Understanding Bitcoin: The basics of the millioniare's coin


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Understanding Bitcoin: The basics of the millioniare's coin
Posted on: January 05, 2018, 12:34:03 AM
Bitcoin is an online alternative currency system, which acts as a form of digital money. Bitcoin is used both as an investment, and as a method of payment for goods and services.

Before proceeding to buy Bitcoin, it is important to understand what it is, and it's advantages and disadvantages.

The basics

Bitcoin is a completely virtual currency, that allows consumers a way to exchange money for free, without the use of a third party (like a bank or other financial institution).

Bitcoin are not regulated or controlled by a central authority and all Bitcoin transactions take place in an online marketplace, where users are mostly anonymous.

Bitcoin mining

Bitcoin mining is the process by which Bitcoin are created. Bitcoin miners are individuals who own computers that constantly verify the block chain(i.e transactions made,dates and who owns which bitcoin) to ensure it is correct and up to date. They are the individuals that confirm transactions, and in exchange for doing so, they are paid in bitcoin.

Legal issues surrounding Bitcoin

Recently in the US, the federal agency responsible for combating money laundering announced new guidelines for virtual currencies. The updated guidelines will regulate Bitcoin exchanges. Since Bitcoin is without government regulation, it has gained loyalty from people who engage in illegal activities like drug dealing and gambling due to the fact money can be exchanged anonymously and the government are gradually having an eye on the system. Shutting down Bitcoin completely would be a challenge, but intense federal regulation could down the system.

The Advantages and Disadvantages of Using Bitcoins

Bitcoin's advantages.

Bitcoins major advantages include low fees, protection from identity theft, protection from payment fraud, and immediate settlement.


In localbanking, if someone makes a fraudulent transaction on your credit card or your bank goes bankrupt, there are laws in place to limit consumer losses. Unlike banks,Bitcoin does not have a measure if your Bitcoins are lost or stolen. An average Bitcoin account is not completely secured against hacking or security breaches.

The main risk of investing in Bitcoin is it's extreme volatility. In 2013, 1 Bitcoin was worth about US$13. It then quickly moved to over US$1200, and is now approximately US$18597.99(as of 16/12/2017).

Bitcoin Storage

In order to buy Bitcoins, you first need to create a storage site for your Bitcoins.

Store the keys to your Bitcoins in an online wallet

The wallet is a computer file that will store your money. You can create a wallet by installing the Bitcoin client, which is software.

Store your Bitcoins via a third party

 You can also create a wallet by using an online wallet via a third party site like blockchain.info

Use a hard-wire wallet to store your Bitcoins

Hard-wire wallets are very limited in number and can be difficult to acquire. They are dedicated devices that can hold private keys electronically. Hard-wire wallets are usually small and compact and some are shaped like USB sticks.

Exchanging Bitcoins

Obtaining Bitcoin through an exchange is the easiest way to get Bitcoin. You simply register and convert whatever your currency is into Bitcoin. There are hundreds of available exchanges, and the best exchange option depends on where you are located.

Read!Where to buy Bitcoins in Nigeria? Find out!

Exchanges and wallets are a good option if you want to engage in regular trading.  When signing up for an exchange service, you will need to provide personal information to the service to create an account.

Learn More!4 simple ways to earn bitcoins in Nigeria and even make money with it

Once you set up your account via an exchange service, you will need to link it to an existing bank account and arrange to move funds between it and your new Bitcoin account. This will usually be done via a wire transfer.

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