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What Is a Bitcoin & Why Should It Be Bought?

what-is-a-bitcoin-why-should-it-be-bought

Bitcoin and other cryptocurrencies are really popular now. But not many people understand how they work or if they’re safe. Before you think about buying Bitcoin, there are some important things to think about.

But just to be clear, this is a guide to help you learn about Bitcoin, not to tell you where to invest your money. I wrote this guide because people had questions about Bitcoin and some had bad experiences buying it from not-so-trustworthy places. I bought some Bitcoin to figure out how it works and how to buy it safely.

In 2013, I wanted to buy a whole Bitcoin for £200, but I never managed to do it. The more I tried to buy it, the more confused and worried I became. So, I gave up. I didn’t know then, but if I had kept trying, that Bitcoin would be worth over £30,000 now.

With so much talk and news about Bitcoin, it’s hard to ignore. The price of Bitcoin has gone up a lot in the past few years. Bitcoin could be a big deal for everyone’s future. I thought it was time to give buying Bitcoin another go, not to make money, but to understand why everyone’s so excited about it.

My curiosity pushed me to do a lot of research because I was really interested and excited. Finally, I understood it. And I found out that buying Bitcoin today is much easier than it used to be.

Now, I own 0.01603666 BTC, which I bought for £100. In this guide, I’ll show you the exact steps I followed to buy Bitcoin. It only took about 15 minutes.

But before we get into the steps to buy Bitcoin safely, it’s super important to know what we’re dealing with. I hear a lot about people making mistakes because they jump into Bitcoin without really understanding it, just because it’s so popular.

There’s a lot of mixed up and wrong information out there. My goal is to make it simple and clear how Bitcoin works before I explain how I bought it.

WHAT IS A BITCOIN?

Bitcoin is more than just money. Lots of folks see it as the new way to pay for stuff, like a digital coin that’s used worldwide. Instead of using regular cash, you might use something called Bitcoin.

But it’s not just a coin. There’s a whole system called the Blockchain that looks after Bitcoin. This system makes sure that when you send money to someone, it’s all done safe and sound.

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Let’s compare it to using a Visa card. When you spend £20 at a restaurant with your Visa card, there’s a whole process. The card machine, Visa, your bank, and the restaurant’s bank all need to talk and check things at each step.

Bitcoin wants to make this easier. It wants to get rid of all these steps and make payments super safe. For example, you could just use your phone to send £20 worth of Bitcoin right to the restaurant.

So, Bitcoin is like a special kind of money that’s looked after by a clever system. It’s meant to make paying for things simpler and safer for everyone.

Bitcoin is a special kind of money that works online. If you’re new to it, I did a lot of digging to understand the most important things about it. Here’s what I found:

  • 1. Trust: Bitcoin helps people trust each other when they do business without needing a bank.
  • 2. Secure:It keeps transactions safe by putting them in a Blockchain that’s very hard to hack.
  • 3. Decentralised: No one’s in charge, so it can’t be controlled, attacked, or changed easily.
  • 4. Unregulated: There’s no guarantee of protection if something goes wrong with a payment.
  • 5. Transparent: You can see all the code and every Bitcoin transaction, making things clear for everyone.
  • 6. Low cost: It’s cheaper because there are no big institutions involved, especially for sending money across countries.
  • 7. Speed: It’s super quick because it’s all digital.
  • 8. Limited supply: There will only ever be 21 million Bitcoins, so it’s not endless.
  • 9. Truly global: Anyone, no matter where they are, can use Bitcoin.
  • 10. Privacy: Your personal info isn’t held by big groups like banks.
  • 11. Virtual: Even though it’s called “Bitcoin,” it’s not physical; it’s all digital.
  • 12. Volatile: The value of Bitcoin goes up and down a lot, so it’s not always a stable way to save money.
  • 13. Energy intensive: Making new Bitcoins uses a lot of energy, which isn’t great for the environment.

Overall, Bitcoin promises to change money for everyone, making it easier and cheaper to pay securely. You don’t have to know everything about it to use it, just like you don’t need to understand how card machines or the internet work to use them.

If you’re curious, we can dive deeper into the background and what Bitcoin might mean in the future.

SHOULD YOU BUY A BITCOIN?

You don’t have to buy a whole Bitcoin because it’s very expensive now. A Bitcoin can be split into really tiny parts, so you can buy just a little bit for as little as £5.

But if you don’t have £5 to spare or you owe money, it’s better not to buy Bitcoin because you might end up losing money.

