What is bitcoin trading and how does it work
Bitcoin emerged in 2008 as the very first cryptocurrency. Bitcoin is a digital currency based on a decentralized and untrustworthy system.
On October 31, 2008, a so-called white paper entitled "Bitcoin: A Peer-to-Peer Electronic Cash System" was published by an unknown person named "Satoshi Nakamoto".
The idea was a decentralized digital currency that would eliminate the need for a central authority or third party (such as a bank) while ensuring that no duplicate or erroneous transactions were carried out (for example, "account overdrafts").
What is bitcoin?
Who is Satoshi Nakamoto?
What are satoshi and BTC?
How to use bitcoin?
We get a lot of questions about bitcoin. What is bitcoin? How to use bitcoin? How to buy bitcoin? What is BTC? In this article, we will do our very best to explain bitcoin simply.
In short, bitcoin is a digital currency that can be stored and transferred directly to anyone, anywhere in the world, without going through third parties. You do not use online banking, Paypal, Vipps, or similar.
In other words, the system allowed two users who did not know each other or trusted each other, to send each other bitcoin safely and securely, in a way that they can give each other cash directly. The system also allowed users to verify messages, transactions, and data using a tool called public-key encryption, which eliminated the need to reveal their identities to transaction partners or third parties.
So if someone asks you "What is bitcoin?", You can easily answer:
Bitcoin is both a digital payment network and a cryptocurrency. The Bitcoin network is decentralized and based on blockchain technology. Being decentralized means you can transfer bitcoin directly to anyone without third-party intervention. Bitcoin as a network is written with a capital B, while the cryptocurrency is written with a small b.
In January 2009, the first bitcoin transaction took place between two computers owned by Satoshi Nakamoto and Hal Finney, who was a developer and an early cryptocurrency enthusiast.
Still, no one knows who Satoshi Nakamoto is. In 2014, a Newsweek journalist claimed that a man named Dorian Nakamoto was the one who made Bitcoin. Many people wonder and wonder who Satoshi Nakamoto is, but it is no longer so important, as bitcoin as a technology, platform, and "godfather of cryptocurrency" works excellently and has become more and more popular.
Bitcoin is not "printed" in the same way as Norwegian kroner or euros - they are produced by computers around the world and stored digitally in so-called wallets (wallets, in the same way as to account numbers for kroner). The smallest unit of a bitcoin is called a satoshi. That is one hundred millionths of bitcoin (0.00000001). This allows very small transactions that traditional money can not perform.
Bitcoin is often abbreviated to the symbols BTC and was the first example of what we now call a cryptocurrency. Cryptocurrency is now a growing asset class and has a mix of the characteristics of "regular" currency (also called "fiat") and gold, except that they are fully digital, where verification of transactions and ownership is based on cryptography.
Now to the frequently asked question "How to use bitcoin?". In general, the term "Bitcoin" has two different uses. One is bitcoin as a token (coin), which refers to the value of bitcoin that one can receive, store, send or sell.
How to use bitcoin as a currency:
A bitcoin token held in a bitcoin wallet is identified by a string of numbers and letters such as: «1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa». When someone sends you a bitcoin or parts of a bitcoin (satoshi), the person sends it to your special, public wallet address, and you will access it via your private keys (private keys). You can look at it as an email, where anyone can send you an email as long as they know your email address (public wallet address for bitcoin). But not everyone has access to your inbox unless they know your password (private keys for bitcoin).
How to use Bitcoin as a protocol:
The second use of Bitcoin is as a protocol, a distributed ledger that maintains the balance of all token trading. These general ledgers are large files stored on thousands of computers around the world.
The network records every single transaction on these ledgers and then shares them with all the other ledgers on the network.
When all the networks agree that they have registered the correct information - the network permanently confirms the transaction.
How to use bitcoin as payment:
Bitcoin can be used as a means of exchange and payment if both parties are willing. In this sense, it is similar to fiat currencies such as dollars, euros, or Norwegian kroner, which can also be used digitally using accounts owned by centralized banks.
Several things separate bitcoin from fiat currency, and it is important to note that sending bitcoin is irreversible and can not be refunded in the same way as in banks, PayPal, or credit cards.
Bitcoin is thus not dependent on a centralized (banking) system. Because each node on the network is owned by a private entity, the entire network is collectively responsible for maintaining the accuracy of the general ledger.
When you send bitcoin or satoshi to another person, the entire network helps to approve and complete the transaction.
This process is called decentralization, one of the most important features of the Bitcoin network. No institution or key player controls the bitcoin network. The protocol is maintained by a group of volunteer coders and is operated by an open network of dedicated computers around the world.
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