Understanding what Bitcoins are is not at all easy: here is a guide to the basics of this cryptocurrency to know what it is, how it is used, and what you risk buying Bitcoin.
Unknown to most for over ten years, known by a few and largely ignored, revered by a few who have used them to make huge gains and, finally, hated by those who have lost everything to their fault. We are talking about Bitcoin, the most famous cryptocurrency in the world and which has officially become a “mainstream” topic despite being extremely difficult to understand what it is.
Whatever you think of Bitcoin, however, the fact remains that today they are the most widespread application of a potentially revolutionary technology when applied to other sectors: the blockchain.
Everything else, from the trend in the value of Bitcoin to its elusive inventor, can be the subject of discussion. But the blockchain no: it is now a mature technology that, thanks to cryptocurrency, has shown its full potential and will therefore be applied to more and more sectors of the global economy. Here, then, is what Bitcoins are and what lies behind this revolutionary invention that aspires to change the world starting from finance.
WHAT IS BITCOIN?
Bitcoin, to all intents and purposes, is not a currency but a worldwide payment system. Thanks to cryptography, this payment system is safe and prevents fraud: it is in fact based on the so-called “blockchain”, or chain of blocks.
The inventor of Bitcoin was Satoshi Nakamoto, a pseudonym behind which it is not yet clear who is hiding. The most likely thing is that this is a group of cryptographic experts. The protocol that manages the functioning of Bitcoins was published by Nakamoto in late 2008 and this cryptocurrency was officially born in 2009.
WHAT DOES BLOCKCHAIN MEAN?
Unlike the name Bitcoin, the term blockchain is absolutely appropriate: it is in fact a chain of “blocks” all linked together. Each block is a packet of data that is stored on multiple computers at the same time, all of which have the same copy of the data.
Each data block contains the “cryptographic hash”, the date of creation, and the log of all previous data transfers. The term “hash” refers to a code, a string of characters and numbers, which is produced by a mathematical function. A new hash is created for each transaction, starting from the previous one which is recorded together with the new one in the same block of data.
Blockchain data is spread across thousands of computers, called nodes. In this way, there is not a single central computer that keeps track of the data, of how they have changed and of individual movements, but there are thousands of them. Even if someone tampered with the data on one or more blockchain nodes, there are still all the other nodes that can “testify” that such data has been manipulated by comparing the hashes.
It is clear, therefore, that the larger a blockchain is, the more secure it becomes. But also difficult and expensive (in terms of computational resources) to maintain.
HOW BITCOINS WORK
Whether you intend it as a currency, or you prefer to define it as “a highly volatile money exchange method”, Bitcoin is still not regulated by a central bank: its central bank is the blockchain on which it is based. On the other hand, if you think about it, the task of a central bank is precisely to ensure that no fake money circulates and to decide when to print new money.
Both things, in the case of Bitcoins, are allowed by the Nakamoto protocol which works via blockchain. Under this protocol, anyone can create new Bitcoins from scratch, but it is a very difficult task. In reality, in fact, what is possible to create is a new block of the chain, which contains the information and hashes of the new Bitcoins. To generate new hashes it is necessary to solve mathematical problems.
The Bitcoin protocol has been designed so that the problems to be solved to generate the hashes become more and more complex so that the network becomes more and more secure. Each money transfer is encrypted with a private and public key. All this means that while at the dawn of Bitcoin it took relatively few powerful computers to generate new blocks (and therefore new Bitcoins and new possibilities to exchange them), now extremely powerful and optimized computers are needed.
WHAT IS BITCOIN MINING
The term “mining” refers to the execution of the calculations necessary to create (mine) new Bitcoins and to validate transactions. To mine Bitcoin today, computers equipped with many graphics cards are used because it has been noticed that GPUs, i.e. graphics processors, are very suitable for completing these calculations and solving these complex mathematical problems.
Today, mining Bitcoin has become a real entrepreneurial activity: there are thousands of people in the world who buy powerful computers, which consume a lot of electricity, to create new blocks and Bitcoins. This is because, for each new block of the blockchain created, you are entitled to a reward in Bitcoin.
Obviously, mining is also done with other cryptocurrencies and not only with Bitcoins, and many “miners” simultaneously carry out Bitcoin mining, BitcoinZ mining, Ethereum mining, etc. But it is not always said that it is convenient to mine Bitcoin: it depends on the current value of the cryptocurrency, the cost of the hardware, and that of electricity.
WHAT DOES BITCOIN HALVING MEAN?
The Bitcoin halving is foreseen by the Satoshi Nakamoto protocol and consists of the fact that every 210 thousand blocks created, the amount of Bitcoins generated for each block is halved. Again according to the rules of the protocol, the halving takes place at an almost fixed frequency: approximately every four years.
The last halving took place in May 2020, the next one will take place in 2024. The halving was designed to prevent Bitcoin from becoming too many, which would cause its value to plummet as computers’ processing power grows.
HOW BITCOINS ARE USED
To have Bitcoins it is necessary to open a “wallet”, that is a wallet. A wallet is a file, which contains an alphanumeric code consisting of numbers and letters (from 25 to 36 characters). For simplicity, we can think of it as the IBAN of our bank account, but there is no bank and there is no account either because the wallets are anonymous.
