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What is Bitcoin? Detailed Cryptocurrency Guide 2022
Everyone in the world has probably heard of Bitcoin. While some are already using it actively, others are still unfamiliar with it and don't understand how it works. If you belong to the second group of people, you've come to the right page. We hand-picked the top-ranking casinos to play with Bitcoin.
What is Bitcoin?
Bitcoin is often described as a digital currency or a cryptocurrency. But what is that precisely? How is it different from standard currencies, such as the dollar or euro? Is it superior to fiat money?
Bitcoin is based on a technology that uses cryptography to make it secure. Cryptography has been around for centuries, so applying it for security purposes isn't wholly new. In fact, this is just one of the several things that make Bitcoin unique.
Bitcoin's official website describes it as open-source P2P money. Open-source means its code is transparent. As a result, anyone can see exactly how it's made, which gives Bitcoin full transparency. More importantly, anyone can suggest amends to the code that could be applied if the majority of the network runners accept it.
P2P means that every transaction is peer-to-peer, probably the most notable feature of Bitcoin. In addition, it's a system that doesn't require an intermediary. In other words, whichever amount you send will be directly transferred from your Bitcoin wallet to the other person's wallet. No centralized companies, such as banks and other payment processors, need to approve the payment. As a result, it's possible to make cross-border payments easily and almost instantly.
This electronic cash system has also completely reshaped how we perceive payments. It has increased anonymity and privacy because no third party has access to any personal information about the sender or receiver. Still, Bitcoin uses a public ledger. Due to this, anyone can see how much is sent from one wallet to another at any time. However, all details about transactions are encrypted and impossible to hack.
Finally, because of the absence of central authority, the cost of making a Bitcoin transfer is much lower than that of traditional payment methods, such as casino PayPal. You just have to pay a small fee distributed among those who run the Bitcoin network.
Advantages of Bitcoin
Here's a short overview of the main advantages of "digital gold":
- Security and anonymity;
- Transparent (public) Bitcoin ledger;
- Encrypted transactions;
- Small fees;
- No intermediaries;
It's also important to mention how Bitcoin is different from fiat money from a financial perspective. First and foremost, there's a finite amount of BTC that can be minted. It is set at 21 million BTC. As of 2022, there are 18.9 million BTC in circulation.
Once the number reaches 21 million, the new BTC will not be produced anymore. We'll talk about how new coins are minted in the section about miners. So, unlike traditional money, which can be printed indefinitely, Bitcoins are limited. This creates scarcity, which ultimately affects its value.
Speaking of value, Bitcoin is highly volatile, meaning its price changes all the time. That's one of the main reasons many people consider investing in BTC or other cryptocurrencies nowadays. Simply put, if they buy it when it's low and sell it when it's high, they can make a quick profit.
Overall, the price of BTC has been gradually increasing over the years, and some investors have decided to play the long game by buying and holding BTC. Now, they are waiting for its price to grow even more. Investors use exchanges to trade cryptocurrencies. This is pretty similar to trading stocks, except it requires being proficient in how cryptocurrency exchanges work.
Explore the Blockchain
How is it possible to obtain all of the benefits mentioned above? How come we can now make transactions without using a bank account? The answers lie in the technology called the blockchain.
Technically speaking, a blockchain is just a way to store data. Think of it as a unique database that plays an essential role in the numerous advantages of Bitcoin.
The name hasn't been chosen arbitrarily. A blockchain consists of blocks, and each of them has a certain capacity to store information. In the case of Bitcoin, the transaction records are noted and stored in a block. Then, each new block is added to the previous ones, thus effectively creating a chain, known as a blockchain.
Every new block is added to the end of the chain along with the time-stamp. On top of that, each block contains a hash number, which is randomly created by a mathematical function. But more importantly, it also contains the hash of the block that was added before it, thus creating a secure chain of blocks.
As you can see, a blockchain offers an innovative way to store data, not in tables but in blocks linked to each other. Moreover, because Bitcoin's blockchain is transparent, everyone can access all blocks, starting from the first one, which contains data on the first-ever transaction.
The technology underlying the blockchain makes it immutable, which means that once information is added to the chain, it cannot be deleted. For example, if Person A sends some coins to Person B, that information will be stored on all computers that act as nodes on the blockchain. Suppose someone manages to hack one computer and change this information.