There are three kinds of people who buy Bitcoin:

  • 1. Speculators: They think the value of Bitcoin could go up, but it’s pretty risky because the value keeps changing a lot.
  • 2. Actual users: These folks use Bitcoin for buying stuff and even earning money. It’s becoming more popular slowly.
  • 3. The curious: They find Bitcoin interesting because it’s new, and they want to understand how money might change in the future.

Everyone has their reasons for buying and selling Bitcoin, but this guide is mainly for the third type. I bought a little bit of Bitcoin myself to learn about this new technology and the chances it offers.

Once you try buying and sending Bitcoin, it gets much easier to understand!

I think it’s good for everyone to buy a small amount of Bitcoin to learn about this digital money. It could be a big part of our future.

CARBON FOOTPRINT OF BITCOIN

Bitcoin’s carbon footprint is a big deal. The process of making Bitcoin uses lots of energy, and many super-powerful computers in China do these using fuels that aren’t good for the environment.

When I got Bitcoin a few years back, it didn’t need as much energy as it does now. I hope that soon they’ll use more renewable energy. Plus, once they’ve made all the Bitcoin that can exist, the footprint might get smaller.

Knowing what we know about it now, if you care about climate change like I do, I’d say, only get a little bit of Bitcoin, or maybe none at all.

HOW TO BUY BITCOIN

There are many ways and websites to get cryptocurrency, but some might be a bit iffy. I chose a way that’s safer and easier for someone like me, who’s totally new to this.

Before you buy Bitcoin, you need five things:

  • 1. Bitcoin address: It’s a unique set of numbers just for you. This helps you get Bitcoin, kind of like a bank account number. It’s also called a ‘public key’.
  • 2. Bitcoin wallet: This is where you keep your Bitcoin safe, like a bank account.
  • 3. Bitcoin exchange: It’s a website where you change regular money into Bitcoin, sort of like a money exchange place.
  • 4. Payment method: You use a debit or credit card to buy Bitcoin.
  • 5. Form of identity: Have your passport or driver’s license ready.

So, I went through these steps to buy some Bitcoin. It was a way to learn the process. There are different ways to buy cryptocurrency, but some might not be very safe. I picked a way that felt safer and easier, especially for someone new like me.

Before you get Bitcoin, there are five things you need:

  • 1. Bitcoin address: It’s a special set of numbers that’s just for you. It helps you get Bitcoin, like a bank account number.
  • 2. Bitcoin wallet: This is where you keep your Bitcoin safe, like a bank account.
  • 3. Bitcoin exchange: It’s a website where you change regular money into Bitcoin, like exchanging money at a store.
  • 4. Payment method: You can use a debit or credit card to buy Bitcoin.
  • 5. Form of identity: Have your passport or driver’s license ready.

STEPS TO BUY BITCOIN

Certainly! Here’s a simplified version:

I wanted to buy Bitcoin, so I picked Coinbase because it does everything in one place. First, I made an account by filling out a quick form. Then, I checked my email and clicked a link to verify it. To make sure my account was safe, I connected my phone. This way, nobody can get in without my password and phone.

Coinbase needed to check my identity, so I gave some personal info and sent pictures of my ID and address. It only took a minute for them to check it. After that, I got to my Coinbase dashboard.

Next, I added a way to pay. I chose to use a debit card because it lets you buy Bitcoin right away, although it costs a bit. If you use a bank transfer, it takes longer.

On the dashboard, I clicked “Buy/Sell,” chose Bitcoin, and picked my payment method. I put in how much money I wanted to spend, and then I got to see the fees and the final amount. After I clicked “Buy now,” the Bitcoin showed up in my wallet. Yay!

I bought £100 of Bitcoin, and the fees from Coinbase were £3.41. So, I got 0.01603666 Bitcoin with the remaining £96.59.

Remember, buying Bitcoin is risky. The folks in charge in the UK say it’s high-risk, so only spend money you’re okay with losing.

View your Bitcoin balance by selecting “Portfolio” from the side menu, where you’ll find the amount of Bitcoin you currently own listed under the “Bitcoin” section.

HOW TO SEND AND RECEIVE BITCOIN

Delving into Bitcoin usage beyond purchasing, here’s a detailed guide on sending, receiving, and utilizing Bitcoin through Coinbase.

Sending and Receiving Bitcoin

Managing Bitcoin transactions is centralized within your Coinbase account. To receive Bitcoin, share your unique Bitcoin address with the sender. Access this by clicking “Send/Receive,” then “Receive.”

This address is also available in a QR format, convenient for mobile use.

