Surely you have already heard about Bitcoin but you may still have many doubts about the virtual currency that is on everyone’s lips in recent years. What is a bitcoin? How are these cryptocurrencies created? How can you get it? How much is each of the bitcoins in the market worth? We review everything you need to know about it: what it is, how it is born, how each of the bitcoins in the market is created or how you can use them on a day-to-day basis.
Although it seems somewhat complicated to understand, we make it as accessible as possible so that you can understand the basic questions about the most famous cryptocurrency, although not the only one. A virtual and intangible currency that belongs to users and of which there are already more than 18 million units.
What is bitcoin?
It is a virtual currency or a cryptocurrency. A completely digital and intangible currency that you cannot convert to physical but that you can use as a means of payment. It is a “money” similar to the one we have in our bank account but we cannot have it physically and its main difference is that it is a self-regulated payment unit that allows its owners to be anonymous or transfers or Transactions are made with encrypted codes.
Bitcoin is decentralized, which means that it is not within the control of a government or the European Central Bank or any similar entity. The European Central Bank cannot create more to modify its price, for example, but it is the users themselves who are responsible for its control through Peer to Peer exchanges (P2P) and whose value is based on the law of supply and demand. The lack of control by the authorities assures us that bitcoin, in short, does not suffer inflation or its market value is manipulated since the control is of the users.
Not only control is in the hands of users, also creation is in their hands and is called mining. Although we will explain in detail what mining consists of, it is about those people who are dedicated to generating these currencies by processing block transactions and collecting some bitcoins as a reward. In addition, one of the “rules” of bitcoin is that there is a limit of 21 million coins and this amount cannot be exceeded.
How does this currency arise?
Surely you’ve heard of her but you don’t know well since when. Bitcoin was the first virtual currency that really managed to succeed in the market, although it is not the only one nor was it the first to appear. Its main difference with the rest is the operation of its surrounding technology, the blockchain or the so-called blockchain technology.
The name that appears as “creator” of this virtual currency is Satoshi Nakamoto although it is a pseudonym and it is not really known who it is or if it was a single person or a group of them.
The domain bitcoin.org is registered in August 2008 and it is in October 2009 when the first dollar transaction is made. Although the first implementation of crypto currency was before, at the end of the nineties when Wei Dai proposed a new type of money that used cryptography to be created or to make transactions, instead of betting on a centralized authority.
During 2010, bitcoins become popular and it is in May of that year when the first purchase is made with this virtual currency, to pay two pizzas (which came out expensive) Although other cryptocurrencies arise, it continues to advance and users become more interested by them. The great success comes in 2017, when the value of Bitcoin exceeds $ 20,000 and today more than 18 million bitcoins have already been mined, the maximum being 21 million.
How much is a bitcoin worth?
The price of bitcoin is not a fixed price and is also very volatile. It can vary greatly from one moment to another and the oscillations are very large even from one day to another. It depends on supply and demand and the market is still small compared to other currencies, so you don’t need a lot of money to make the price move much higher or lower. To know the price in real time, you can connect to the wallet that you normally use and there you will see the evolution or fluctuation of the currency. Although you can also do a search on the Internet and some specialized websites will give you the data at that time, although it is not as accurate as in the other method.
How much bitcoin has already been mined?
As we have explained in previous paragraphs, there cannot be more than 21 million bitcoins in total. It is the maximum and total amount allowed. Currently, there are about 18 million bitcoins (approximately 18,231,000) although the exact number changes nine or ten minutes although 87% of the total is already around. Every day, around 1,800 bitcoins are mined and it is estimated that there are approximately more than one million people worldwide mining bitcoins. Years ago, it was estimated that the total bitcoin would be undermined in approximately 2030 but it takes longer and longer to undermine the virtual currency and this could be extended for many years.
Operation and management
As we said in previous paragraphs, there is no bank that controls this virtual currency but transactions are made through users. It is the users themselves, through a P2P network , that validate the blocks of the chain and assure us that the transactions are safe. A chain of computers around the world is responsible for approving or rejecting each change, so the real control is absolute of users anywhere.
The technology behind this virtual currency is the blockchain . To understand us easily, in a normal financial system and as we usually do, you make a transaction through a credit card (for example) and the bank has to approve the process so you can pay. But in the case of this virtual currency, there is no bank that approves or validates but it is a block technology: the blockchain. It is a network distributed among many computers everywhere, shared, and whose information is only updated when you have consensus.