In that case, they will only change one instance of the database stored on thousands of other devices around the world containing the original data.
Bitcoin Mining Explained
Since the blockchain network is decentralized, no central authority governs it. So, who runs the show? Who is responsible for Bitcoin? These questions can be answered with one word: miners.
By now, you've probably heard about Bitcoin miners. They are basically users who have dedicated their computing power to running the Bitcoin network. This network has some hard-coded rules on how transactions take place and are recorded, and miners make sure that nobody breaks those rules. They get rewarded with newly minted bitcoins for their service.
As we've mentioned, not all BTCs are "minted" or "mined." Some are yet to be mined, and they will be distributed to miners. Besides the new BTC, miners also receive a share of users' transaction fees. Simply put, the Bitcoin network works as a stand-alone ecosystem, where users can make payments, and miners get rewarded for maintaining the network.
But how exactly is the computing power borrowed for the network?
The Bitcoin network is based on the Proof-of-Work consensus mechanism. It's a protocol that ensures all information on all miners' devices (referred to as nodes) is synchronized. Bitcoin's network adds new blocks to the blockchain approximately every 10 minutes. However, this isn't done automatically. Instead, one node (or one miner) has to do it, and this is where their computing power comes into play.
Namely, computers need to solve the so-called "target hash" (just think of it as solving a complex mathematical equation). This way, they will gain the right to enter the new block into the chain. As a result, they will be rewarded in BTC. Of course, more powerful computers will have more goes at the target hash, but less powerful ones can also get a chance to enter a new block if they're lucky.
Who Created Bitcoin?
Bitcoin was created by Satoshi Nakamoto, who is assumed to be a person or people using this pseudonym. One of the key mysteries about Bitcoin is that its original creator decided to remain completely anonymous. Perhaps the alias Satoshi Nakamoto isn't even a single person; maybe it's an entire organization.
The white paper introducing the new payment system based on the blockchain was published by Nakamoto. The rest is history.
Many individuals started accepting Bitcoin and making investments. A decade later, Bitcoin has become a critical asset, attracting millions of people worldwide. As a result, the crypto market is booming, and many other blockchain-based products operate successfully. All thanks to Nakamoto, who made Bitcoin possible.
Who is Satoshi Nakamoto
The fact that Satoshi Nakamoto has remained anonymous after all this time is one of the largest mysteries surrounding Bitcoin. Numerous people have claimed to be Nakamoto. Many have been suspected, including famous entrepreneurs, such as Elon Musk. Of course, there are theories that governments or big businesses are behind Bitcoin. Some even claim that criminals invented it.
However, we must face the fact that the individual behind Satoshi Nakamoto's name will probably never be revealed. Still, the only thing that matters is that we have found many applications for it, and there are many blockchain companies carefully examining the technology's scope.
Bitcoin Owners Around the Globe
Bitcoin boomed in 2017 for the first time. It was then that it also became a global phenomenon and even caused a stir among governments.
Due to the nature of Bitcoin, it's difficult to estimate the exact number of holders. Still, according to some research, there are around 106 million owners and about 200 million Bitcoin wallets. Many of them are active traders, approximately 53 million. In the US alone, 22% of residents own BTC, and 89% have heard about the popular cryptocurrency.
Please remember that these facts may change soon, as more people invest in BTC.
What is the Next Best Cryptocurrency
The most popular cryptocurrency after Bitcoin is definitely Ethereum. It was created by a young Russian-Canadian prodigy called Vitalik Buterin. What made Ethereum different from the get-go was that it wasn't only a financial device. Instead, it was a platform for developing decentralized applications, which used the power of blockchain for many other aspects besides the financial one.
Each decentralized app created on the Ethereum network can have a token, as the team behind Ethereum has created a standard for developing tokens (ERC-20). Moreover, it has also enabled the creation of non-fungible tokens, which are better known as NFTs.
In short, Ethereum was one of the keys to expanding the use of blockchain. Because of that, Ethereum's native crypto, which is called Ether, is the second biggest crypto based on market capitalization.
Since Bitcoin is open-source and many people contribute to it, they sometimes disagree on specific points.
