What is Bitcoin? How to Start.

When I originally heard of Bitcoin I asked, “What is Bitcoin?” So just like you I got very intrigued by the world of cryptocurrency and what it has to offer. A few weeks ago I listened to Mike Dillard’s podcast, Self Made Man, where he interviewed Teeka Tiwari, the co-editor of The Palm Beach Letter. Within this podcast I learned a lot about the misconceptions of cryptocurrency with a break down of the true value that blockchain provides. For those who have no idea what Bitcoin is or have just heard the word talked about and don’t know where to start let me try to make some since of what cryptocurrency is.

Bitcoin: Everything you need to know, Podcast with Teeka Tiwari on Self Made Man

In short cryptocurrency is a digital currency that is created to decentralize the banking system and make it international. In the United States we use a central banking system known as the Federal Reserve. The way Teeka explains cryptocurrency is that it is more secure than our current banking due to the fact that all currency is spread over a variety of different locations versus one. For example, imagine there are 1 million locations that hold $1 each versus one location that has $1 million. With this concept in mind a hacker would be more incline to attack the one location due to the fact it would be worth the resources expended to gain access. Whereas if an attacker spent the time to access one of the 1 million locations it would cost more time and energy to receive the $1 the one location houses. Due to this decentralized banking it is more secure because of how the resources are so spread out. Now that you have a brief explanation of what decentralized banking is I will explain how Bitcoin works.

The way Bitcoin works is that it uses a blockchain that creates checks and balances to validate whether or not you have the amount of bitcoin that you are trying to send or receive. To make sense of this I will scale it down to a small bank analogy. Imagine you have all of your account balances stored in one location, a LEDGER, that banker will validate that you have the amount requested. If the amount requested is available they will then give you the funds requested. That is how our current banking system works. Rather than a single ledger used, cryptocurrency will instead give access to the ledger to everyone within that bank so everyone is aware of all balances stored in every account with anonymity of what account is associated with which person. That being said in order to withdraw money from one account and send it to another account everyone within the bank would have to unanimously agree the funds are available to be sent. If the funds are available and it is verified the transaction is added to the blockchain. Once the transaction is executed by the blockchain a new ledger is sent out with all updated  balances to everyone.

Now that we have a better understanding of Bitcoin there are also other cryptocurrencies out there. Some of these include, Ethereum, Litecoin, IOTA, etc. With all other cryptocurrencies they each have their own unique systems for encryption and reason behind their creation. Bitcoin and Ethereum are the granddaddy of them all though. In order to buy other cryptocurrency you will need to first buy Bitcoin or Ethereum in order to get started. Tip: You do not have to purchase a full Bitcoin, you can purchase a fraction of a coin. 

In order to begin you will need to connect your bank account or debit/credit card to a service that will allow you to buy bitcoin for a small fee. The most credible and most referred I have been informed of and use personally is:

www.coinbase.com

Within coinable you will need to sign in with standard sign up information including your name, email, phone number, etc. Later on it will give you the option to setup a payment method whether credit/debit or linking your account. I chose to link my card which is a bit more expensive like (3.15%). Once you have done this it will verify your bank account with small deposits into your account. Validate your account and then I suggest that you purchase some Bitcoin. With the debit card method it will limit the amount you buy to $300. If you want to purchase more you will need to wait. Once you have submitted the amount it may take a few minutes for the bitcoin to become available.

While you await your purchase I suggest downloading the Google Authenticator App.

This is another barrier of encryption that will help to protect your bitcoin that you have stored on your coinable account. Once you have purchased Bitcoin you can then choose to keep your Bitcoin and use it on the exchange or store it.

If you choose to store it protection is important and there are several ways to ensure your Bitcoin is stored securely. Below I will link to how you can securely store your bitcoin whether its online or using physical storage.

Storage Options

However, if you want to invest in other cryptocurrency you will need to find an exchange that you want to use. There are several different exchanges to choose from and there are certain cryptocurrencies that are only accessed on specific exchanges too. The one I chose to use because of its functionality and easy to understand platform is Binance.

www.binance.com

Within this exchange I created an account and immediately linked my google authenticator for this site as well. While it makes it more difficult to access it is nice to know your Bitcoin is that much more secure. After I accessed the exchange I funded my account by clicking Funds>Deposits & Withdrawals. Once you are on this page you will need to click on the BTC Bitcoin. It will have to buttons on the right column one for deposits and one for withdrawals. Click Deposit and copy the link given as the Deposit address. Then go to your Coinbase account, click on the withdrawal and paste the link. Once this is done click the Submit button and it will start to pend. This is when your transaction will need to be verified and then sent into the blockchain. This process may take a few hours for the transaction to complete unless you pay an extra fee to make it priority which is 0-60 minutes. Once your transaction is processed you can then purchase any currency within the exchange with Bitcoin.

In conclusion, I hope this gives you a better understanding of cryptocurrency. I know when I started this quest to learn a few days ago I was overwhelmed with the information and wanted to know exactly how it works. There is much more information out there and this is just the basics which I was unable to find myself.

P.S. If you made it this far hopefully you are up and running! I will see you in your mansion in ten years across the way from mine. Always grow your knowledge and feel free to share if this blog post was helpful!

Cheers,

Dylan

 

 

 

Author: dylanbrodigan

Young entrepreneur on a journey to making his first million while documenting it along the way.

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