Knowledge

What is bitcoin ?

Bitcoin is a digital p2p payment system, that enables each user to send value around the planet. Bitcoin is like secure electronic cash, currently around 17.465 million coins are in circulation, however the total number of bitcoins in existence can never exceed 21 million (20,999,839.77). This fact makes it very scarce, if you consider there are 36 million millionaires in the world according to Credit Suisse Global Wealth Report. Bitcoin has by far the highest market cap and trade volume (around $4 billion per day). There are many cryptocurrencies that have bitcoin in their name (if that's a good thing is another question), but you should always be aware that they certainly are not bitcoin.

How can I get bitcoins ?

Nowadays there are many different options available, how you can acquire bitcoins, usually you can buy, trade or earn them. You could offer a service or sell a product and receive your payment in a cryptocurrency like bitcoin. If you want to buy bitcoins by bank transfer you can sign up at exchanges like Kraken or Coinbase . If you prefer to buy bitcoins with fiat currencies (USD, EUR, GBP,...) you can meet other traders on platforms like Local Bitcoins. A more anonymous way are specifically designed bitcoin atms , usually fees are slightly higher than exchanges. It is important to remember, only if you hold th private keys of your coins, only than you are the true owner, also be aware of local government legislation, in some countries atms and other services might be restricted.

Why does bitcoin have value ?

For many people it is hard to understand, where the value from bitcoin stems from. Supply and demand can be a good explanation. Demand refers to how many bitcoins are desired by buyers, and supply represents how much the market can offer. Bitcoin has a finite supply (~21m), what makes it very scarce, for many investors this set cap makes it an extremely desirable asset. An even more interesting question is to ask, "what is money ?". Let's go back in history, before we used money, we had a barter system, where people traded one good for another one (e.g. fish for berries), unfortunately there was one problem: "coincidence of wants" - only a few trades could succeed under such circumstances, thus people agreed on a common medium of exchange - money was invented. Unfortunately many people perceive money as an arbitrary token, but that's a misstake, and that's where the misunderstanding of bitcoin beginns. Money is not arbitrary, it is selected for a very good reason and through a natural process, it had specific attributes that made it very useful as a medium for exchange: scarce, fungible and uniform, easily identifiable, highly durable, predictable supply. The use of gold was nothing magical, it simply had the best properties for exchange. Think about a commodity with better properties than gold, it might even be better money. Fiat money as the US Dollar are superior to gold as they are fungible and transportable, unfortunately it lost 98 % of their value since its creation, due to inflation.

What is mining bitcoin ?

Mining is a process to validate and secure transactions of the network and to distribute new coins. In order to mine bitcoin you need to use a special software that searches for a solution to a very difficult math problem. Andreas Antonopoulos gave a very good description in his book, "Mastering Bitcoin - Programming the open blockchain": "A good way to describe mining is like a giant game of sodoku that resets every time someone finds a solution and whose difficulty automatically adjusts so that it takes approximately 10 minutes to find a solution."

How to store your bitcoins ?

There are several ways of storing your bitcoins (more precisely your private keys), we want to present the most common ones: You can keep your coins on an exchange like Coinbase or Kraken , this is quite easy, but also considered very risky. You don't have control of your keys, and there is a 3rd party risk, if the exchanges fails or gets hacked. There are many different wallets available, like bitcoin core client, Electrum, Multibit any many more, they can be used as a hot (online) or cold wallet (offline - more secure). Mallorca Blockchain recommends hardware wallets from Trezor or Ledger, another good alternative could be a paper wallet - this is a bitcoin private key printed on paper.

Best crypto apps ?

Cryptonaut makes it easy to manage your cryptocurrency portfolio. Whether you're a passive owner of Bitcoin or an active trader, it allows you to easily track the value of your holdings. You can check your portfolio in Bitcoin, Dollars, Euros, and more. Set alerts and receive push notifications when coin prices move.

What is Ethereum ?

Ethereum is an open-source platform to write and distribute decentralized applications. Ethereum is a network, with its own browser, coding language and payment system. Most importantly, it enables users to create decentralized applications on its blockchain. It uses Ether to operate.