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July 12, 2018

What is Bitcoin (best article)

You can find news of people who are now millionaires just investing in Bitcoins and I bet that the idea of investing in this virtual currency and to also become a millionaire has already crossed your mind.

But before making your first investment, I recommend you better understand what Bitcoin is. So keep reading...

Bitcoin Stock

After reading this article, you will understand a lot more about Bitcoin.

What is bitcoin

Bitcoin is a digital currency, there is no paper or physical currency as we find in traditional money. This virtual currency is issued and used through computers that are connected on the Internet and does not depend on intermediary financial institutions such as banks.

The issuance of Bitcoins is not carried out by governments and is not controlled by a Central Bank. Its production occurs in a totally decentralized way through the use of powerful computers scattered around the world.

These computers are not in banks or government institutions, they can be anywhere, such as homes or offices of ordinary people who have decided to use their computers for this purpose.

Who Invented Bitcoin

Satoshi Nakamoto is the supposed name of the creator of the Bitcoin. It is not known for sure who this person is, it is not known whether if it's a man, woman, a development team or some government agency.

Who is Satoshi Nakamoto

The name Satoshi Nakamoto was used in the official document describing how Bitcoin works, something a little bit technical with details most understood by software developers.

To learn more about the creator of Bitcoin, read this other article:

How Bitcoins are created

The creation of this currency is done through a process known as Bitcoins mining. Computers all over the world are responsible for creating currency using this process that demands a lot of processing power.

Bitcoin Mining

Mining Bitcoins

This job is totally democratic, if you want to participate in the Bitcoins mining for example, is just necessary to have a computer with high processing power and follow the correct procedures to be part of the mining network.

In general, a person who participates in the Bitcoins mining process makes his/her computer available on a worldwide network that processes and validates the bitcoins transactions performed daily around the world.

By participating in the process of processing and validating transactions, miners receive rewards in Bitcoins, that means they are generating more Bitcoins that will become part of the global virtual currency system.

So the idea is that more and more Bitcoins will be generated and get into the market until reaching a limit of 21 Million Bitcoins. This should occur around the year 2,140.

How Bitcoins are stored

You can store a Bitcoin the same way you store a file on your computer, pen drive or mobile. As the currency is virtual, its storage is not physical but rather electronic.

When you buy a Bitcoin you need a wallet to store it, but NOT a physical one like the one you own to store your money.

Apps to manage Bitcoin

Bitcoins Wallet

The Bitcoin wallet is actually a piece of software that can keep your private key information that represents your Bitcoins.

For now you don't have to worry about too many technical details, in a practical situation, you must have a software on your computer or an App in your mobile that represents your electronic wallet for Bitcoins.

So before acquiring Bitcoins you need one of those virtual wallets, or let your Bitcoins stored in the company (exchange) where you purchased them, but that is a little bit risky, long time ago a big exchange company (Mt. Gox) was hacked and lost million of client Bitcoins and they could not be recovered anymore.

Satoshis, the submultiples of Bitcoin

Imagine a situation where you need to buy some product but it costs less than a Bitcoin, In this case you can use the Bitcoin submultiples such as 0.5 or 0.002, and so on. Since its inception the Bitcoin has been divided 100 million smaller pieces that were baptized of satoshis to honor its creator.

We can compare this to the traditional system where we divide the money into small  parts we call pennies. The difference with Bitcoins is that this division is much larger and may represent very small fractions of 1 Bitcoin.

How to buy something using Bitcoins

When a person owns Bitcoins and wants to buy something in a store that accepts that currency, a transfer of Bitcoins is done from the buyer to the seller. This transfer can be done using an App in the mobile.

So it is not complicated, it is like the process of buying a home or a car for example, where you transfer the money from your bank account to the bank account of the other person whom you doing business with.

Bitcoin Transaction

How to buy using Bitcoins

The difference is that with Bitcoins it is not necessary to have a bank to intermediate the process, the transfer is made directly from the buyer to the seller.

Imagine the following scene: you arrive at a store that sells cars, you want to buy the last car model and the seller says that he accepts payment via Bitcoin.

You simply open the App on your mobile phone points the  mobile camera to a bar code from the dealership and input the amount of Bitcoins you want to transfer, it will be transferred from your virtual wallet to the dealer's.

How to Buy Bitcoins

If you want to invest in Bitcoins the process is relatively simple and there are different ways to buy the currency, see the examples below:

Using a Bitcoin exchange

You can create an account at an exchange company that is in charge to perform the process of buying and selling the cryptocurrency exactly as one does to buy and sell stocks in a traditional market for example.

