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What is Bitcoin?

What is Bitcoin?

What is Bitcoin? A million dollar question right here. 



CHAPTERS 



1. Introduction to Bitcoin

2. Where Do Bitcoins Come From?

3. Getting Started with Bitcoin

4. Common Bitcoin Misconceptions




Chapter 1 - Introduction to Bitcoin



* Contents



* What is Bitcoin?

* What is Bitcoin used for?

* What makes Bitcoin valuable?

* How does Bitcoin work?

* What is Blockchain?

* Is Bitcoin legal?

* A History of Bitcoin

* Who created Bitcoin?

* Did Satoshi invent Blockchain technology?


Now, let's begin... 


* What is Bitcoin?

Bitcoin is a decentralized cryptographic virtual currency that was created in 2009 by Satoshi Nakamoto.

Since inception, Bitcoin has increased more than 1000% of its original value.

It is widely accepted as a means of payment on various websites and online stores.

Bitcoin is a digital form of cash. But unlike the fiat (paper money e.g Naira) currencies we're used to, there is no central bank controlling it. Instead, the financial system in Bitcoin is run by thousands of computers distributed around the world. Anyone can participate in the ecosystem by downloading open-source software.

Bitcoin (BTC) was the first cryptocurrency, announced in 2008 (and launched in 2009). It provides users with the ability to send and receive digital money. What makes it so attractive is that it can’t be censored, funds can’t be spent more than once, and transactions can be made at any time, from anywhere.

Bitcoin is the first decentralized peer-to-peer payment network that is powered solely by its users – no middlemen.

From a user’s view, Bitcoin is pretty much like cash that works on the Internet.

* How did Bitcoin come about? 

Bitcoin came as a response to the clamour for a currency that is devoid of any central guiding authority. To further explain this, Let's go back in history.

In years past, many things such as cowries, salt, metal, etc have served as means of exchange of value. At some point, gold was settled for by many persons because they are very rare to find.

Eventually, the downside of gold became an issue: its weight makes it difficult to carry around. As a remedy, fiat(paper money e.g Naira, dollar) was created and is still in use to date.

Though fiat money is easier to carry, it can easily be counterfeited(something impossible with gold) and of course, the problem of double-spending(which banks solved in a centralized way).

The search for a better solution gave birth to Bitcoin. 

* What is Bitcoin used for?

People use Bitcoin for a number of reasons. Many appreciate it for its permissionless nature – anyone with an Internet connection can send and receive it. It’s a bit like cash in that no one can stop you from using it, but its digital presence means that it can be transferred globally.


* What makes Bitcoin valuable?

Bitcoin is decentralized, censorship-resistant, secure, and borderless. 

This quality has made it appealing for use cases such as international remittance and payments where individuals don’t want to reveal their identities (as they would with a debit or credit card).

Many don’t spend their bitcoins, instead choosing to hold them for the long-term (also known as hodling) Bitcoin has been nicknamed digital gold, due to a finite supply of coins available. Some investors view Bitcoin as a store of value. Because it’s scarce and difficult to produce, it has been likened to precious metals like gold or silver. 

Bitcoin Holders believe that these traits – combined with global availability and high liquidity – make it an ideal medium for storing wealth in for long periods. They believe that Bitcoin’s value will continue to appreciate over time.


* How does Bitcoin work?

When a user makes a payment using BTC, they broadcast it directly to the distributed peer-to-peer Blockchain network - there's isn't a centralised bank or institution to process transfers. In order to add new information, the Bitcoin blockchain uses a special mechanism called mining. It is through this process that new blocks of transactions are recorded in the blockchain 

* What is Blockchain?

The blockchain is a ledger that is append-only: that is to say, data can only be added to it. Once information is added, it is extremely difficult to modify or delete it. The blockchain enforces this by including a pointer to the previous block in every subsequent block.

The pointer is actually a hash of the previous block. Hashing involves passing data through a one-way function to produce a unique “fingerprint” of the input. If the input is modified even slightly, the fingerprint will look completely different. Since we chain the blocks along, there is no way for someone to edit an old entry without invalidating the blocks that follow. Such a structure is one of the components making the blockchain secure.


* Is Bitcoin legal?

Bitcoin is perfectly legal in most countries. There are a handful of exceptions, though – Bitcoin is not legal tender in Nigeria 

In countries where it’s legal, government entities take varying approaches to it where taxation and compliance are concerned. The regulatory landscape is still highly underdeveloped (especially in African countries) overall and will likely change considerably in the coming years.



A HISTORY OF BITCOIN 




* Who created Bitcoin?

