What is Bitcoin and How does it Work Best in 2020?

what is bitcoin
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Bitcoin, is the cryptocurrency everyone is talking about. Maybe you are new into cryptocurrencies? Do you already own Bitcoins yourself? Actually, it doesn’t matter. We will keep beginner’s as well as professionals covered in this guide.

Learn everything you need to know about Bitcoin. In this article we will cover frequently asked questions. Furthermore, we dig deep into the future of cryptocurrencies. Finally, we will teach you about Bitcoin mining. At the very end we evaluate the Bitcoin price of today and its future value predictions. So let’s start our Bitcoin guide 4 You.

WHAT IS BITCOIN IN SIMPLE WORDS?

What is Bitcoin is by far one of the most popular questions these days. To understand what a Bitcoin is, we first need to look back in time and its origin. The ledger of the Bitcoin Blockchain was distributed January 3rd, 2009, by a person with the nickname Satoshi Nakamoto. The initial release took place 11 years ago, it was January 9th, 2009. Bitcoin was the worlds very first cryptocurrency. Then followed by DashEtherLitecoinRipple, and uncounted other tokens

Bitcoin is a digital currency. Within its Blockchain, secure data is sent through a peer-2-peer network. This data is treated like real money. Compared to regular FIAT currencies, such as USD or EUR, there is no assigned value behind the Bitcoin. Furthermore, Bitcoin is not a physical element. There is no hard coin nor any paper. The verification, as well as the value of Bitcoins, is provided by all network participants.

What are Advantages of Bitcoin?

The major advantage of Bitcoins is, that you can store and receive crypto assets in no time. Send it to everyone you like, without the need of an intermediary. Meaning, you don’t need a bank, nor a bank account. Spending and receiving this crypto money requires a lot of computer power. Some users in the network have specialized in mining cryptocurrencies. These users are called miners and get rewarded for proving each transaction. You’ll find more information about Bitcoin Mining below. First, let us explain how Bitcoin works.

HOW BITCOINS WORK?

So how do Bitcoins work in real life. Another important question to answer. If you want to understand how Bitcoin works, then we need to dive deeper into the technology behind. It’s called Block Chain. Don’t worry! We’ve already explained this new technology in a previous post here: What is Blockchain?

Now let’s explain how Bitcoins work. So each Bitcoin (BTC) or a Satoshi (the smallest unit and equivalent to 0.00000001 BTC with eight decimals) is basically a computer file. It is stored in a digital wallet. Your wallet can be a piece of software on your computer or an App on your smartphone. Even better and safer is a hardware wallet. Don’t worry! We’ll explain you later how bitcoin wallets work.

Once you’ve received your first Satoshi or even a Bitcoin, you can start spending Bitcoins as well. Every single transaction is recorded. It’s encrypted, safe and absolutely amazing because it’s simple.

Can Bitcoin be traced?

Absolutely! Bitcoin can be tracked and traced. Within the network your transaction is stored in a public distributed ledger. All thanks to miners all around the world-wide-web. Therefore, it’s possible to trace the history of Bitcoins. Furthermore, the so called proof-of-work process stops fraud completely. You are not able to make a copy of your Bitcoin and undoing a transaction is impossible.

WHAT IS BITCOIN MINING?

Bitcoin Mining Hardware Farm

Bitcoin mining is the process to verify a transaction within the Block-Chain. Miners use special software and huge computing power to solve the math. Blockchain technology uses cryptographic coding. Once a distributed ledger is issued it will be checked and verified by a miner. It’s a simple but smart way of issuing crypto currency. Furthermore, Bitcoin mining is rewarded. Miners get an incentive for each transaction they can approve.

Sure, the Bitcoin has some downsides as well. Next to high investment costs, enormously high power consumption, each transaction takes about 10 minutes. These are a few reasons why developers started to create new cryptocurrencies, such as the Litecoin in 2011 with a block time of under 3 minutes or the latest and fastest cryptocurrency on the market, called EOS with 2800 transactions per second.

What’s the Best Bitcoin Mining Hardware?

