Bitcoin was the first cryptocurrency, building on the original digital currencies of the 1990’s, DigiCash and Flooz. While those two currencies never really gained traction, Bitcoin introduced the concept of the Blockchain, and with that advantage, Bitcoin has grown from its initial code launch in January 2009 to become a globally accepted currency today. Who created Bitcoin remains a mystery, officially the Bitcoin code was created and released by a man named Satoshi Nakamoto, but there is one problem with that. Its not a real person, it is a name used by whoever did create Bitcoin to help them remain anonymous.
Along the way Bitcoin has launched a thousand other cryptocurrencies, all using blockchains of one form or another, and enjoying various levels of success. But you may be asking just what a cryptocurrency is. Satoshi Nakamoto’s paper that launched Bitcoin itself described a cryptocurrency as “A Peer-to-Peer Electronic Cash System”. In short it combines the blockchain and electronic cash ideas to create a currency that exists on multiple computers all over the world, so it cannot be forged or tampered with. A secure, digital currency that can be freely traded, and has a complete record of its movements.
You see, the blockchain allows the verification of every transaction made with every Bitcoin in existence, and it’s a permanent record too. So, for every Bitcoin, every transaction can be traced right back to when it was ‘mined’, the term used for creating a coin. With that record, and the fact that only 21 million Bitcoins can ever be created, you have a currency that is transparent, completely trustworthy, impervious to forgery and because it is limited, has significant value.
We talked about the creation of Bitcoin through mining, but there are actually 4 ways you can obtain Bitcoin for yourself, these are:
The most common way to obtain Bitcoin today is through a digital currency exchange, but whichever way you obtain Bitcoin, you will need a Bitcoin Wallet. A wallet is like a digital bank account, a place to store your Bitcoins, and where others can send you coins. Each wallet has its own unique address, consisting of between 26-35 alphanumeric characters, beginning with the number 1 or 3. If someone is sending you a payment, you give them that address, and the sent Bitcoins will arrive in your wallet. Similarly, the interface of your wallet allows you to send Bitcoin to other wallets as payment for whatever you wish.
There are two distinct types of wallet, hot storage and cold storage.
A hot storage wallet is one that permits instant transfers online. This wallet's Bitcoins are stored and used online, and it is permanently online for ease of access. These wallets are perfect for trading or making purchases.
A cold storage wallet is an offline wallet, such as a USB drive, hard drive or specialized offline wallet. Transactions from these devices take longer to set up, however, they provide the ultimate in security. For Bitcoin funds you wish to keep as savings long-term, this is the best wallet to use.
Why You Need Bitcoin Wallet
Like a bank account, a bitcoin wallet is a safe storage for you BTC. Making use of them begins with one of these "wallets."
In fact, it operates like active bank accounts for the use of storing your Crypto-currencies or exchanging them. There are various types of bitcoins wallets. Here are two types of Bitcoin wallets which are considered "Hot and Cold."
NakWhy Use Bitcoin?
There are several reasons why Bitcoin trading is so popular, firstly there are few restrictions, because you can trade without getting involved with banks or other financial institutions, making it by far the simplest way to begin trading. Secondly, transaction fees are low, much lower than with most other platforms, and that simplification of the process means fast transactions too.
Because Bitcoin transactions are anonymous while remaining secure, Bitcoin offers the best blend f privacy and security available today.
Bitcoin gained in popularity due to its unique properties thanks to the blockchain it is built upon, and that success has seen many other cryptocurrencies come into existence to gain from that popularity. These new cryptocurrencies are called alternative coins, or Alt Coins, and while some are direct Bitcoin copies, often built on Bitcoin’s own blockchain, there are many that are interesting in their own right, often with more capabilities than Bitcoin itself and using their own bespoke blockchain code.
There are hundreds of these coins, and more being created every week. But why would you be interested in them? With low value and relatively low volume, alt coins offer a way to get involved with cryptocurrency trading for very low investment, and it is a great way to position yourself for spectacular gains in some cases.
One Bitcoin may be worth around $9000 today, but you could buy them for as little as 10 cents not too many years ago. There are many alt coins that have the potential to see significant growth in value that would be difficult to find anywhere else today.
There are several alt coins that stand out, Litecoin and Ethereum in particular, but with a wide range of cryptocurrencies and some good research, there is profit potential all over the alt coin market.