Nobody knows! Bitcoin’s creator used the pseudonym Satoshi Nakamoto, but we don’t know anything about their identity. Satoshi could be one person or a group of developers anywhere in the world. The name is of Japanese origin, but Satoshi’s mastery of English has led many to believe that he/she/they originate from an English-speaking country.


Satoshi published the Bitcoin white paper as well as the software. However, the mysterious creator disappeared in 2010.

* Did Satoshi invent Blockchain technology?

Bitcoin actually combines a number of existing technologies that had been around for some time. This concept of a chain of blocks wasn’t born with Bitcoin. The use of unalterable data structures like this can be traced back to the early 90s when Stuart Haber and W. Scott Stornetta proposed a system for timestamping documents. Much like the blockchains of today, it relied on cryptographic techniques to secure data and to prevent it from being tampered with.

Interestingly, at no point does Satoshi’s white paper make use of the term “blockchain.”




Chapter 2 - Where Do Bitcoins Come From?


* Contents


* How are new bitcoins created?

* How many bitcoins are there?

* How does Bitcoin mining work?

* How long does it take to mine a block?




* How are new bitcoins created?

Bitcoin has a finite supply, but not all units are in circulation yet. The only way to create new coins is through a process called mining – the special mechanism for adding data to the blockchain.




* How many bitcoins are there?

The protocol fixes Bitcoin’s max supply at twenty-one million coins. As of 2020, just under 90% of these have been generated, but it will take over one-hundred years to produce the remaining ones. This is due to periodic events known as halvings, which gradually reduce the mining reward.




* How does Bitcoin mining work?

When you hear Bitcoin mining, do you envisage shovels and excavators lined up to dig up coins from the ground?

We've all been there, only Bitcoin isn’t physical.

Bitcoin mining involves the creation of new coins that are done by miners for a reward.

The miners do this by using Nodes(supercomputers that contain a copy of the Bitcoin software)to confirm transactions by solving complicated mathematical equations.

The first miner to figure out the equation claims the reward and a new coin is released.

By mining, participants add blocks to the blockchain. To do so, they must dedicate computing power to solving a cryptographic puzzle. As an incentive, there is a reward available to whoever proposes a valid block. 

It’s expensive to generate a block, but cheap to check if it’s valid. If someone tries to cheat with an invalid block, the network immediately rejects it, and the miner will be unable to recoup the mining costs.

The reward – often labeled the block reward – is made up of two components: fees attached to the transactions and the block subsidy. The block subsidy is the only source of “fresh” bitcoins. With every block mined, it adds a set amount of coins to the total supply.


* How long does it take to mine a block?

The protocol adjusts the difficulty of mining so that it takes approximately ten minutes to find a new block. Blocks aren’t always found exactly ten minutes after the previous one – the time taken merely fluctuates around this target.


Chapter 3 - Getting Started with Bitcoin


* Contents


* How can I buy Bitcoin?

* What can I buy with Bitcoin?

* Where can I spend Bitcoin?

* What if I lose my Bitcoins?

* Can I revert Bitcoin transactions?

* Can I make money with Bitcoin?

* How can I store my bitcoin?

* Storing your bitcoin on Bigeria Smart-Wallet 


* How can I buy Bitcoin?

* How to buy Bitcoin with a Bank Transfer in Nigeria 

Bigeria.com is the safest and fastest way to buy or sell Bitcoin in Nigeria using your Naira bank account 

Bigeria allows you to seamlessly buy Bitcoin in your browser. To do so:

Log in to your Bigeria Smart-Wallet, or register if you don’t already have an account.

1. Click on "Buy" on your Bigeria BTC Smart-wallet 

2. Input the amount of BTC you want to buy in dollar value e.g $1000 and click on "Confirm" 

3. Info of the amount to pay in Naira and Bigeria bank account details comes up 

4. Quote your "Transaction ID" or your Bigeria "Username" in your reference or depositor name on your bank transfer to the Bigeria bank account 

That’s it! Your Bitcoin will be credited to your Bigeria Smart-Wallet. 




* What can I buy with Bitcoin?

There are a lot of things you can buy with Bitcoin. At this stage, it can be difficult to locate local merchants in Nigeria that accept Bitcoin in physical stores. However, you’ll still be able to find websites that accept it or allow you to purchase items with it. 


* What if I lose my bitcoins?

Because there’s no bank involved, you’re responsible for keeping your coins secure. Some prefer to store them on exchanges, while others take custody with a variety of wallets. If you use a wallet, it’s crucial that you write down your seed phrase so that you can restore it.


* Can I revert Bitcoin transactions?

Once data is added to the blockchain, it’s not easy to remove it (in practice, it’s virtually impossible). This means that when you make a transaction, it can’t be undone. You should always double- and triple-check that you’re sending your funds to the right BTC address.


