If you have no idea about Bitcoin, no worries, in this article we will define its main characteristics in a simple way, using examples for a better comprehension, without technicalities so that ordinary people can understand it.
Bitcoin Network:
Bitcoin is a network of connected computers that allows data to be transmitted between users. The data handled are called "bitcoins" and are managed without intermediaries with programs designed for it called "wallets" or purses.
Wallets:
Once you download a bitcoin wallet for the first time you should consider something. You will have two types of keys or keys, this is due to the type of security used by the Bitcoin network, called asymmetric cryptography, this indicates that you will have:
- A single private key, which is your key (similar to a PIN code) that should not be shared with anyone, because it is the key that gives access to your coins.
- All the public keys you want (each one is similar to what can be an account number) that serve as "containers" of the coins, and can be stored in different public keys (accounts) under the same private signature (password).
Miners:
Bitcoin transactions are "confirmed" by some network users who decide to become "miners", these users have computers and computers that behave like "notaries" verifying that transactions have been made correctly based on mathematical calculations. While they confirm new transactions they are also creating new currencies (bitcoins), of which a part corresponds to them for the maintenance work carried out.
Blockchain:
It is an intrinsic part of bitcoin, the technology that makes network transactions are registered and visible throughout the network
HOW DOES A BITCOIN TRANSACTION WORK? (EXAMPLE)
- Paula has 1.12345678 BTC in her purse and wants to send 0.12345678 BTC to Carlos
- Carlos shares the public key to Paula to indicate where he wants to receive them.
- Paula indicates the amount to send (0.12345678 BTC) and the destination (Carlos's public key).
- Paula signs the transaction with her private key and transfers 0.12345678 BTC
- Miners charge a small amount (0.00002000)
- Paula now has 0.99998000 BTC in her purse (0.12345678 BTC - 0.00002000 BTC)
- Carlos receives in his purse (public key) 0.12345678 BTC
- The Miners confirm that the transaction has been correctly signed
- Carlos can now use the 0.12345678 BTC he received.
Before talking about the type of network, it is worth clarifying two things about the currency, and that is that it has a predetermined limit. Bitcoin is designed so that the issuance of coins is only 21,000,000 (21 million bitcoin), so that the miners will issue just that amount, they can not create more, or less. Another "curiosity" about the currency, is that contrary to what we are used to traditional currencies, bitcoin as a currency unit has 8 decimals (1,00000000 BTC), with its smallest fraction being satoshi (0.00000001 BTC ).
Bitcoin network is decentralized (P2P), that is to say "peer to peer" (point to point / person to person), basically it uses the same type of network that programs like BitTorrent or eDonkey did to share multimedia files, in this case in Bitcoin exchanges cryptographic currencies called bitcoins or bitcoins.
What makes Bitcoin different is that its network is supported by cryptography and a distributed database based on blockchain.
What is cryptography and why is bitcoin a cryptographic or crypto currency?
Cryptography is a term from the Greek that literally means "hidden writing". It is an essential part of the study of cryptology that consists in hiding the meaning of a message, being of vital importance in computer security and a key piece in the Bitcoin network, which uses asymmetric cryptography.
Asymmetric cryptography is the cryptographic method where a person uses 2 different keys to send information. A key is public and can be given to any person, and another key is private and must only be kept by the owner. Bitcoin uses "elliptic curve cryptography", a variant of asymmetric cryptography that makes it possible to reduce the size of public keys without affecting security.
Why is the blockchain so important in Bitcoin?
Blockchain technology is called the set of technologies that builds a system capable of protecting the data of users and allow the proper functioning of transactions without the need for intermediaries.
It is so important in Bitcoin because it has been the first network to use this technology, formed by:
- A distributed accounting book that keeps an unchanging record of digital events in chronological order. In the Bitcoin network this book is public and the events are transactions made from the first to the last.
- Wallets or digital wallets, also called wallets, which are the programs that allow users to both "store" and "send" cryptographic currencies.
- Nodes, which are computers that act as "guardians" of the accounting book, keeping an exact copy that is subsequently sent to the miners to verify the transactions.
- Miners or computers that act as notaries of the network, verifying all the transactions of the network to guarantee the validity of said transactions through computational calculations. Therefore they are rewarded with a certain amount of BTC for each block mined or tested / verified.
Where can I download a bitcoin wallet?
In Bitcoin.org a list of the most recommended appears. There are several types, although the most common way to access your bitcoins is through mobile apps or computer programs dedicated to that end.
Where can I buy and sell bitcoins?
Today there are companies specializing in marketing bitcoins, there are even ATMs available in many cities where you can simply buy and sell by exchanging them for your local currency. There are also online platforms that put local buyers and sellers in contact, being possible to buy them "in situ" from a seller in your city, or much better, buy them directly from a friend or relative. As we said before, bitcoin transactions are irreversible, so it is highly recommended that you start making transactions with people you trust, and you will be willing to give you some small fractions of bitcoin to familiarize yourself with it. topic!
Maybe you know Coinbase, but it is also possible to have a bitcoin VISA card, if you live in Europe you can request your free Wirex card here, so you can pay at any store and withdraw money from any ATM in the world.
How can I earn bitcoins?
Store: If you sell any product or service, your first profits in BTC could come from your own store, to start accepting bitcoins you only need to have a wallet (purse) and offer this payment method to your customers.
Earning free bitcoin fractions (satoshi): There are many ways to start getting our first coins online without making any kind of investment. There are websites where many advertisers are willing to offer us some free satoshis in exchange for some advertising or simply by browsing their website, so there are endless collectives (companies, artists, writers, etc ...) ) who pay us to see an ad for their product, read a book or watch a music video clip, for example. In this way he gets publicity and we a small benefit for it, simple.
Trading in "exchanges": These are online platforms where you can buy and sell cryptocurrencies in real time at the market price. It is a way to obtain profits in the short, medium and long term but it requires deep knowledge to operate in it.
Mining: Although any user of the Bitcoin network can become a miner simply with his computer using programs dedicated to this purpose, nowadays it is quite expensive. Many users prefer to join other miners to work jointly or directly rent "mining power" to specialized companies called "mining farms".
