Bitcoin has been accepted as a form of digital payment after its inception in 2009. It was found out that in the year 2015, over 100,000 merchants and vendors were accepting bitcoin as a form of payment method. Anyone can use bitcoins, and these bitcoins can be exchanged into any currency all over the world. Bitcoin is the world’s first decentralized digital payment system, as it has no central administrator. It verifies and records each and every transaction on a public ledger which is available for viewing by every one.
If you want to use Bitcoin, but are not quite sure how to go about the process, then this is the right article for you. We will tell you about the basics of bitcoin and how you can easily start using it as a legitimate method of digital payments.
The first thing you must do to trade in, or use bitcoins, is to create a bitcoin wallet on your mobile phone or your computer. Doing this will automatically generate a bitcoin address. You can use this address to make all your bitcoin transactions, and you can also create more bitcoin addresses as and when required.
Once you have created your bitcoin address, you can share it with your friends and family who are also bitcoin users, so that you can make transactions in bitcoins. The process of using bitcoins for transaction is pretty simple, and works similar to that of an email address, with the only difference that bitcoin addresses should only be used once.
Some of the important terminology you must know when dealing in bitcoins are:
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- Mining- mining refers to a system which is used to confirm pending transactions. Once these transactions are verified and processed, they can be added to a new group of blockchains. This process allows a conformity in the system, and also arranges all transactions in a chronological order. In order for a transaction to be confirmed, it must fit into the strict set rules of a block and only then can they be verified by the nodes of the network. Involving yourself in the process of mining can also help an individual earn rewards in the form of bitcoins, which they can spend on transactions.
- Blockchain- the blockchain refers to a public ledger on which all transactions are recorded. The entire network of bitcoin relies on blockchain. Once a transaction is verified and processed, it is added to a block. This process is used for owners to be able to calculate their spendable amount of bitcoins, and also make transactions using their owned bitcoins. The chronological order as well as the integrity of a blockchain is maintained with cryptography.
- Private key- in the world of bitcoins, a transaction refers to the exchange of a value of bitcoins from one user to another. These verified transactions get added to a blockchain. In order to verify a transaction being made by an owner, private keys are used so that the owner can digitally sign the transaction. This private key is a secret piece of data which can confirm the transaction being made from the owners bitcoin wallet. The digital signature also ensures that the transaction is not altered by a third party after the transaction is being processed. When the process of mining is being done, these private keys and signatures are being verified and processed. Once this process is complete, which takes a minimum of 10 minutes, the transaction process can be confirmed as completed
Using digital currency is slowly becoming regularized, as more and more companies and vendors are accepting bitcoins as a regular payment system. In order to use bitcoins, an individual must find out the basic rules and regulations, and they can easily use bitcoins as a form of digital payment.