This means that, if we keep our wallet on a computer and someone steals it from us, then we lose all our Bitcoins because whoever accesses our wallet can move them somewhere else (i.e. to another wallet) completely anonymously. Also, for this reason, hackers always choose Bitcoins as a currency to get paid the ransomware ransom.
Wallets, and Bitcoin transfers from one wallet to another, are managed through a special wallet app available for the main platforms: Android, iOS, Windows, macOS, and Linux. Each individual can create multiple different wallets, just like he can open multiple current accounts and many Bitcoin exchange platforms.
For some time now it has been possible to create a wallet and fill it or empty it by buying or selling Bitcoin even with the popular prepaid card apps available in the world.
WHERE TO FIND BITCOINS
The only existing ways to have Bitcoins are three: buy them, in an “exchange”, mint them, with an excellent computer and the appropriate software (called “Bitcoin miner”) or receive a payment in Bitcoin.
Exchanges are sites where, upon registration, it is possible to trade in Bitcoin and check the value of cryptocurrencies in real-time. In these sites, it is possible to buy and sell cryptocurrencies: from Euro to Bitcoin, from Dollar to Bitcoin, and vice versa, but almost always also from other cryptocurrencies such as Ethereum, Bitcoin cash, BitcoinZ, Dash Coin, Litecoin, Monero, Ripple, etc.
In some exchanges, it is possible to buy virtual currencies with traditional currency, such as the euro, while in others it is only possible to exchange cryptocurrencies (for example from Bitcoin to Ethereum). In both cases, the exchange will retain a small percentage as an exchange fee for each transaction made.
Unfortunately, not all exchanges are reliable and, especially in the past few years, we have seen many bitcoin scams. To receive payment in Bitcoin, however, it is necessary to have a Wallet and communicate the code to the payer, who can send us the agreed amount through the wallet app he uses. Bitcoin transfers, however, are usually quite a bit slower than those of regular currencies due to the complexity of the calculations required.
In reality, there would also be a fourth way to get Bitcoin for free (or as many call them “Bitcoin bonuses”): the faucets. These are platforms that offer minimal fractions of Bitcoin in exchange for viewing tons of banner ads. In most cases, the cost/benefit ratio is very low. The most famous faucet at the moment is Moon Bitcoin.
HOW MUCH ARE BITCOINS WORTH
The value of Bitcoins is extremely volatile, it changes a lot in a very short time. 2020 was the year in which, all over the world, ordinary people discovered that Bitcoin exists because the enormous swings in the value of this cryptocurrency have become the subject of endless news articles.
In January 2020, Bitcoin was worth 7,200 euros, on 31 December it was worth 29,800, on 8 January 2021 it reached 33,000 euros and then redeemed over 5,000 euros in a few days.
Behind these changes in value, there are also speculative maneuvers, which is why from a financial point of view Bitcoin can be very dangerous for our wallet, and if you have in mind to make money with Bitcoins or even become rich with Bitcoins you should be very careful.
IS INVESTING IN BITCOIN DANGEROUS?
Leaving aside the purely financial considerations on the trends of Bitcoins, which do not compete with us, it is right to answer the question of whether investing in Bitcoin is dangerous from the point of view of cybersecurity. The answer is not easy to give, because many factors have to be considered.
First of all, it is necessary to take into account the fact that, to open a wallet and trade cryptocurrencies on an exchange, it is necessary to provide data such as email, an identity document (at least on the platforms), and the IBAN of the account into which the Euros will be paid when let’s trade Bitcoins.
All data must be entrusted to more than secure companies, which perform a two-factor authentication process before making any money transfer. In fact, even the best platforms can be hacked. If a hacker manages to get his hands on our account on one of these platforms, he also gets access to our wallet and can empty it exactly as he would with a checking account.
It happened in December 2020 at Livecoin, a Russian cryptocurrency exchange that suffered a very heavy hacker attack that knocked it out. Two weeks later the platform was closed, but users’ wallets had already been emptied.
Since Bitcoins are the preferred currency of hackers already the fact that there is a wallet associated with an email address (two pieces of information that hackers can steal from both trading and faucet platforms and, unfortunately, also from traditional bank databases) exposes us to extra risk. Bitcoins, then, are the subject of specific phishing campaigns aimed at emptying wallets called crypto phishing.
BITCOIN PRO LEGIT BONUS
Those who are familiar with crypto know what wallets are, where to keep crypto, and exchanges, where to buy, sell or exchange them with different cryptocurrencies. The great volatility of Bitcoin and other currencies offers great opportunities to earn.
Given the great growth of interest in crypto, in recent times many new platforms have been born that incorporate the function of wallets and exchanges. Each transaction, as with fiat currencies (traditional ones such as EURO, USD, GBP, YEN, etc), requires the payment of variable fees.
As with money transfer apps, cryptocurrency management apps often offer sign-up or recurring bonuses.
