Learn everything about Bitcoin in just 5 minutes

What is Bitcoin? Why is it used?

If you had asked this question before 2009 or 2011, no one would have been able to answer it.

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Now, if you search on Google, you will find hundreds of thousands of articles explaining Bitcoin. And if you try to read all of that, it will take you hours to understand all of the same.

But even then, people rarely get a complete idea of ​​all the terms related to Bitcoin.

In just 5 minutes, you’ll learn everything that can help you understand the entire Bitcoin system.

What is Bitcoin?

Bitcoin is a digital currency or a form of digital cash. This type of digital cash is encrypted, creating new units of digital currency and confirming the transfer of funds.

Bitcoin is a type of cryptocurrency.

Here’s what comes up when you search for Bitcoin: Google:

And here is what you will see if you search for Cryptocurrency: Google:

You can send and receive Bitcoin just like you would using real money. The only difference is that you have to transfer your bitcoins using the internet. In fact, your Bitcoin account is not necessarily linked to your real identity. So you can exchange Bitcoins with known as well as unknown people.

However, security is maintained with the help of cryptography, a branch of mathematics.

Bitcoin operates independently without a central bank or system administrator.

What is a Bitcoin Address?

The most common way to communicate with people over the Internet is through email addresses.

The same goes for Bitcoin. You can exchange Bitcoin using your Bitcoin address. Bitcoin addresses can be created in seconds and without cost with the help of an exchange or digital wallet.

A Bitcoin address consists of 26 to 35 letters and numbers and begins only with the numbers ‘1’ or ‘3’.

There is no way to know who owns a Bitcoin address unless someone explicitly links their name to it.

Here are some sample Bitcoin addresses found at: Google:

What is a public key?

The public key is the Bitcoin owner’s identification (ID) number used to generate a Bitcoin address.

Just like you have a bank account number for your banking transactions, here is a public key that you can provide to anyone transferring Bitcoin to your Bitcoin address.

Bitcoin’s public keys are easy to read and enter. So, you won’t make any mistakes while transferring Bitcoin.

What is a private key?

Your private key is the other half of your Bitcoin address that only you know. This is the same as the CVV of your credit/debit card that can be used for payments or online transactions.

Therefore, you cannot share it with anyone. And if someone gets your private keys, they can transfer your bitcoins to their address and you can do nothing about it. That’s why it’s very important to keep your private keys private.

What is blockchain?

Blockchain is a public digital ledger that maintains records of transactions that occur between various websites and users on the Bitcoin network.

This is a kind of global database that stores each and every Bitcoin. In fact, all new Bitcoins created are recorded on the blockchain.

If you search ‘what is blockchain’ on Google, you will get the following results.

What is Bitcoin Mining?

Bitcoin mining is the process of verifying transactions that occur on the Bitcoin network and adding them to the blockchain, a public ledger.

Bitcoin mining is also used to create new Bitcoins.

Participating in Bitcoin mining requires an internet connection and special hardware that can help you engage in Bitcoin mining.

To create a new Bitcoin, you need to gather recent transactions into a block. And, you can only do that by solving computerized math puzzles. The puzzles are not easy to crack and the difficulty level depends on the people involved in the mining process.

If you can solve the puzzle, you can place the next block on the blockchain. And this helps you earn Bitcoin rewards.

The Bitcoin mining process is as follows: Support Sage

Bitcoin rewards can be two things:

1. Transaction fees charged for transactions that assemble blocks in a blockchain

2. Newly created Bitcoin

This is how you get Bitcoin.

Examples of Bitcoin Rewards BitcoinMining.com:

What is a Digital Bitcoin Wallet?

A digital Bitcoin wallet is similar to a digital wallet used to store electronic cash. A digital Bitcoin wallet can store all your public and private keys.

Since you have multiple Bitcoin addresses, a Bitcoin wallet allows you to stay organized while processing transactions with multiple people.

This is a sample digital Bitcoin wallet from Wikipedia.