* Can I make money with Bitcoin?

You can make money with Bitcoin, but you can also lose money with it. Typically, long-term investors buy and hold Bitcoin believing it will rise in price in the future. Others choose to actively trade Bitcoin against other cryptocurrencies to make short- to mid-term profits. Both of these strategies are risky, but they’re often more rewarding than low-risk approaches.

Some investors adopt hybridized strategies. They hold bitcoins as a long-term investment while simultaneously trading some (in a separate portfolio) in the short-term. There isn’t a correct or incorrect way to allocate assets in your portfolio – each investor will have a different risk appetite and different goals.


* How can I store my bitcoin?

There are many options to store your Bitcoin, each with their own strengths and weaknesses.


* Storing your bitcoin on Bigeria Smart-Wallet 

A custodial solution refers to storage where the user doesn’t actually hold the coins themselves but trusts a third party to do so. To make transactions, they would log in to the third party’s platform. Exchanges like Bigeria often use this model as it’s vastly more efficient for trades.

Storing your coins on Bigeria allows you to easily access them for the purposes of trading. 


* Storing your coins in a bitcoin wallet

Non-custodial solutions are the opposite – they put the user in control of their funds. To store funds with such a solution, you use something called a wallet. A wallet doesn’t hold your coins directly – rather, it holds cryptographic keys that unlock them on the blockchain.


Chapter 4 - Common Bitcoin Misconceptions


* Contents


* Is Bitcoin anonymous?

* Is Bitcoin a scam?

* Is Bitcoin a bubble?

* Does Bitcoin use encryption?


* Is Bitcoin anonymous?


Not really. Bitcoin might seem anonymous initially, but this isn’t correct. The Bitcoin blockchain is public and anyone can see the transactions. Your identity isn’t tied to your wallet addresses on the blockchain, but an observer with the right resources could potentially link the two together. It’s more accurate to describe Bitcoin as pseudonymous. Bitcoin addresses are viewable to everybody, but the names of their owners are not

That said, the system is relatively private, and there are methods to make it even harder for observers to figure out what you’re doing with your bitcoins. Freely available technologies can create plausible deniability to “break the link” between addresses. What’s more, future upgrades could massively boost privacy – see An Introduction to Confidential Transactions for an example

* Is Bitcoin a scam?


No. Just like fiat money, Bitcoin may also be used for illegal activities. But, this doesn’t make Bitcoin a scam in and of itself.

Bitcoin is a digital currency that isn’t controlled by anyone. Detractors have branded it a pyramid scheme, but it doesn’t fit the definition. As digital money, it functions just as well at $20 per coin as it does at $20,000 per coin. It’s over a decade old, and the technology has proven to be very secure and reliable.

Unfortunately, Bitcoin is used in many scams that you should be aware of. These might include phishing and other social engineering schemes, such as fake giveaways and airdrops. As a general rule: if something sounds too good to be true, it’s probably a scam. Never give your private keys or seed phrase to anyone, and be cautious of schemes that offer to multiply your money with little risk on your behalf. If you send your coins to a scammer or to a fake giveaway, they will be lost forever.


* Is Bitcoin a bubble?


Throughout the many parabolic rises in Bitcoin price, it was common to see people referring to it as a speculative bubble. Many economists have compared Bitcoin to periods like the Tulip Mania or the dot-com boom. 

Due to Bitcoin’s unique nature as a decentralized digital commodity, its price is entirely dictated by speculation in the free market. So, while there are many factors driving the Bitcoin price, they ultimately affect market supply and demand. And since Bitcoin is scarce and follows a strict issuance schedule, it’s thought that long-term demand will exceed supply.

The cryptocurrency markets are also relatively small when compared to traditional markets. This means that Bitcoin and other crypto assets tend to be more volatile, and it’s quite common to see short-term market imbalances between supply and demand.

In other words, Bitcoin can be a volatile asset at times. But volatility is part of the financial markets, especially ones with relatively lower volume and liquidity.


* Does Bitcoin use encryption?


No. This is a common misconception, but Bitcoin’s blockchain doesn’t use encryption. Every peer on the network needs to be able to read transactions to ensure that they’re valid. Instead, it uses digital signatures and hash functions. While some digital signature algorithms do use encryption, that’s not the case for Bitcoin.

It’s worth noting, though, that many applications and crypto wallets make use of encryption to protect users’ wallets with passwords. Still, these encryption methods have nothing to do with the blockchain – they’re just incorporated into other technologies that tap into it.



This is the end of Bitcoin 101 for now, we hope you've learnt something as the knowledge of Bitcoin can change your life 

Freedom, Sincerely Yours Bigeria.com 🚀 

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