The Bitcoin price now is at an all-time high with people wondering if they should buy Bitcoin for the first time ever.
This isn’t a coincidence since the increase in BTC price is because of an increase in its popularity.
But, if you want to buy Bitcoin the first thing you need to do is understand it.
Use this beginner’s guide to learn what is bitcoin and how does it work to start your cryptocurrency investment journey.
What is Bitcoin and How Does it Work?
Let’s start with the basics of what is Bitcoin. You probably already know that Bitcoin is a cryptocurrency. But, that is where your knowledge ends.
Explaining what Bitcoin is used for will distinguish cryptocurrency from regular fiat currency (USD, Euro, etc.) Both are used to send money across borders and even pay for goods and services.
However, Bitcoin transactions differ from fiat transactions for the following reasons:
- They’re anonymous
- They don’t use a bank as a middleman
- They use a blockchain (decentralized ledger) instead of a bank
- No one person or corporation owns or controls Bitcoin
- Bitcoin fees are lower and in some cases faster
To put these reasons into perspective, here is a quick example:
If you want to send money to another country via your national currency (aka fiat) then you will need to send it using a platform like MoneyGram, Western Union, or PayPal.
These services connect to your bank or credit card provider to transfer the money by converting it into the sender’s currency. This incurs fees and is subject to currency conversion rates.
You will end up paying an average remittance fee of 6.75%, higher in many countries. The solution to the remittance problem is a major reason for cryptocurrency’s popularity, especially Bitcoin.
History of Bitcoin
So, why is Bitcoin the most popular crypto on the market? The most important reason is its originality.
Bitcoin is the original digital currency, created in 2009 by an anonymous developer that only goes by the name Satoshi Nakamoto. Still to this day the real creator of Bitcoin is unknown.
Since its creation, Bitcoin has slowly transformed from a dark web currency provider, used on previous websites like Silk Road to a fast, easy, and cheap way to send money.
More recently, Bitcoin has become a major currency for retail stores and businesses. And even more recently, Bitcoin ATMs and payment apps like PayPal make buying, selling, and trading BTC easier than ever.
How to Buy Bitcoin?
Now that you know what Bitcoin is your next step is to learn how to get some. If you aren’t one of the few people who can choose to get paid in Bitcoin, then you will have to buy it from a cryptocurrency exchange or platform that offers that service.
One of the most popular ways to buy Bitcoin is on PayPal, which began crypto purchases in October 2020. If you are a U.S. customer then you can see this option on your PayPal account. Here is a step by step guide on how to buy Bitcoin on PayPal.
You can also use a credit card, bank transfer, debit card, and P2P methods to buy Bitcoin on other exchanges or platforms. Check out the top 5 other ways to buy Bitcoin here.
How to Use Bitcoin?
The best part about using Bitcoin is its investment opportunities. Unlike fiat, the price of Bitcoin fluctuates according to the cryptocurrency market.
So, you may buy Bitcoin at one price and later sell it for a profit.
If you want to hold your Bitcoin for a capital gain then you will need to secure it. Using a Bitcoin wallet app allows you to keep your assets safe while being able to use your BTC for trading, selling, or purchasing goods and services.
Use your Bitcoin wallet address to transfer your BTC to other platforms or to send it to other people.
When you send Bitcoin you are placing your “buy order” on the blockchain. Your order is then verified by nodes (independent computers) that process your transaction.
Think of a blockchain as a replacement for a bank. An instead of an institution safeguarding and processing transactions, the public upholds the network. This makes it completely anonymous and decentralized. It also makes it secure, using encrypted private and public keys or passwords.
Beyond this Beginners Guide to Bitcoin
Knowing what is Bitcoin and how to use it may be your first experience with crypto but it definitely won’t be your last. There is a whole world of altcoins, DeFi (decentralized finance) platforms, and innovative applications to explore.
Be sure to visit our crypto tutorials section for more lessons to be learned.