What is Bitcoin and how it works

 It is the first and most widely known cryptocurrency. It enables peer-to-peer value exchange in the digital world through the use of a decentralized protocol, cryptography, and mechanism to achieve global consensus on the state of the periodically updated public system of transactions called the "blockchain".

1.What is Bitcoin?

What is Bitcoin and how it works

In practice, Bitcoin is a form of digital money that exists independently of any government, state or financial institution, can be transferred globally without the need for a central intermediary, and has a well-known monetary policy that can be said to be unchanged.

On a deeper level, Bitcoin can be described as a political, philosophical, and economic system. This is thanks to the combination of technical features it integrates, the wide range of participants and stakeholders it involves, and the process of making changes to the protocol.

2. The beginning of Bitcoin

Launched anonymously in January 2009 for a specialized group of technologists, Bitcoin is now a globally traded financial asset with a stable daily volume measured in tens of billions of dollars. Although its regulatory status varies by region and continues to evolve, Bitcoin is commonly regulated as either a currency or a commodity, and is legal for use (with varying levels of restrictions) in all major economies. In June 2021, El Salvador became the first country to impose Bitcoin as legal tender.

3. Bitcoin's origin, early growth and development

Bitcoin builds on the ideas contained in a 2008 white paper titled Bitcoin: A Peer-to-Peer Electronic Monetary System.

The paper detailed ways "to allow any two parties willing to deal directly with each other without the need for a trusted third party." The deployed technologies solved the problem of "double spending", enabling scarcity in the digital environment for the first time.

The author of the listed paper is Satoshi Nakamoto, a supposed pseudonym for a person or group whose true identity remains a mystery. Nakamoto released the first open source Bitcoin software client on January 9, 2009, and anyone who installed the client can start using Bitcoin.

The initial growth of the Bitcoin network was primarily driven by its usefulness as a new way of dealing with value in the digital world. Early proponents were, by and large, "cypherpunks"—individuals who advocated the use of strong encryption technologies and enhanced privacy as a path to social and political change. However, speculation about the future value of Bitcoin quickly became an important driver of adoption.

The price of bitcoin and the number of bitcoin users rose in waves over the next decade. As regulators in major economies provided clarity on the legitimacy of Bitcoin and other cryptocurrencies, a large number of Bitcoin exchanges established banking connections, making it easier to convert local currency to and from Bitcoin. Other companies have established robust custody services, making it easier for institutional investors to be exposed to the asset as a growing number of high-profile investors have signaled interest.

4. Basic features of Bitcoin.

. Decentralization

. No one controls or owns the Bitcoin network, and there is no CEO. Instead, the network consists of willing participants who agree to the rules of the protocol (which takes the form of an open-source software client). Changes to the protocol must be made unanimously by its users and there is a wide range of contributing voices including "contract", end-users, developers, "miners" and participants in the adjacent industry such as exchanges, portfolio providers and custodians. This makes Bitcoin a quasi-political system. Out of the thousands of cryptocurrencies that exist, Bitcoin is arguably the most decentralized.

. Distribution 

 . All bitcoin transactions are recorded in the public system ledger that has become known as the "blockchain". The network relies on people who voluntarily store copies of the system book and run the Bitcoin protocol software. These "nodes" contribute to the correct spread of transactions over the network by following the protocol rules as specified by the software client. There are currently more than 80,000 nodes distributed globally, making it nearly impossible for the network to suffer downtime or loss of information.

. Transparency

The addition of new transactions to the blockchain system book and the state of the Bitcoin network in no time (in other words, the "truth" of who owns the amount of Bitcoin) is reached by consensus and in a transparent manner in accordance with the rules of the protocol.

. Peer-to-peer

Although nodes store and publish network status ("truth"), payments effectively pass directly from one person or company to another. This means that there is no need for any "trusted third party" to act as an intermediary.

. Without permission

 . Anyone can use Bitcoin, there are no gatekeepers, and there is no need to create a "Bitcoin account". All transactions that follow the rules of the protocol will be confirmed by the network along the established consensus mechanisms.

. unknown

  Identity information is inherently not related to bitcoin transactions. Instead, transactions are associated with addresses that take the form of randomly generated alphanumeric strings.

5. What are the uses of Bitcoin?

At its simplest level, Bitcoin is useful for dealing with value outside the traditional financial system. People use Bitcoin, for example, to make international payments that are settled faster, more securely and with lower transaction fees through legacy settlement methods such as SWIFT or ACH networks.

In the early years, when network adoption was minimal, Bitcoin could have been used to settle even transactions of small value, and do so competitively with payment networks such as Visa and Mastercard (which, in fact, settle transactions long after the POS). However, as Bitcoin became more widely used, expansion issues made it less competitive as a medium for exchanging items of small value.

 In short, it has become very expensive to settle small-value transactions due to limited productivity in the ledger and the unavailability of second-tier solutions. This has supported the narrative that bitcoin's core value is less as a payment network and more as an alternative to gold, or "digital gold." Here, the argument is that Bitcoin derives value from a combination of technological breakthroughs that it integrates, limited supply with "code-in-code" monetary policy, and powerful network effects. In this regard, the investment thesis is that Bitcoin could replace gold and possibly become a form of "pristine guarantee" for the global economy.

6. How to open a Bitcoin account 

A Bitcoin wallet is software or hardware used to store Bitcoins. Bitcoin wallets are encrypted with private and public keys that ensure that the bitcoin stored in the wallet can only be accessed by the wallet owner. In addition to storing bitcoins, a bitcoin wallet allows you to securely send and receive bitcoins from other wallets.

With the rise in popularity of Bitcoin as a payment method and investment option, more people are looking for ways to store their bitcoin safely and use it easily when needed. That is why choosing a Bitcoin wallet that uses the latest security measures to protect your cryptocurrency and has a user-friendly user interface for a seamless experience using and storing your crypto is vital.

1. How to Choose a Bitcoin Wallet

Getting a bitcoin wallet is simple when done correctly. But you need to be careful not only to download any app from your app store, as this can lead to the loss of your encryption if it is a phishing or malware app. Here's what you need to do when choosing a Bitcoin wallet:

  • Research: The first thing you'll need to do is do some research to find out that the mobile or web app is actually a Bitcoin wallet. An easy way to confirm this is by simply searching for the app on Google to see what people are saying about it.

  • Check the app: You can check out reviews on the App Store to see what others are saying about it. To be safe, you only have to download and use a Bitcoin wallet that others can attest.

2. How to open a Bitcoin wallet

Opening a bitcoin wallet is easy, almost as simple as downloading an app to your phone or laptop. All you have to do is download the yellow card cryptocurrency exchange app, and you will get a free bitcoin wallet once installed and registered. Here's how:

Download the yellowcard app available on both the Google play store or the App Store. You can also open the web app through the yellowcard website on yellowcard.io

  1. Install the app
  2. Subscribe to the yellowcard app
  3. That's all!

Once you subscribe to the app, you can automatically open a bitcoin wallet without any extra fees or stress. But that's not the best part! You can easily buy or sell Bitcoin in your local currency within the app.

The great thing about YellowCard is that you don't have to worry about where your bitcoin is stored or how much blockchain fees you have once you buy bitcoin. You can also receive Bitcoin from other yellow card users or offshore wallets and sell it for your local currency.


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