Bitcoin has been a growing currency for quite a few years, and the rise of cryptocurrency, in general, has made it even more famous. But what is Bitcoin, and how do you break into the Bitcoin market as a complete newcomer? Here is everything you will need to know to get started.
Bitcoin is a cryptocurrency, a decentralized digital currency that is not beholden to a specific bank or other central authority. As the first cryptocurrency, it is also the oldest of its type, meaning that it is the baseline for every future currency project that has come after it.
The Bitcoin cryptocurrency, or BTC, is exactly what the name suggests: a currency. It can be bought, sold, traded, used to purchase things, or even invested. There is not a physical representation of a single Bitcoin coin since the digital funds exist purely online or in separate offline wallets.
How Do You Get Bitcoin?
Bitcoin is generated through mining, a process where you use a computer to carry out peer-to-peer operations. These operations involve sorting hashes, strings of mathematical problems that are used as proof of ownership for each individual coin.
‘Mining’ these hashes is important for making sure that the entire Bitcoin infrastructure works, so successful miners are given a reward based on how much they have helped mine. In short, the more somebody contributes towards the system, the more of a reward they will get.
However, mining takes a lot of computational power, so many people use mining farms instead – places that they can pay to have a share in the mining operations somebody else has already set up.
Where Can I Buy Bitcoin?
Crypto exchanges are the safest way to buy Bitcoin since they do not force you to deal with a single individual user that could try to rip you off. They also list up-to-date values, making it much easier for you to tell what the value of BTC should be.
Bitcoin can also be earned if you are paid using it. However, to store Bitcoin properly, you need a digital wallet – a piece of software (either local or hosted by a company) that stores your digital funds. Hardware wallets are also available but are mostly used for security reasons.
What is Bitcoin For?
Bitcoin is a currency, so it is used in all of the same ways. This means that you can use it to pay for goods and services, trade it for other currencies on cryptocurrency exchanges, and is even taxed like regular income in some countries.
How you use Bitcoin is entirely up to you. Some people use it to save up money without relying on a bank, while other people treat it like the stock market, buying low and selling high. The changing value of a single Bitcoin can mean that the market is always fluctuating.
If you want to know more about Bitcoin as a whole, many popular crypto platforms have pages like https://swyftx.com/learn/what-is-bitcoin/ that can give you a longer breakdown. The more you know before you start, the better you will be able to manage your money.