How Bitcoin Works
If you’re new to using BItcoin it can be kind of confusing when you first start. But once you understand the basic concepts of Bitcoin like the Bitcoin Wallet, Blockchain, Mining, and more, you’ll be a pro in no time. Before you start using Bitcoin you need to get a Bitcoin Wallet. Bitcoin wallets are available on smartphones, tablets, and computers. Make sure to do your research before choosing the best Bitcoin wallet for you. Once you install the Bitcoin wallet, it will automatically generate the first Bitcoin address and then users can create more as needed. Bitcoin users can give friends and family their wallet address as they please. This process is similar to how emails work, except that addresses only need to be shared once.
Learning How To Use Your Bitcoin Wallet
Bitcoin wallets allow you to purchase digital currency instantly with a debit or credit card. Before you start using Bitcoins there are a few things you will want to know about Bitcoin wallets and how they work. Bitcoin is different than most traditional currencies and Bitcoin users should know how to get the most out of this digital currency.
Some important things to know are:
- Bitcoins are difficult and near impossible to inflate or counterfeit.
- Bitcoin wallets can be used to send or receive any amount of money from anyone in the world at little to no cost.
- Digital currency payments cannot be blocked and Bitcoin wallets cannot be frozen.
- Bitcoin gives the user direct control without having to involve any third party entities like PayPal or a bank.
- Transactions can not be refunded or reversed, so only use them with people or businesses you trust.
- Digital currency can now be used to buy products from popular brands and companies. Bitcoin users can easily purchase bitcoins from BTM machines that installed in larger cities across the United States.
- Everyday more merchants (online and offline) are getting onboard with this new digital currency concept. Many new services and products now accept Bitcoin as a form of payment.
Bitcoin is easily accessible to everyone because of its shared public ledger, the Blockchain. All transactions that are confirmed are included in the Blockchain. The Blockchain creates a chronological order of transactions, thus keeping order and integrity in the decentralized digital currency. Bitcoin wallets are able to calculate the spendable balance and all new transactions are verified.
A transaction between Bitcoin wallets is just like any other transaction. However, each Bitcoin wallet stores secret data that is the private key or “seed” of the wallet, which is like the pin of a debit card. The key or “seed” is used to sign transactions. This signature is what prevents transactions from getting altered by anyone else.
Mining enforces chronological order in the Blockchain and allows different computers to “agree” on the system’s state and protect the overall neutrality of the network. Mining is used to confirm waiting transactions by adding them to the Blockchain. Mining is what also creates a type of “competitive lottery”, preventing individuals from adding new blocks into the blockchain. No individual person or entity can control anything that is added or replaced to the blockchain.