That's precisely what happened in 2017 when a hard fork took place, and Bitcoin Cash was created. In addition, there were ideological differences back in the day, as Bitcoin Cash wanted to increase the block size and improve transaction speed. In contrast, proponents of Bitcoin wanted to stick to the original block size as envisioned by Nakamoto.
Bitcoin Cash is, therefore, slightly different from Bitcoin, but the underlying mining algorithm remains relatively the same, as you can also mine BCH and get a reward for doing so. Still, BCH is nowhere as popular as BTC, even though it has managed to position itself well on the cryptocurrency market.
Many other forks have happened since, resulting in multiple versions of the blockchain.
How to Use Bitcoin Cryptocurrency
There are two ways in which you can use your Bitcoin funds. First, you can pay for goods and services and, second, you can trade them on crypto exchanges or simply invest in them.
Who Accepts Bitcoin (BTC)?
Many businesses worldwide have decided to accept Bitcoin as a payment method, further popularizing BTC and other cryptocurrencies. You'll notice that many e-commerce websites let you pay in BTC. This process is quite simple and easy if you have BTC stored in your Bitcoin wallet.
Even Microsoft accepted Bitcoin payments at one point. Online gambling sites, such as casinos and sports betting, were fast to adopt this emerging and disruptive new technology. Today, you can find thousands of regular online casinos accepting a combination of fiat money and cryptocurrencies. Crypto-only casinos with new types of offers are fast-growing as well.
It's difficult to list the businesses that accept BTC, as their number grows every day. So instead, we encourage you to check available payment methods whenever you're about to buy something online, as you might be able to make a purchase using digital gold.
One of the first pieces of software that used Bitcoin was called Satoshi Dice. It was a simple game of chance inspired by traditional dice games. Many lost hundreds of BTCs that way; however, some won much more. But, of course, Bitcoin was still worth nothing back in the day.
The point is that there has always been a close relationship between Bitcoin and gambling. Nowadays, hundreds of online gambling platforms accept Bitcoin as a deposit and withdrawal method. Gamblers love using Bitcoin, as it features much smaller transaction fees and higher transaction limits. Moreover, it's a secure way to transfer your funds to and from an online casino.
Some platforms only focus on cryptocurrency gambling, referred to as crypto casinos. Among the most popular internet gambling platforms accepting BTC, you will find:
Many casinos also offer lucrative bonuses for Bitcoin users to attract them. This is because operators have plenty of benefits from using Bitcoin and Bitcoin slots, too. However, you'll have to be careful when picking bonuses, as they may come with strict bonus terms and high wagering requirements.
Investing in Bitcoin
Millions of people worldwide actively buy and sell BTC on popular exchanges, such as Coinbase. You can try to guess the time when BTC's price will be at its lowest, as that would be the perfect moment for you to invest. Also, you can sell it as soon as you think it has hit the ceiling for the given period, thus making a profit.
This type of trading involves risk, as cryptos are highly volatile, and it's often difficult to make an accurate prediction regarding crypto markets.
Alternatively, you can just buy and hold a particular portion of BTC for a long time without actually engaging in active trading. Many professional investors have a list of crypto assets they invest in to diversify their portfolios. Therefore, if you decide to become a crypto investor, it's essential to take other digital currencies into account and keep a record of all units you have bought.
We could say that investing is a skill, so it's important to understand and master this activity before you make any moves.
How to Buy Bitcoin
If you don't have any cryptocurrencies, you need to select one of the Bitcoin exchanges that accept fiat money and buy some there. Here's a step-by-step guide on how to do it.
- Pick a secure Bitcoin exchange that accepts a credit card, debit card, or any other fiat payment option you're using. Credit cards are the safest to use on such platforms.
- Open an account by providing the requested information. Mind you — some places have strict AMC and KYC regulations, so you'll have to give details to confirm your identity.
- Connect your payment method and fund your account.
- Select the option to buy Bitcoin and enter the amount you'd like to purchase.
- Confirm your purchase.
If you're looking for a more in-depth analysis, you can read here our comprehensive How to Buy Bitcoin guide.
There are two types of crypto exchanges, centralized and decentralized ones. The main problem with centralized exchanges is that you have to go through identity-verification processes, as they work similarly to any central bank and must adhere to specific regulations. However, the good news about them is that they accept fiat currencies.