After opening an account with the company of your choice, you transfer an amount of money from your bank to the company's bank, so you will be able to purchase Bitcoins according to its value at the time of the purchase.

With a computer and Internet access you log into the system and request the purchase of Bitcoins in a simple and fast way with just a few clicks.

Using a Bitcoin ATM

It is possible to use an ATM to purchase Bitcoins, there are several of these devices spread all over the world, see the picture of a Bitcoin ATM in Brazil.

Bitcoin ATM

Using an ATMs is very simple. To purchase Bitcoins, just insert the amount of cash in the ATM and bring the mobile close to the screen, so the Bitcoins are transferred to your virtual wallet.

How to sell Bitcoins

The procedure to sell Bitcoins is also very simple, in the same online platform you use to make the purchase it is possible to make the sale. Just log into your account and carry out the sale transaction.

Is important to sell your Bitcoins at the appropriate time to make a profit when the cryptocurrency values increases, it is not advisable to sell at the moment that the prices are falling down.

Bitcoin price rising

In 2009, the first bitcoins were mined by Satoshi Nakamoto, at that moment there was no value for the coin, it was $ 0.

With the first transactions in 2009 the currency reached the value of $0.0001 (USD) and from there began its rising trajectory.

In February 2018 Bitcoin's price surpassed the $9,000 and the trend is that it will continue to rise up in 2018.

How to make money with Bitcoins

There are different ways to make money with Bitcoins, see the examples:

1. Buy and wait for the price to rise

One of the simplest ways to make money with Bitcoin is to buy the currency and simply expect it to rise its price in the long run.

Imagine a person who bought Bitcoins when it was worth only $.50. With an investment of only $100, it would have 50 Bitcoins that in 2018 would be worth about $450,000.

Make almost a half million dollars from $100 investment is fantastic. Just imagine how rich are the people who have invested more.

Just like the story of Erik Finman who invested $1,000 in Bitcoins when he was only 12 years old and became the youngest Bitcoin millionaire.

2. Buy and sell (trading)

This is a simple way to make money with Bitcoin, it is the same process of buying and selling used in the transactions of the stock exchange. You should buy when the price is low and sell when it's high.

The Bitcoin's price variation is crazy, daily there is a large drop or rise in the price of the currency. To make money on these transactions simply pay attention to these variations and carry out the buying and selling at the right time.

Imagine that you are now entering into the Bitcoins business and invest $ 6,000 in the purchase of 1 Bitcoin to sell it later.

Let's say the next day you're are looking at the Bitcoin's price variation and realize that there was a price increase from $ 6,000 to $ 7,000. You decide to sell your Bitcoins and have a profit of $ 1,000 in just a single day.

Of course this is a simple example, there are other factors to consider such as paying operator's transaction fees and taxes, but roughly you can get a high profit in a single transaction with Bitcoin.

There's also a risk to lose money if you buy Bitcoin and the price goes down the next day, considering of course that you are in a such desperation and don't know what you are doing. You don't have to sell the Bitcoins in the wrong time. 

Bitcoin's trading operation can be learned from investment specialists, so it's recommended to learn from them before investing your money.

3. Sell services and products

With the high demand for negotiations with Bitcoin, it is now easy to sell products and services related to this business. You can for example give training and advice on Bitcoins as long as you know about this topic.

In the market there are many companies giving training on Bitcoins to different types of audiences, from beginners to experienced professionals working with finances and investments in the traditional market.

One of the ways you get into this market is by studying it. If you already work with finances or investments and want to enter into the Bitcoin business, just invest in courses from qualified professionals.

If you are not from the investment market you can still earn from selling tickets for third-party lectures, video courses or even products like computers for people who want to do Bitcoins mining.

4. Make money with Bitcoin mining 

Several people around the world make money through Bitcoins mining. They invest in powerful computers that are connected to the worldwide network and become part of the process of creating new Bitcoins.

People in the technology industry as computer technicians or programmers easily learn how this process works and in a matter of a few hours can have a system ready to mine Bitcoins.

Who controls Bitcoin?

No one. Bitcoin is public and transparent because it is not controlled by any bank or government, computers around the world (miners) validate transactions and keep information accessible to everybody.

Explanatory video

Below a quick video that explains what Bitcoin is.

Bitcoin Training and information

To learn more about what Bitcoin is and how to make money with it, you can invest in one of the courses listed below:

Books and stuff about Bitcoin

There are books of experts in the area of cryptocurrency. If you want to understand more about bitcoin it is worth checking the links below:

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