- Wirex promo, € 10 bonus in WXT token
British fintech Wirex aims to connect the world of cryptocurrencies with that of traditional currencies. For this, it has developed a platform based on a prepaid card and launched its own WXT token.
Going into more detail, the great advantage that makes the Wirex card almost unique on the market is the possibility of being able to make payments in real-time in any store, converting the cryptocurrencies contained in your wallet into euros in a few steps. This is certainly not a small aspect, since there are still very few stores in the world that directly accept payment in cryptocurrencies (almost always Bitcoin).
WELCOME BONUS: 10$ bonus
To get the bonus, the following conditions must be met:
- Register via this link and complete the verification of the identity document (also paper)
- Deposit on the Wirex account of at least € 1 or the equivalent in any of the supported currencies (transfer from another wallet also valid)
- Once you have received the physical card, you will have to activate it with a simple procedure from the app and make a purchase. The regulation has no limits, so a payment of € 1 is fine too.
Completed these simple you will receive your 10$ bonus in WXT. For each friend invited, you will receive an additional 10$ bonus in WXT as soon as the above steps are completed.
- Quantfury bonus ranging from 10$ to 100$
Quantfury is a trading platform that allows you to buy and sell stocks using cryptocurrencies. The coins currently available for the account are Bitcoin, Ethereum, Litecoin, Tether, Dash, Quantum, Dai, USDC, and TrueUSD.
For exchanges, therefore, it will be necessary to deposit one of these currencies. Quantfury has a really interesting promotional campaign underway. For a deposit of $ 101, you receive a stock action with a value ranging between $ 10 and $ 100. Your deposit can be immediately withdrawn, for the operation, you can use Litecoin, in order to have very low fees. The bonus, as it happened for the Trading 212 promo, will be available in BTC after 30 days on your wallet.
- Crypto.com Wallet, 25$ bonus
Crypto.com is an “ecosystem” that offers several services, including a wallet, an exchange and several cards that allow you to spend dollars or crypto both online and in physical stores. The Crypto.com wallet offers the possibility to receive 25$ as a bonus reward. The platform allows you to exchange a huge number of cryptocurrencies and tokens, among which obviously also the CRO.
You can complete the registration and order your VISA card for free. Buy and deposit your CRO Tokens to receive up to 16% annual interest. Just follow the instructions, deposit your CROs and put them in “gain” to get the 25$ bonus and the free Visa card with which you can spend your cryptocurrencies. the CRO Token has greatly increased its value since it was launched.
By choosing to stake the CRO token, in addition to an annual interest on the deposit, you are entitled to numerous benefits and services on cashback, Netflix and more.
- Crypto.com Exchange, variable bonus from 10$ up to 2,000$
With Crypto.com Exchange, in addition to the 25$ offered by the wallet app, you can receive a second bonus. To get it you will need to meet the required requirements.
The first step is to sign up via this link and complete the KYC. Once your registration is confirmed, you can purchase as many CROs on the Crypto.com app and transfer them to the Exchange. From now on, you can get a bonus depending on the amount of CRO you have staking (valid only for the first deposit):
- $ 10 bonus by depositing 1000 CRO
- $ 50 bonus with 5000 CRO staking
- $ 100 bonus with 10,000 CRO staking
- $ 200 staking bonus of 50,000 CRO
- $ 400 staking bonus of 100,000 CRO
- $ 800 staking bonus of 200,000 CRO
- $ 1,000 staking bonus of 1,000,000 CRO
- $ 2,000 bonus with 2,000,000 CRO staking
For all bonus levels, you receive reduced commissions for 12 months in addition to the interest expense on deposited CROs
- MAIAR app, 10$ bonus in eGLD
Maiar is a smartphone app created by the Elrond group. It allows you to manage wallets for Elrond eGold, Binance BNB and Ethereum ETH. Maiar allows you to send crypto to people in our address book but also to make payments with our crypto.
Crypto can be purchased directly in the app via a credit card, immediately. Maiar turns out to be very simple and linear with intuitive and fluid navigation even for beginners. The Learn section allows you to start and increase your knowledge of cryptographic currencies. The application is constantly evolving and implementing.
The wallet allows us to make payments with crypto directly from our smartphone with very low commissions. An implementation with a staking function is coming that will allow you to earn interest on the crypto deposited. The eGold coin is also worth keeping an eye on. Since its launch in 2020, it has seen a significant increase in value.
- Binance Exchange, 5$ bonus on your first purchase of at least 50$ on Binance
Binance is the most important and complete crypto platform in the world. It is a system that offers exchange, wallet, trading, P2P, staking, crypto loans, Visa card, and much more.
The strength of Binance is to offer an efficient and complete trading system, with an exchange between a very large number of crypto. Remember that trading is potentially very profitable but just as risky. On Binance you can find lots of free material for your training.
Regardless of how you use it, you cannot be in the crypto world without having a Binance account. The Academy section allows you to learn many notions for free to be able to move with safety and awareness in this sector.
Each of the systems included in the Binance platform offers the possibility to earn Bitcoin, Ethereum, Binance Token BNB, or others. Since 2017 Binance has been growing continuously with an ever-increasing volume of exchanges. Reliability has always proved to be at the highest levels.