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Cryptocurrency for Beginners

How does Bitcoin work? [2024] Non-Techiest GUIDE For Dummies

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Thousands of computer users all over the world run the Bitcoin network software from their computers which verify and approve the Bitcoin transactions.

How does Bitcoin work? An easy Non-Techie Guide

Bitcoin works like both a bank and a currency.

The Bitcoin network is powered through a new technology called Blockchain.

 

How does Bitcoin work?

Bitcoin works just like regular cash, except it is online and your account are not under the restrictions of any local bank.

You can send any amount of Bitcoin to anyone with a Bitcoin wallet to anyone around the world (even the north pole) within minutes for only a couple of dollars.

And anyone with a Bitcoin wallet can receive Bitcoin from anyone within minutes.

how does bitcoin work for beginners
Computers around the world run the Bitcoin software and verify transactions in exchange for Bitcoin as rewards

 

How to store your Bitcoin

A cryptocurrency wallet works a lot like your online bank account.

And just like regular banks, you can own different currencies under one user name.

For example: you can have a savings, current, usd, eur under one account

So therefore, a crypto wallet can host different types of cryptocurrencies on top of Bitcoin such as Dogecoin , Litecoin, Ripple or USDT.

How bitcoin works: how to store bitcoin
In crypto, we use the term “bitcoin wallet” to describe the Bitcoin account

Types of Cryptocurrency Wallets

Saving your money in a cryptowallet is almost the same as your bank account.

In most developed countries and immerging economies, you can access your bank account through a web browser, mobile app or even a paper account book.

Depending your personal preferences , you can choose which types of cryptocurrency wallet makes the most sense for you.

  1. Web Browser
  2. Web plugin
  3. Desktop
  4. mobile app
  5. Ledger (usb)
  6. Paper Wallet

 

Cons

  1. There is no insurance: if you lose your wallet information, you can lose all your Bitcoin without a refund
  2. Bitcoin is not easy to use for non-techies– The tech might be overwhelming for those who are terrified of new tech.

 

Where to get Bitcoin

You can buy Bitcoin on beginner-friendly cryptocurrency exchanges like Binance, Coinmama and CEX.io

The cryptocurrency exchange act as the middle man between regular money and the crypto space.

You can also cash out your Bitcoin on crypto exchanges.

 

How send and receive Bitcoin

You send and receive Bitcoin the same you would for your online bank account.

How to receive Bitcoin

To receive Bitcoin, you just need to provide your Bitcoin wallet address (public key) which works like your bank account number.

How to send Bitcoin

To send Bitcoin from that wallet to another, you just need the wallet address of the other person or the withdrawal address.

 

 

 How to make money off of Bitcoin

The reason Bitcoin is referred to as digital gold is because while traditional money savings loses value over time because of inflation, Bitcoin gains value over time just like gold because of its limited supply.

There are several bitcoin investing and trading strategies.

 

 

How are new Bitcoins created

Bitcoin mining not on powers the blockchain but is the process to create new Bitcoin.

Bitcoin miners all over the world verify the transactions in exchange for bitcoin.

An that is how new Bitcoins are made.

 

The” Killer of Banks”

The approval of Bitcoin transactions are 100% decentralized and not controlled by any central bank.

The Bitcoin network approves transactions 24/7 and you do not need to wait for banking hours for certain transactions to go through.

Bitcoin is also 100% digital so physical contact is not necessary like traditional coins and bills.

This means you can potential send millions of dollars worth on Bitcoin to someone in the south pole on a Saturday night, they would receive it within minutes and it would cost you only a couple of dollars in transaction fees.

 

Transparency vs Privacy

The Bitcoin Blockchain works like a spreadsheet database which everyone can view but no none can modify transactions.

As cryptocurrency exchanges start implementing KYC (know your customer) standards,  people who buy Bitcoin can easily be traced.

Bitcoin does not have the anonymity which cash bills provide.

 

Conclusion

While Bitcoin and Blockchain technology is exciting, several governments have banned Bitcoin to prevent tax evasion as well as investors leaving the economy.

While China has released its own Central Bank Digital Currency (DBDC) , USA and the EU are studying their own at the time of writing.

 

Now that you know How Bitcoin works, CLICK HERE if you would like to know:  How do Beginners Buy Bitcoin?

 

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