A newcomer to the topic of cryptocurrency faces many questions: what is bitcoin, how to use and store it, what does bitcoin look like, and what is needed to buy it. This article will explain the most popular cryptocurrency in simple terms.
Strictly speaking, any cryptocurrency has no natural physical carrier. This is its main difference from the currencies we are accustomed to, such as the ruble, dollar, or euro (also called fiat currencies). Therefore, bitcoin is not a coin and not a bill. To understand what it is, let us briefly talk about the essence and functions of cryptocurrency.
Bitcoin features
Carrying out any transactions with money, making purchases or transfers, we use the services of intermediaries, most often banks, and pay a commission for this. Now people prefer cashless payments more and more often. Data about your bank account and such transactions are in the digital vault of the bank that supplies you with services.
However, transactions can also be made on the Internet, storing information about them in a decentralized way, without the involvement of banks. This is how a payment system is set up; the unit of record for transactions is bitcoin, the first digital currency. It is essentially encrypted information about transactions stored on the computers of bitcoin network members worldwide. The sequence of records of these transactions is called a blockchain. Changing one part of that chain alters the others, so processing more transactions takes much computing power. This processing using encryption is called mining.
Below we will briefly describe the main characteristics of bitcoin.
- Decentralized. Bitcoin runs on blockchain technology, the feature of which is the absence of a single center. If a bank’s digital vault can be hacked, stealing customers’ money is impossible in the case of bitcoin. Transaction information is stored on a large number of network participants’ devices. All transactions are conducted online, and cryptographic methods protect the data.
- Anonymity. To conduct transactions with bitcoin, the user does not need to give his bank or other organization. It is enough to have a bitcoin wallet with a specific address. This address is sufficient for most transactions. You can read more about bitcoin wallets in this article.
- The limited issuing. Central banks issue traditional money, which can increase emissions and devalue coins and bills in circulation. This does not happen with cryptocurrency because it is mined. The principle is similar to gold mining: the less there is, the more expensive it is. Moreover, the bitcoin’s source code limits the maximum number of coins issued – 21,000,000.
- Irreversibility of transactions. If you make a transaction, you can’t undo it. After every operation, the whole network is changed, which means that the operation data will be spread among thousands of computers worldwide. It is impossible to forge the data for y the same reason.
- Globals. Bitcoin allows you to make fast payments with minimal fees anywhere in the te is based solely on supply and demand fluctuations, as it is not subject to the influence of states or regulatory bodies. For the same reason, anyone can own and use bitcoin because no one can block or freeze their account.
What does bitcoin look like?
Because bitcoin exists only on the Internet, it cannot be touched or seen. Each coin is represented as a hash function. The aggregate data about each currency is stored in an electronic bitcoin wallet file. You can download this file to your computer, or it will be held on the service server were made into a virtual wallet. Access to your wallet is provided by meaningless – a sequence of letters and numbers. This address is where you can send bitcoins from your account or receive them from other users.
Numerous images on the internet beg the question about bitcoin: what does the coin look like? As we have already said, bitcoin is not a coin or a bill, meaning that any physical embodiment of it is more of a symbolic nature. However, some companies and individuals issue coins made of different metals, which have two QR codes: open with an address (for transfers and transactions) and closed with a private key (known only to the owner) and access to the balance and transaction history). Such coins are more of interest to collectors and are essentially a way to store a cryptocurrency’s address. It may as well be written down on paper; it won’t look as presentable.
What does a bitcoin code look like?
Anyone can join the bitcoin network and start mining. The reason for that is the open-source code. Many programmers used it to create altcoins – new cryptocurrencies. What does bitcoin look like on a computer? It is an array of transaction data, many chains of zeros and ones. Most users never see them on their screen, interacting only with bitcoin wallet addresses. We will focus on them in a bit more detail.
What does a bitcoin wallet look like?
A bitcoin wallet is an electronic file. It can be stored on your computer, an external storage medium, or on a company’s server that you can access online. A bitcoin wallet address is an identifier assigned to it for transactions. It begins with a 1 or 3 and includes numbers and upper and lower case Latin letters. Address length is usually 34 characters.
Every bitcoin wallet has a private key created in the blockchain, which gives its owner access to the funds. It cannot be hacked or faked, but losing this key means losing the wallet without the possibility of recovery. We wrote earlier about what to do in such a situation.
How to buy bitcoin?
At the current exchange rate, Bitcoin can be purchased by exchanging it for fiat currency (such as dollars, euros, or rubles). Most often, bitcoins are purchased on cryptocurrency exchanges or through exchangers. We wrote about it in more detail here. When choosing a site to buy, pay attention to the service’s rate, reputation, and reviews. Thousands of exchange requests go through Mine. Mine allows you to exchange fiat currency for bitcoin at a favorable rate quickly.
Summary
- Bitcoin, like any other cryptocurrency, has no physical embodiment. It is a payment system with no single controlling center. Transaction data is stored in encrypted form on the computers of the participants of this network worldwide. Installing a client program on your computer is enough to join this network.
- The physical images of bitcoin coins are more of a symbolic nature. Bitcoin has something in common with gold because it is mined rather than issued by central banks. Nevertheless, at its core, bitcoin is a collection of encrypted transactions, not a coin or a bill.
- Most users see only the keys to a bitcoin wallet: an external address for transfers and operations and a private key that gives the owner full access to the funds. The keys are a sequence of characters, including Latin letters and numbers.