As mentioned before, Bitcoin Mining is very resource-intensive. The number of blocks found by miners remains steady. Each block get a proof-of-work. This is how we consider a transaction as valid. Furthermore, the verification continues by nodes. Each time a node receives a block it gets a verification right away. It all works as open-source software. This service is based on record-keeping. The bitcoin blockchain is consistent and unalterable. Bitcoin mining allows nodes to reach a secure and resistant consensus.

If you want to start Bitcoin mining yourself, here are 3 hardware options you can invest to:

whatsminer-m30s
WhatsMiner M30S

MicroBT

$1,40000

  • light

    3344W

  • poveroff

    88Th/s

  • network-vired

    SHA-256

Bitmain-Antminer-S17-73Th
Antminer S17

Bitmain

Popular

$1,61000

  • light

    2680W

  • poveroff

    67Th/s

  • network-vired

    SHA-256

avalon6
Avalon 7

Avalon

$56000

  • light

    2900W

  • poveroff

    3.5Th/s

  • network-vired

    SHA-256

Since the release of the Bitcoin we have a circulating supply of over 17 million bitcoins. The maximum supply is set to 21 million. Now you know what Bitcoin Mining is. Next, let’s talk about on how to store and use your Bitcoins in a safe and legal way.

HOW TO GET BITCOINS?

Before you can get bitcoins you need a Bitcoin wallet or let’s say digital wallet. Modern Bitcoin wallets let you store multiple cryptocurrencies at the same place. There are dozens of Cryptocurrency wallets available. Basically, the big difference between the different crypto wallets available is their operating system. Of course, there are Mobile Apps, Desktop and even Cloud Applications. Most important is, that you make the right decision regarding features and your own criteria of your personal needs.

Bitcoin, like any other cryptocurrency can be exchanged or used to buy products and services. The ticker symbol is BTC. All you need to start using bitcoin is a digital wallet. Ok, now you know how it works and how powerful cryptocurrencies are.

How to Get a Bitcoin Account?

If you want to get a Bitcoin Account the easiest way is to on bitcoin.org and choose the right wallet for your needs. Let’s have an expert look into the different wallet options you can choose from:

bitcoin wallet options

Do you remember? When it comes to Blockchain and especially Cryptocurrencies, then privacy and security are key factors. Therefore,

ALL EXPERTS DO RECOMMEND A HARDWARE WALLET ONLY.

Sure, there are other digital wallet brands like Opendime, Coldcard, CoolWallet, BlochTech or BitLox. The market is fast growing. As a final recommendation from our experts, our first choice is a Trezor Model T or a Ledger Nano S, depending on your budget. As soon as you own a wallet and subscribed your account, you’re a happy owner of a Bitcoin Account.

Which Bitcoin App is the Best?

The best Bitcoin App in 2020 is Coinbase. It’s a great app for consumers. They even offer enterprise solutions. Easy e-commerce integration, custody and even ventures. The only down side of Coinbase is their high pricing and fees. Therefore our recommendation for a great Bitcoin App is PrimeXBT. Maybe the most popular Bitcoin App today.

What we really like about Blockfolio, their service is completely free. If you’re an absolute beginner, then Etoro is the one to chose. Also Coinmama has many fans, same as CEX.io. A must mention when it comes to the best Bitcoin Apps is Bitmap. The Bitmap App let’s you find the closest Bitcoin ATM near you.

When you choose to use a Bitcoin app, then always remember the safety issues we’re facing.

INSTALLING AN APP ON YOUR SMARTPHONE IS NEVER SAVE!

Which is the Best and Safest Bitcoin Wallet in 2020?

The best and safest Bitcoin Wallet as of today is the Trezor Model T. It is a full-featured hardware wallet. Sure, there are plenty of good Bitcoin Wallets out there. From our perspective, the following 3 cryptocurrency hardware wallets are great choices:

Trezor Model T
Trezor Model T

Trezor.io

$16000

  • coins

    >1,000

  • code

    SSH

  • laptop-code

    U2F

ledger nano s
Ledger Nano S

Ledger

Popular

$7000

  • coins

    23

  • code

    not available

  • laptop-code

    SHA, Grost, KECCAK

keepkey wallet
KeepKey

Shapeshift

$49000

  • coins

    >40

  • code

    not available

  • laptop-code

    SHA-256

HOW TO BUY BITCOINS?