Decentralized exchanges are built on one of the protocols, such as Ethereum, and the number of cryptocurrencies they offer is much larger. Moreover, there's no need to make an account to start trading in many cases, and the trading limit is much looser. Unfortunately, decentralized exchanges are not as popular, and they don't accept fiat money.
Once you purchase Bitcoin on a centralized exchange, it's stored in your exchange account. However, to really claim ownership of that BTC, you will need to transfer it to your Bitcoin wallet.
A wallet is a piece of software or hardware that stores your money. Each wallet features two addresses (also referred to as keys), a private and a public one. The private key is your password, which you should memorize at all costs, as it's impossible to retrieve your funds if you forget it. In fact, many BTCs are locked up forever. And why is that? It's because their owners have forgotten their private key!
The public key works like an email. You need to type this key (also called wallet address) in your wallet to send BTC to someone (this is now made more accessible, thanks to QR codes). Following the same principle, someone can send money to you using your wallet address.
The best thing about wallets is that you won't have to leave your sensitive data anywhere.
Bitcoin Price Predictions
Bitcoin's price changes all the time. It's undoubtedly one of the ongoing problems for many cryptocurrencies, but it is also an opportunity to profit. For example, BTC's price peaked for the first time in December 2017, when a single unit was almost $20,000. However, the price started declining after that, with BTC sinking to $3,500 apiece. All of that happened in just one year.
The second time BTC peaked was in April 2021. This time, the price skyrocketed to around $63,000. After only about three months, the price was cut in half to approximately $30,000.
The point is that it's difficult to make any kind of concrete price predictions. So even if you see someone claiming they've got it figured out, don't trust them 100%, as there's no sure way to predict the price of Bitcoin.
Bitcoin Safety and Risks
Bitcoin is considered one of the most secure payment options globally, thanks to the groundbreaking technologies that support it. However, there's still a lot you can do to increase your safety further.
Security of Bitcoin
To maximize your security as a Bitcoin owner, you should keep your wallet's private key hidden. If someone learns your key, they will be able to log in to your wallet and steal all your money. Ideally, you'll use a hardware wallet (also known as a cold wallet) to completely keep your funds off the internet.
Finally, don't hold your cryptocurrencies in your exchange balance for too long, as exchanges get hacked from time to time, no matter how well-protected they are.
Cryptocurrencies have opened up a whole new world of fraud that creative hackers might take advantage of to steal your money. This includes some scams such as pump and dump, fake exchanges, fake celebrity endorsements, fake crypto apps, phishing, spoofing, and more.
As mentioned several times throughout this guide, Bitcoin is a volatile asset, and it makes sense to approach it as such. Therefore, you should never invest your entire savings in it or make any sudden moves.
The crypto market has recorded overall growth. However, the circumstances often change, and not always for the better. Unfavourable market conditions can make the BTC price go down rapidly, but that's the risk you must be willing to take. However, you can always stay updated with the latest market developments by following the cryptocurrency news.
Final Thoughts on Bitcoin
Bitcoin has made a lot of things easier for people around the world. It's not limited like fiat currencies are, meaning you can send and receive infinite amounts of BTC. Moreover, the fees for cryptocurrency transactions are minimal, and the overall security is great.
All in all, buying Bitcoin and using it as a payment method or simply investing in it is something you should consider. Still, we encourage you to do further research on the matter before making any decisions.
How much is 1 Bitcoin?
The price of BTC constantly changes, so make sure to check various sources for the current BTC price.
Where can I buy Bitcoin?
Your best bet is to join an online cryptocurrency exchange and purchase BTC on it.
Is Bitcoin safe?
Thanks to blockchain technology and other security measures, Bitcoin is one of the safest payment options around.
Is Bitcoin mining still profitable?
It's still profitable at the moment, but many factors affect it, including the cost of electricity, overall popularity of BTC, number of transactions, and more.
How long does it take to mine a bitcoin?
It depends on your mining rig (your computing power). However, thanks to the process known as halving, the number of Bitcoins distributed as prizes is cut in half after a while.
Should I invest in Bitcoin cryptocurrency?
Bitcoin is an interesting investment opportunity, although it comes with a certain risk that's higher compared to some traditional investment opportunities. But it's also more profitable, so it's definitely worth considering.
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