pay you for the Bitcoins you have no way to retrieve your Bitcoins unless that person voluntarily send it back so whenever you’re doing this type of business make sure the person can be trusted or you can use what is known as a local trading site like localbitcoins.com and it’s available in over 200 countries local Bitcoins allows you to put your Bitcoins for sale on their site and they provide an escro service and this service simply locks your Bitcoin inside the platform and the buyer will be able to pay you for those Bitcoins the platform takes care of releasing the Bitcoins upon successful payment so at the end of the day the Bitcoin goes to the buyer and the buyer actually pays to the seller in this lecture you are going to learn how bit coin can be sent and received here we have Mike and John John wants to send two Bitcoins also known as 2 BTC to Mike John is sending these Bitcoins maybe he bought a product or he’s paying mik for his service in order for John to send two Bitcoins he needs to have at least two Bitcoins in his wallet now the question is how can Mike receive his two Bitcoins from John so in order for Mike to receive two Bitcoins he also need to have wallet of his own and needs to provide him with his Bitcoin address he can share his Bitcoin address with whomever he wants because that Bitcoin address is simply for receiving money Bitcoin address is a hashed version of a public key which was assigned when he open up his account note they both have different and unique private keys that will see allow them to spend their Bitcoins anytime and these keys are kept secret
Looking to learn the basics of blockchain and bitcoin? Look no further! This ultimate guide will break down the fundamentals of these technologies in simple terms.
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