What is Bitcoin?

Bitcoin has almost become synonymous with cryptocurrency, and is the type of currency most people think of when it comes to digital currency. However, it is not so easy to understand what Bitcoin actually is for every day and how it works.

In this guide, we explain Bitcoin for beginners, and we will take a closer look at everything from what it is to how to buy it.

Bitcoin – easily explained

Bitcoin (BTC) is the most well-known form of cryptocurrency, and is thus a digital currency. The currency is thus not like traditional currency and fiat money (cash), and exists primarily online.

Bitcoin is otherwise decentralized, which simply means that the state or government agencies and banks do not control the transactions. This job is rather outsourced to the users themselves, in a so-called peer-to-peer network.

Bitcoin – history

Bitcoin was first launched in 2009, and it was Satoshi Nakamoto who was behind it. It is uncertain whether Satoshi Nakamoto is one person or a group of people, and it is not known exactly who launched Bitcoin.

In any case, Bitcoin was the first form of cryptocurrency to be launched to the public, and it was the first time that blockchain technology was fully implemented in a means of payment.

This is how Bitcoin works

How does Bitcoin work? Imagine Anne transferring 1 Bitcoin to Per. The transaction then goes from Anne to Per, without going to any bank first. Per and Anne do not need to know each other’s names, as the transaction is sent from one address to another.

The address is just a combination of numbers and letters, and will not reveal your identity immediately. This makes Bitcoin and other cryptocurrencies a safe option for you who are concerned about privacy.

The transaction Anne sends to Per is published in a network, which is done to prevent the same money being used several times. The valid transfer is then stored in a new block (new blocks are created approximately every 10 minutes).

In each block there is information about the latest transactions, but also information for the previous block. In other words, all the blocks are linked together, which has led to the use of the term “blockchain”.

How are transactions verified with Bitcoin?

In other words, no bank or others verify transactions carried out with Bitcoin. This job is outsourced to so-called mine diggers or “miners”. These are people who work to verify transactions, and they also ensure that the network is kept secure.

To engage in mining, you need a well-functioning graphics card and possibly other equipment. The computer does a lot of the work for the person doing the mining. Bitcoin is unearthed using a proof-of-work algorithm.

The first miner to complete the task for the new block will receive a reward in the form of new Bitcoin units.

Why trade Bitcoin?

There are various reasons why one chooses to buy Bitcoin, rather than just using traditional currency. Many people want a more anonymous and secure means of payment, and then Bitcoin is a great alternative. Bitcoin also ensures that you can get fast and cheap transactions – also abroad.

Another important reason why many people buy Bitcoin is because they want to make a good investment. You can thus invest in cryptocurrency in the same way as many people invest in shares and securities.

If you buy Bitcoin cheaply, you can profit from selling it more expensively at a later opportunity. This of course presupposes that the price rises after buying Bitcoin, which is not taken for granted.

Bitcoin is volatile, and can therefore be a risky investment – like most other forms of cryptocurrency.

How to buy Bitcoin?

Buying Bitcoin is easy. To be able to buy Bitcoin, you must first find a crypto exchange where you create a user account. Here you will find several options, including the Norwegian Block Exchange (NBX), eToro and Firi.

There are countless crypto exchanges out there that sell Bitcoin, but remember that only the players who have registered with Finanstilsynet are allowed to offer their services in Great Britain . Both NBX, Firi and eToro are registered with Finanstilsynet, and safe to use.

Once a user account has been created, you usually need to verify your user profile via a link you receive via email. Once this is done, you can deposit money at the crypto exchange with, for example, MasterCard or Visa.

You can then go to the market page and find cryptocurrency, or more specifically Bitcoin. Bitcoin is the most popular form of cryptocurrency, and you will therefore find it on most cryptocurrency exchanges.

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Alternatives to Bitcoin – altcoins

Since Bitcoin was the first form of cryptocurrency to become known to the general public, it has almost become the external face of cryptocurrency. This is perhaps also the reason why all other forms of cryptocurrency that have been launched since, are referred to as altcoins .

Altcoins – or “alternative coins” – are in other words an alternative cryptocurrency to Bitcoin. We can mention, for example, Ethereum, Dogecoin, Tether and Litecoin.

Do you want to trade Bitcoin?

We have now explained to you the most basic things about Bitcoin. What is Bitcoin? Yes – a digital currency (cryptocurrency) that uses blockchain technology and a peer-to-peer network.

This may sound complicated, but the good news is that you do not have to understand the process behind it. If you want to trade Bitcoin, keep in mind that the currency can be safe and efficient as a means of payment, and a volatile investment object.

You can potentially earn a lot from investing in Bitcoin, but you can also lose money on it. If you invest responsibly, however, it can not hurt to try. Remember not to invest more money than you can afford for a possible loss.

FAQ

[sc_fs_multi_faq headline-0=”h2″ question-0=”Hvor finner jeg Bitcoin-kurser?” answer-0=”Du får oppdatert informasjon om Bitcoin-kurser hos kryptobørser som eToro og Firi, men du kan også finne informasjon om kurser ved å google «Bitcoin kurs».” image-0=”” headline-1=”h2″ question-1=”Er Bitcoin bedre enn altcoins?” answer-1=”Det avhenger litt av øyet som ser. Noen synes Bitcoin er best, mens andre synes for eksempel at Ethereum er best. ” image-1=”” headline-2=”h2″ question-2=”Hvilke altcoins finnes?” answer-2=”Det finnes mange alternativer til Bitcoin, noe som omfatter både Dogecoin, Ethereum, Monero, Litecoin, Tether, DAI og Cardano.” image-2=”” count=”3″ html=”true” css_class=””]