Understanding Blockchain And How Bitcoin Works
What Is A Blockchain?
Blockchain technology is an immutable database managed by a computer network that could be centralized or decentralized.
One of the main principles of a blockchain is that it uses blocks that contain data and that are bound to each other by using cryptographic techniques. In decentralized networks such as the one that powers Bitcoin (BTC), no central authority controls the information shared on this network.
In open networks, information is accessible to everyone and democratized, and interested users can participate, making the whole blockchain more decentralized. Many companies are currently using this technology to send and receive information, track important data, and store files.
Also Read: Censorship Resistance In Blockchain Technology
When And Why Was Bitcoin Created?
Bitcoin is the largest cryptocurrency in the world, and it has been growing for over fifteen years. After the 2008 financial crisis, a person or group of people with the pseudonymous “Satoshi Nakamoto” decided to create a new financial system that completely eliminated intermediaries.
Considering banks generated a world financial crisis that affected millions of individuals around the world, Satoshi Nakamoto considered it was time to move towards a trustless system. Since that moment, Bitcoin has expanded worldwide, allowing users to transact money and send and receive funds.
If you want to know more, check out this article, which includes 11 of the most important and interesting facts about Bitcoin.
Transactions: What Are The Fees And Why Are They Considered Immutable?
Every time a Bitcoin user sends BTC to another, he/she must pay a small fee. This fee is calculated based on what users decide to pay and what miners agree to accept. If the network is not congested, Bitcoin transactions can generally be sent for just a few cents. This is very positive for individuals that want to make small payments or send funds across borders.
It is important to note that the fees included in each transaction pay miners for their work in confirming and processing the network’s transactions. Although transaction fees are not the main revenue source for miners, they are expected to play an important role in the future.
Bitcoin has immutable transactions considering that its ledger cannot be changed, or at least it is very difficult to do so. Each block that the network processes contains important information about the transactions that users make. Moreover, miners control the processed transactions and avoid malicious entities to perform a double-spending or a 51% attack.
Also Read: What Is A 51% Attack?
What Is A Crypto Wallet? The Best Ways To Store Your Bitcoin
What Is A Crypto Wallet?
A cryptocurrency wallet is a device or software that Bitcoin users use to store their funds. Each wallet has a private key and a public address to which other individuals can send BTC.
The private key should only be known by the wallet’s owner, and the information shouldn’t be shared with others.
If you lose your wallet, the private key allows you to recover the funds. At the same time, if you own these private keys, you are the real owner of those cryptocurrencies in the wallet.
Also Read: What Are Public And Private Keys, And How Do They Work?
Types Of Cryptocurrency Wallets
There are different types of cryptocurrency wallets, each with different characteristics and features. Some are faster and easier to use, while others are safer.
Desktop wallets are software applications that can be downloaded to a computer, allowing users to handle their cryptocurrencies there. These are safe wallets if the user protects the computer against attacks and malicious software. These wallets are certainly good for newcomers because they are easy to use and have friendly interfaces.
Mobile wallets are also easy to use and carry. For example, if you want to spend Bitcoin in a shop, these wallets would certainly be very useful. However, mobile wallets are less safe than desktop wallets and are more vulnerable to attacks. They are not the safest in the market. Nevertheless, this does not mean that you will be hacked or that you will lose your funds. These are good wallets for newcomers and individuals that are starting to use Bitcoin and other cryptocurrencies.
Paper wallets are safer ways of holding cryptocurrencies. They cannot be hacked because they are not connected to the internet. These wallets allow users to store larger amounts of Bitcoin and other cryptocurrencies without worrying about losing their funds. They can be printed and include a private key and a public address, allowing you to send the funds to this wallet. It is always advised to store these wallets in a safety box or in another safe place at home or where you consider nobody else can access them.
Also Read: How To Create A Bitcoin Paper Wallet?
Another way to safely store cryptocurrencies is to use a hardware wallet. These wallets are the safest on the market. They are not connected to the internet and cannot be hacked by third parties. If a user holds large amounts of cryptocurrencies, hardware wallets are the safest and easiest way to store them.
Nonetheless, novice users are recommended to start using a traditional mobile wallet and move to a hardware wallet after gaining some experience. The negative side of hardware and paper wallets is that they are not user-friendly if an individual wants to purchase a coffee at a store or process daily transactions.
What Are The Best Places To Buy Bitcoin?
What Is A Cryptocurrency Exchange?
A cryptocurrency exchange is a platform where users can buy, sell, and hold cryptocurrencies. This is one of the most straightforward ways to acquire cryptocurrencies. Indeed, Bitcoin users will find that these exchanges have low fees and would allow them to easily sell or buy the cryptocurrency they desire.
Also Read: Best Cryptocurrency Exchanges In 2024
The Best Places To Buy Bitcoin
There are different exchange platforms in the market that would allow users to have access to Bitcoin and other cryptocurrencies.
One of them is Binance. This cryptocurrency exchange is one of the world’s largest and most liquid platforms. It includes a large number of trading pairs and helps users build up their crypto portfolio quickly. Indeed, the platform is also one of the most user-friendly in the market.
One thing to note is that individuals in the United States must use the Binance.US platform, which focuses mainly on US citizens.
Although there are other exchanges that offer similar solutions, Binance is one of the best options after years of operating in the space.
How Can You Buy Bitcoin From Binance?
The main question you may have is, “How can I buy Bitcoin from Binance?”
The answer is very simple. You can purchase Bitcoin using a credit or debit card or by making a bank transfer. Binance will process the transaction, and the funds should be added to your Binance account in just a few minutes!
Bank transfers may take longer to process, meaning the funds may take longer to be credited to the user’s account. If you already own cryptocurrencies, you can send them to the Binance platform and buy other virtual currencies through this exchange.
Also Read: Buying Bitcoin Safely In 2024 For Beginners