A few years back I began successfully trading with Bitcoin. After a while of listening to the hundreds and thousands of news reports questioning its very existence, I then found myself in a very fortunate position when the price of Bitcoin rose considerably!
Despite trading in this cryptocurrency for some time now, I am still conscious of a significant amount of people struggling to understand or get their head around the very term Bitcoin. This is a basic breakdown of what you need to know to get acquainted with the phenomenon that is Bitcoin.
What You Initially Need to Know About Bitcoin
Quite simply, Bitcoin is an exchange of digital information that allows you to purchase or sell good and or services.
- Bitcoin is not cash but virtual currency.
- Bitcoin transactions can be made by cash, check or wiring.
- Alternatively, you can use Bitcoin to refer a purchaser to your signature.
- Your signature is a 16-digit security code which is encrypted with distinct symbols.
- This code can be decoded by the purchaser on a smartphone to get to the cryptocurrency.
- Each transaction runs on a peer-to-peer computer network, and this is how it gains security and trust.
- This type of computer network is like a file sharing system such as BitTorrent or Skype, for example.
How to Buy Bitcoin
- Install a virtual wallet on your PC or mobile device.
- Deposit real money through an online Bitcoin payment company, or transfer it directly from your bank account, to a third-party website connecting Bitcoin buyers and sellers.
- This wallet is like the software you would use for personal finances, and it tracks your Bitcoin transactions and balances.
- Funds are then available for a buyer to place a Bitcoin order through an exchange. This is like trading stocks.
- You can also purchase Bitcoins from third parties, and the coins are sent directly to your virtual wallet.