The growth of Bitcoin has meant that more and more people want to be part of this “currency of the future”. Every day people are becoming interested in investing in Bitcoin, enjoying its benefits and taking advantage of the enormous growth in value that the digital currency is experiencing year by year.
But where do you start if you are interested in investing or buying bitcoins? How does Bitcoin work and what are the advantages? Where do you store them and how do you buy them? For many new investors and users of Bitcoin, all of this sounds way too tricky to delve into. Nothing could be further from the truth! In reality, Bitcoin is very intuitive and shares many similarities with what you are already used too.
Who is this guide for?
This guide is created to help anyone who is interested in using, storing, buying and mining bitcoins, but have no idea where and how they should do that.
In this guide we discuss everything you need to know to take part in this digital revolution! It’s structured in a way that both serves beginners and more experienced users. The first chapters assume that the reader has never had prior experience with a blockchain. While the following chapters go more in-depth into core information and usage.
Why did we make this guide?
Bitcoin has been around since 2009 and has since become incredibly popular but also quite controversial. More and more people want to transfer part of their income into bitcoins and invest in their future. The problem, however, is that it is not clear to the average person how Bitcoin actually works.
The good news is that most of these concerns are out of place. You will soon notice that working within the Bitcoin network is not only easy but a lot more intuitive then what you are used to from interacting with your current bank! Once the first step has been taken, you will soon see how simple using the network is.
The purpose of our manual is to help you with the first step! We have made this manual to guide you in your first purchase of this digital currency, and to help you with the choices that you will encounter along the way. We discuss aspects of Bitcoin such as:
- Bitcoin wallet, what types are there and how do you choose the best?
- How you can buy bitcoins and invest in them. Which brokers are reliable.
- How you make sure you use your bitcoins safely.
How should you use this manual?
We recommend that you bookmark this page in your browser so that you can always come back if you have any questions.
The manual is written in chapters where each chapter in itself describes an aspect/step completely. In other words, each chapter is a mini guide in itself!
You can decide for yourself how to go through the manual. If you’re completely new to the world of Bitcoin we would strongly recommend going through the entire guide at least once. But if you are already familiar with blockchain technology, then you can safely jump to the chapter that is most relevant to your question.
Important: If you are looking for the best place to buy bitcoins, you can go straight to chapter 3.
What is Bitcoin?
Satoshi Nakamoto, the inventor of Bitcoin, described the coin as a Peer-to-Peer Electronic Cash System in Bitcoin’s original whitepaper of 2009. Until today, this is still the most simple and accurate description of the currency.
Bitcoin is a consensus network that creates a new way of payment together with its own currency. It’s the first decentralized currency, which means that there is no central authority or intermediary that has control. From the perspective of the user, Bitcoin is best described as ‘the currency of the internet’. But it is also known as digital money, cryptocurrency, or internet money.
No matter how you look at it, Bitcoin has changed the way we look at money. Bitcoin does not require a central server or an additional party to carry out its transactions. All transactions are carried out by a network of computers and are completed within 10 minutes. If you compare that with a normal bank debit that can sometimes take 1 to 2 days, it will immediately become clear as to what makes Bitcoin so attractive.
The Bitcoin protocol has a limited supply of 21 million bitcoins. Which means that never more than those 21 million coins can be created. So no individual, central bank or government can simply decide to ‘print’ more bitcoins. For many, this is the most attractive aspect of the network. In a day and age where transparency and privacy are becoming a very big factor for the average consumer. Having your assets held in a currency that is independent of regional or national politics and is therefore not affected by their decisions is a large selling point for many consumers. In addition, the fact that the maximum supply will never change is one of the main reasons bitcoins are so attractive to investors as such an asset will always go up in value.
So people invest and use Bitcoin because it doesn’t require a bank and it’s a good way to keep all( or part of) their assets safe. But how does the Bitcoin protocol actually achieve this?
All transactions that are made with Bitcoin are permanently stored in a ‘ledger’ which in the cryptocurrency world is referred to as a “Blockchain”. This Blockchain is shared with all ‘nodes’ and ‘miners’ in the world, and they all have access to this ledger. In other words, everyone has a list of all transactions made within the network, and because of this no single person or authority can just put money in our out of the system without the knowledge of the whole network. If you read through our Blockchain chapter, you should also know that the Blockchain rewards the miners, who verify the transactions! If the workings of a Blockchain are strange to you, we suggest you go and read that chapter first!.
The miners of the network are always busy verifying incoming transactions, for their effort (which in this case is computational power) they are rewarded with new bitcoins every 10-minute block.
This technology has started quite the revolution in the world, and since the appearance of Bitcoin, many new cryptocurrencies have appeared that all work just a slight bit differently. In some cases, these cryptocurrencies even serve a specific function.
In the world of cryptocurrencies, Bitcoin is virtually the same as what gold is to many wealth experts. Many use Bitcoin now as a safe way to preserve their assets and make a huge profit because of the enormous increase in the value. It’s also way easier to move around! Moving 10kg of gold is a lot harder and costly than moving 10 bitcoins.
Frequently Asked Questions
Bitcoin with a capital letter refers to the network of the cryptocurrency, while bitcoin without a capital letter refers to the digital currency itself.
Contrary to popular belief, you are not completely anonymous in the Bitcoin network! Every wallet is fully visible to everyone within the network due to the blockchain’s property. This makes it possible – even if it is very difficult – to link someone to a wallet by indirect methods. What do we mean by this? Think of the traditional bank account that the wallet deposits money on.
The wallet itself is completely anonymous because there is never personal data associated with one wallet. Because of this contrast Bitcoin is often called pseudo-anonymous.
However, it is possible to buy bitcoin anonymously by taking additional steps. These steps are aimed not to leave any traces that make it possible to trace indirect actions.
In the fourth chapter of our manual you will find a detailed explanation of what methods there are to buy bitcoins but also to sell.
A blockchain is the underlying technology that Bitcoin uses.