For sending Bitcoin:

1. Click “Send/Receive.”

2. Enter the amount from your digital wallet.

3. Input the recipient’s BTC address.

4. Add a message (serves as a payment reference).

5. Confirm the transaction by clicking “Continue.”

Trying it Out

Consider making a small donation to RNLI by using their Bitcoin address.

Using the Coinbase App

The Coinbase app enables on-the-go access to your BTC wallet. This facilitates local Bitcoin spending and transfers through QR codes, ideal for transactions in shops or among friends.

Tracking Transactions

Remember, all Bitcoin wallet transactions are logged. These transfers are recorded in the publicly available Blockchain. While they’re transparent, they maintain anonymity as addresses cannot be linked to individuals.

Example Transaction

Consider a test transaction sent to a friend’s wallet. Understanding Blockchain technology will be revisited later in this guide.

Spending Bitcoin

Bitcoin adoption extends from local pubs to global corporations. Various businesses, including Cumbria University for tuition fees, are incorporating Bitcoin payments. Rumors suggest Amazon might join this trend.

Brands Accepting Bitcoin

Notable brands embracing Bitcoin payments include CeX (entertainment), Dell (computers), Expedia (travel), Lush (cosmetics), Microsoft (computers), RNLI (charity), and Scan.co.uk (computers). For more, refer to our “What You Can Buy with Bitcoin” guide.

Bitcoin’s Growth in the UK

The expansion of Bitcoin acceptance might surprise you. Explore the growth in Bitcoin adoption across the UK in recent years.

This comprehensive overview serves as a practical guide to using Bitcoin beyond its purchase. As you explore the diverse uses and adoption of Bitcoin, keep in mind its evolving nature and the potential it holds in various sectors.

HOW BITCOIN WORKS

Delving into Bitcoin and Blockchain, let’s explore their functionalities, the process of buying, selling, and investing in Bitcoin, its growing popularity, the downsides, and more.

Bitcoin & Blockchain

Bitcoin operates on Blockchain, a secure technology publicly verifying information transfer between parties. Blocks containing transaction data are added to the chain in chronological order, sealed by cryptographic signatures. This decentralized chain is virtually unhackable due to its bound blocks across thousands of global computers.

Blockchain’s Applications

Beyond Bitcoin, Blockchain validates various transfers, from music licensing to property sales. Ethereum extends beyond currency, enabling ‘smart contracts’ for rapid validation, while the British government considers adopting Blockchain.

NFTs & Bitcoin’s Origin

Blockchain authenticates digital assets, as seen in the rising popularity of non-fungible tokens (NFTs). New Bitcoin is mined through solving complex mathematical problems, creating scarcity as only 21 million will ever exist.

Downsides of Bitcoin

While Bitcoin has surged in popularity, it faces challenges like energy-intensive mining, price volatility, and issues with transaction speed and scalability. Additionally, it lacks intrinsic value and buyer protection.

Bitcoin’s Popularity

The meteoric rise of Bitcoin stems from diverse factors, including political events, technological advancements, and media attention. Bitcoin’s increasing acceptance, driven by distrust in financial institutions post-2008, aligns with the vision of a global digital currency.

The Future of Bitcoin

Bitcoin might signify the shift towards a fully digital currency, offering a democratic, secure, global monetary system. Despite obstacles, its potential attracts only a small fraction of the global population, hinting at continued momentum.

Bitcoin FAQs

Origin of Bitcoin

The true founder, under the alias Satoshi Nakamoto, remains unknown, reinforcing Bitcoin’s decentralized ownership.

Buying & Selling Bitcoin

Platforms like Coinbase offer ease for buying Bitcoin. Selling should be through reputable exchanges to avoid risks.

Best Bitcoin Wallet

Online wallets like Coinbase suffice for beginners, but dedicated hardware wallets provide enhanced security.

Investing in Bitcoin

Exchange-traded portfolios and trading platforms like eToro offer investment options. Remember, investing in Bitcoin involves high risk.

Bitcoin & Scams

Bitcoin itself isn’t a scam, but scams linked to it exist. Research and caution are crucial in transactions to avoid falling prey to scams.

Bitcoin vs. PayPal

While PayPal facilitates digital transfers, it doesn’t operate as a currency. Bitcoin’s encryption and decentralization provide more security compared to PayPal.

This comprehensive guide aims to shed light on Bitcoin and its underlying technology, Blockchain, outlining its functionalities, challenges, potential, and use in the evolving landscape of digital currency. Understanding the risks and opportunities associated with Bitcoin is essential for anyone considering involvement in this dynamic financial landscape.

 

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