Bitcoin Basics

Bitcoin is a digital currency that facilitates peer-to-peer transactions. The Bitcoin network is maintained by miners who add blocks to the blockchain. Bitcoin’s supply is predetermined and cannot be changed.

Bitcoin can be purchased in a variety of ways using several different payment methods. Brokerages, exchanges, and peer-to-peer networks offer trade-offs between liquidity, security, and privacy.

Learning how to send and receive bitcoin is easy, and does not require a complete understanding of Bitcoin. Wallets and services allow users to easily send, receive, and store their bitcoin. You can also use your brokerage to send and receive bitcoin.

A transaction is a transfer of Bitcoin value on the blockchain. Bitcoin transactions are irreversible once added to the blockchain.

A private key is used to verify ownership and sign transactions in order to send bitcoin. A private key can derive a public key.

Bitcoin has been criticized as unfair from a few different angles. However, these accusations are based on inaccurate assumptions and poor measurement. Bitcoin’s monetary policy and initial distribution were as fair as possible for a new invention.

Bitcoin and gold are the primary inflation hedges utilized by consumers. Bitcoin offers superior value as a medium of exchange and secure long-term value relative to gold.

Bitcoin is often compared to Ethereum as an investment and a potential money. However, the two projects are fundamentally different. Bitcoin is decentralized, sound money while Ethereum is neither.

Bitcoin is built on a public and pseudonymous blockchain, which grants strong privacy to users. Several parties, including governments and chain analysis companies actively work to erode this privacy by analyzing the blockchain and using AML/KYC data.

Fiat currency is a government-issued currency that is not backed by any asset. The government can increase the supply of this currency. Most economies use fiat currency as their main form of money.

Fungibility is a property of goods whose units are interchangeable. As with all monies, fungibility is a critical property for Bitcoin, and it directly upholds the usability of bitcoin as a privacy-preserving, censorship-resistant money.

As the bitcoin market has grown, it has begun to compete with and integrate into traditional financial products. Bitcoin’s network effect has grown to compete with that of gold and fiat currency.

Encryption is the process of transforming data such that it can only be deciphered and understood by specific parties. Encryption is critical to maintaining security and privacy in the digital realm.

Bitcoin uses a blockchain to process payments, but blockchains are slow and inefficient databases. For Bitcoin to become the global reserve money, additional infrastructure is needed to enable more, faster, and cheaper payments.

Bitcoin is a currency. However, the Bitcoin and its community of early adopters have several broader implications. Bitcoin and the new monetary system it will establish will have broad impacts on culture and the economy.

Governments have both incentives and disincentives for banning Bitcoin. While most governments are currently incapable of banning Bitcoin on their own, a coalition of governments might be able to effectuate a ban.

As a new phenomenon, Bitcoin faces much skepticism. However, Bitcoin’s database, the blockchain, is practically impervious to attack or corruption. Individuals can still lose their bitcoin in a variety of ways.

Bitcoin is a new form of money, and its network has rapidly grown. While Bitcoin is not yet a universal a Medium of Exchange, economic, cultural, and technological incentives explain why this is the case, and why Bitcoin will be used as a Medium of Exchange in the future.

Bitcoin mining requires significant electrical energy, accounting for the majority of production and operation costs associated with the Bitcoin Network.

Bitcoin uses a blockchain as a ledger to record all transactions. The blockchain is the most secure database in existence, but neither the fastest or cheapest way to transact bitcoin. Off-chain solutions, such as the Lightning Network, offer trade-offs to optimize for rapid, cheap payments.

The demographic of bitcoin investors has shifted as more individuals and institutions look to bitcoin as a means of securing long-term value, moving away from centralized financial institutions, and capitalizing on current and emerging use-value.

The success of Bitcoin has generated many imitations and spin-offs. Some have genuinely attempted to recreate or extend Bitcoin’s innovation on money, while others have been nothing more than affinity scams, playing off of Bitcoin’s reputation to attract investors.

There will never be more than 21 million bitcoin. This rule, encoded in Bitcoin’s source code, cannot be changed thanks to Bitcoin’s decentralized nature. If it were possible, changing this hard cap would destroy the value proposition of Bitcoin.

Although the Bitcoin market and its institutional support have grown rapidly in recent years, negative perceptions of its core principles and utility have kept many potential users from participating.

Bitcoin’s network utilizes a wide range of technologies and ideas from previous projects. Additionally, Bitcoin implements several original technologies.

One bitcoin is divisible into 100 million satoshis. Satoshis give Bitcoin great divisibility and flexibility.

New bitcoin are released every 10 minutes by mining a new block. When a minor finds a new block, they receive the sum of the transaction fees and the block reward, known as the block subsidy.

Bitcoin transaction fees promote network security by allowing miners to remain profitable. Transaction fees increase in cost as transaction size, urgency, and network activity increase.

Money is a tool that helps people store value and conduct exchange. Some types of money are better forms of money than others. Dominant monies used in human history have been replaced when a better type of money was implemented.

Bitcoin is a unique asset that can meet the specific needs and goals of an investor who is looking for diversification, flexibility, and increased purchasing power in the long-term.

Bitcoin can be used to purchase many goods and services, such as VPNs, giftcards, travel, luxury goods, and more. Several companies act as intermediaries to allow customers to spend bitcoin at merchants who do not yet accept bitcoin.

Learn what schemes exist to steal bitcoin, how to spot them, and how to protect yourself from becoming a victim. Recognizing these scams will help you avoid them and safeguard your bitcoin.

As a new phenomenon, Bitcoin faces much skepticism. However, Bitcoin’s database, the blockchain, is practically impervious to attack or corruption. No software is invulnerable, but so far, Bitcoin has proven to be the most secure monetary system in history.

Bitcoin becomes more useful as a currency as more people accept it. This means that every additional user makes adoption easier for the following users. This effect is also responsible for existent currencies’ continued dominance despite their inferiority relative to Bitcoin.