Now, as you know everything about Bitcoin Wallets, it’s time to explain to you how to buy Bitcoins.

There are tons of services out there to buy Bitcoins. So which service should you choose? As always, it’s about your preferences. Is low price important for you? Do you want to use your credit card? Or bank wire transfer?

How Can I Purchase Bitcoins?

Let’s have an expert look into the most common ways to buy Bitcoins:

Option No 1 – Coinbase

Coinbase is a giant when it comes to purchase Bitcoins. Within minutes you’ll have an account, your bank account or credit card linked with it, and your ready to buy and sell Bitcoins as well as many other cryptocurrencies.

Until 2020, Coinbase has exchanged about $150B cryptocurrencies, within 102 countries all around the world, and serving over 30M clients. Their online registration process is really simple. Their application is very easy to use.

Option No 2 – Coinmama

Coinmama is a very popular platform to purchase Bitcoins. Also, you have multiple payment options. The fact that you can set spending limits makes Coinmama a great option to buy bitcoins.

With Coinmama you can buy and sell Bitcoin Cash, Ether, Cardano, Litecoins, Qtum, Ripple, and more. They call themselves “The fastest way to buy & sell cryptocurrency” so give them a try.

Option No 3 – Etoro

Etoro is a so called social trading platform. What we like is that you can trade cryptocurrencies as well as regular stocks fast. Furthermore, you don’t pay any commission.

Etoro offers a simple to use trading platform. Their copyTrader is another fancy tool. You can watch what other clients are trading and you can copy their strategies. Finally, you can even trade CFD’s. But be careful! About 62% of investors lose money when trading high-risk CFD’s.

What Can Bitcoin Buy?

With Bitcoin you can buy almost everything. From electronic items to furniture and even food. One of the retail giants in the US just started to accept Bitcoin payments. Major e-commerce platforms, such as Shopify or WooCommerce, do allow the integration of Crypto payments as well. Therefore, we will see a huge increase of goods that Bitcoin can buy.

Actually, the online payment with cryptocurrencies is as simple as you use your credit card. All you need is your digital wallet and a piece of code that you’ll have to scan. The code provided by the seller is nothing else than his/her crypto wallet address. It’s really simple. Just try it yourself!

HOW MUCH IS BITCOIN TODAY?

The value of a Bitcoin is in fact very volatile. Maybe the most volatile ever. To find our how much is Bitcoin today, the best way is to simply google it. If you f.e. use the search term “usd to bitcoin“, then google will show you the equals of almost any FIAT currency.

google usd bitcoin converter

Another way to convert cryptocurrencies is by using any other converter such as xe.com, FXStreet, coinmarketcap.com or even your smartphone will have an app to convert most cryptocurrencies and for sure the BTC (Bitcoin).

We hope this article helped you to find out what is Bitcoin. Stay tuned for our next blog post. We’ll talk about the future of the Bitcoin. We deliver more Blockchain info on our blog at least once a month. If you have any question or thoughts, then please leave a comment below. And don’t forget to subscribe below!

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Marcel Isler

Marcel Isler

Marcel is a Business Economist and founder of iMi Blockchain. A Consultant and international Keynote Speaker. He studied at the University of Oxford. He helps enterprises to implement Blockchain applications. On our blog, he writes about distributed ledger technology, smart contracts, cryptocurrencies, industry news, and future trends.

This post has 4 comments

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It’s great that you are getting thoughts from this post as well as
from our dialogue made here.

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Hey hi, seriously this post is awesome, One thing that strikes me that most is your style of writing. And also you explained so perfectly, I could understand the concept correctly.

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hey! It is the first time I read about bitcoin mining hardware! Thanks for Sharing!

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