How to get them?
There are two basic ways to get bitcoins: buy them or undermine them.
Get them by buying them
You can get bitcoins by buying them. Simply go to some of the specialized virtual currency pages and pay through bank transfer or your PayPal account or credit card. Although it is easy to find pages to buy cryptocurrencies, there are also many websites that are a scam (despite giving a sense of security and legitimacy) and that will steal your money without giving you bitcoins so it is essential to look for information before betting on one or the other .
Mine bitcoins
The most common way to win bitcoins was, at first, by mining them. Mining consists of using powerful computer equipment that is responsible for solving mathematical problems to manage the network. That is, this virtual currency is an encrypted code that can be used to carry out transactions: pay, send to others, change, collect. But all transactions, to ensure their safety, must be fully approved by the P2P network of users and the various miners. Each bitcoin transaction is part of a block and the blocks must be sealed. To seal them, you need to solve mathematical calculations. And to solve the mathematical calculations we need a great computing power. Therefore, mining consists of making available to the P2P network a specialized team to perform the calculations and process the transactions and seal the blocks. What do we get in return? Bitcoins As recommended by mining, bitcoins are achieved.
Is it available to anyone? Probably not. Mining bitcoins means having enough power in the equipment we are going to use and the competition has meant that the equipment we have at home is not enough for it. Currently, these are specialized teams that exceed 1,200 euros and that incorporate ASIC circuits. In this same team, you must mount a hardware to undermine bitcoins, so it will cost. To this cost we must add the cost of light, for example. Profitability depends on the price you have at that time: the more expensive you are, the more it will be worth mining bitcoins. Of course, it is increasingly difficult to do so, it increases competition and is not available to everyone.
It is safe?
Yes, it is a completely secure way since access to your bitcoins requires a private password. Without it, you will not be able to access or manage or pay.
Is it legal?
Yes it is legal if the people who are going to make the purchase and sale agree to use the virtual currency as a means of payment . That is, you can pay online or even in stores if you agree with it. Although you can use it to pay for goods or services, it is obviously less used than other types of transactions but there are already enough websites that allow you to use bitcoins as payment, you can use it on Internet services such as WordPress or Reddit, for example. You can also sell your bitcoins if you want to exchange them for another currency, for example.
Where are they stored?
Bitcoins do not send them home, as is obvious. In reality, bitcoins are not stored in any particular place or in a bank safe. To operate with them we need a private key that allows us to verify that it is we who want to use them and is associated with an address.
But there are several types of wallets for bitcoins, platforms where virtual currency is stored and you can store it safely or keep track. There are online purses for mobile phone or computer, PC purses, physical purses or purses for smartphone.
Bitcoin purses
In general, online purses are the easiest to use and are a good option if you want something simple but it is not the safest. It consists of the users’ private key being stored on a server that is managed by the company so you do not have control of your password and you must fully “trust” that company. It is a good option if you have a small amount of bitcoins and want to have them always at hand, if you want to operate quickly and comfortably. But they are not the safest.
There are also purses for mobile phones and tablets that do what they download is only a part and we can always have it on hand in the phone to make transfers and are easy to use. And thirdly, there are the computer monedores that are quite safe and the private key is stored on the device itself and not on a website that is at risk of hacking or theft. Basically they will make you download a program where your bitcoins will be protected with an encrypted key that will give us greater security in case of any problem.
Finally, physical wallets are the safest but the least practical if you want to store your virtual currencies there. It is complicated that someone steals or hacks our private key because they are not exposed to the internet. There are two types: purses that are a device similar to a pendrive and that stores the key or makes us make transactions. In this case, although it is a very safe option it is always advisable to know the key in case the device breaks or fails and we do not want to lose our money. There are also physical bitcoin wallets in the form of currency but that is not especially practical if you want to use it frequently and it will not always be easy to use. In this case, they are more focused on collecting if you want it to be tangible.
Which to choose? If you want ease, it is best to bet on virtual purses or mobile phones. On the other hand, if you need more security, it is advisable to bet on a physical wallet that is safer and less susceptible to hacking. It is also advisable to follow a series of recommendations to know if a Bitcoin wallet is a scam.
