What Is Bitcoin? A Complete Guide On How To Buy Bitcoin

Bitcoin is not only the first cryptocurrency, but it is also the most well-known of the over 5,000 cryptocurrencies currently in use. It has become an inextricable part of the landscape, with financial media breathlessly covering each new dramatic high and stomach-churning collapse.

While the high volatility may make for interesting headlines, it hardly qualifies Bitcoin as the ideal option for new investors or those seeking a reliable store of wealth.

In this article, we will introduce you to this popular coin and guide you about how to buy bitcoin. 

About Bitcoin

Bitcoin is decentralized digital money that was first introduced in January of 2009.  The identity of the individual or people behind the technology is still unknown. It promises reduced transaction fees than existing online payment methods, and it is run by a decentralized authority, unlike government-issued currencies.

Every Bitcoin transaction that has ever been made is recorded on a public ledger that is open to the public, making transactions difficult to reverse and fabricate. That’s on purpose: Because of its decentralized structure, Bitcoins are not backed by the government or any issuing institution, and their worth is only guaranteed by the proof encoded into the system.

Why Has Bitcoin Received So Much Hype?

Bitcoin was a big breakthrough in computer science when it first arrived since it solved a basic difficulty of online commerce: how do you move value between two individuals without a trusted middleman (like a bank) in the middle? The invention of bitcoin, by solving that challenge, has far-reaching implications: It allows for financial transactions across borders and around the world without the intervention of banks, credit card companies, lenders, or even governments as a currency intended for the internet.

When any two people, regardless of where they live, can transfer payments to each other without encountering such gatekeepers, it opens the door to a more efficient, free, and inventive financial system.

Which Technology Does Bitcoin Use?

Bitcoin was one of the first digital currencies to make use of Peer-to-Peer (P2P) technology to allow for immediate transactions. Bitcoin “miners,” who own the governing computational power and participate in the Bitcoin network, are responsible for processing transactions on the blockchain and are rewarded with new Bitcoin and transaction fees paid in it.

These miners can be thought of as a decentralized authority that ensures the Bitcoin network’s integrity. Miners receive new bitcoins at a set, though periodically decreasing, rate. There are only 21 million bitcoins available for mining. There is about 18.875 million Bitcoin in circulation as of November 2021, with just 2.125 million left to mine.

In this approach, Bitcoin and other cryptocurrencies differ from fiat currency; in centralized banking systems, the currency is issued at a rate that corresponds to the economy’s growth, with the goal of maintaining price stability. A decentralized system, like Bitcoin, determines the rate of release in advance in accordance with an algorithm.

How To Buy Bitcoin?

Step 1: Select A Bitcoin Trading Platform

Choosing a crypto trading platform or exchange is the first step in purchasing bitcoin. Cryptocurrency exchanges, payment services, and brokerages are all popular trading services and venues for obtaining cryptocurrencies. Cryptocurrency exchanges are the most convenient alternative because they provide a wider range of functions and a greater number of cryptocurrencies to trade.

You can purchase, sell, and hold cryptocurrency by signing up for a cryptocurrency exchange. Using an exchange that allows consumers to withdraw cryptocurrency to their own personal online wallet for safety is often the best strategy. This functionality may not be important to people trying to trade Bitcoin or other cryptocurrencies.

Step 2: Link Your Exchange To A Payment Option

You will be asked to connect a payment option after the exchange has validated your identity. Most exchanges allow you to connect your bank account or a debit or credit card directly. Although you can buy cryptocurrency with a credit card, this is not a good idea because cryptocurrency price fluctuation might inflate the entire cost of buying a coin.

You’ll need to assemble your personal paperwork once you’ve decided on an exchange. These may contain images of your driver’s license or Social Security card, as well as details about your employer and source of income, depending on the exchange. The information you’ll need is likely to be determined by the place you live in and the regulations that govern it. The procedure is similar to that of opening a traditional brokerage account.

Deposits to crypto-related sites or exchanges may be questioned or even stopped by some banks. It’s a good idea to double-check that your bank enables deposits at the exchange you’ve chosen.

Step 3: Start Purchasing

After selecting an exchange and linking a payment method, you can purchase bitcoin (or other cryptocurrencies). Cryptocurrency exchanges have gradually become more common in recent years. In terms of liquidity and feature set, they have greatly expanded. 

The changes in bitcoin exchange operations correspond to the shift in public opinion of cryptocurrencies. An industry that was formerly regarded to be a scam or one with questionable methods is steadily transforming into a respectable one that has piqued the interest of all of the financial services industry’s major players.

Concluding Remarks

Bitcoin is digital money that runs independently of any central authority or government monitoring. It utilizes Peer-to-peer software and cryptography instead. Every transaction is broadcast to the entire network and shared across nodes. Miners consolidate these transactions into a group known as a block and add them to the blockchain permanently every ten minutes or so.

Virtual currencies are stored in digital wallets, which can be accessed by client software or a variety of internet and hardware solutions, similar to how traditional coins are kept in physical wallets. With our guide on bitcoin, you can understand everything from what is bitcoin to how to buy bitcoin.