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Bitcoin ... WHAT?

Bitcoin is the most popular cryptocurrency on the net today. What is it really, though, and how can you use it? Find out in our guide.

You will likely have heard of Bitcoin by now. Since its inception, the world’s most popular cryptocurrency has hardly ever left the headlines. It has had periods where it has been worth tens of thousands of dollars, and others where the bubble has burst, and the value of this digital currency has been brought crashing back to reality. What is Bitcoin really, though?

In this guide, we aim to take a closer look at the world’s leading cryptocurrency. We will explain what it is, how it works, and try to do so in a manner that even a layman will be able to grasp. You should not have to be a technical wizard to tinker with Bitcoin. By the time you have finished reading our Bitcoin guide, you should feel more comfortable about exploring this cryptocurrency option for yourself.

Where else could we begin? Let us start with the most basic question concerning the cryptocurrency. What is Bitcoin?

What Is Bitcoin, and Why Have I Heard of It?

There is every chance you will have heard of Bitcoin by now. After all, the cryptocurrency regularly features in the news. In the past, you may have heard that Bitcoin’s value has skyrocketed, Bitcoin’s value has plummeted, or Bitcoin has been banned, and not been fully aware of what it was. That is okay - Bitcoin and cryptocurrencies, in general, are a tricky beast to wrap your head around if you are not a computer nerd. Fortunately, we are here to help.

Bitcoin was founded in 2008. Either a single man, woman or a group of people named Satoshi Nakamoto launched the cryptocurrency in 2009. Today, they (or he, or she) have given their name to a denomination of Bitcoin, known as a Satoshi. Since its inception, Bitcoin has rapidly grown to become the first and most famous cryptocurrency on the internet. There are plenty of imitators and challengers to the throne, but Bitcoin still reigns supreme.

At its most basic definition, Bitcoin is a cryptocurrency, or if you prefer, a digital currency. It is not affiliated with any central bank, it is a decentralised currency, and it is not tied to any FIAT currency option. Because of this, the value of Bitcoin often tends to fluctuate wildly. It is a highly volatile digital currency, though still subject to the world’s ebbs and flows like any other. This decentralised, volatile system has caused Bitcoins value to rise and fall rapidly over the years.

Bitcoin is not an actual currency. There are “real” Bitcoins out there, but they are virtually worthless, mere novelty coins. Instead, it is the private information that some (though, not all) contain which is real gold. Ultimately, Bitcoins are bytes and nothing more; mere pieces of information (coding) which are sold for substantial sums of money.

How does this equate to being a currency? To answer that, we need to explore how Bitcoin works.

How Does It Work?

Bitcoins, as we have explained, are pieces of digital coding. Using cryptography, this digital info forms a part of transactions on a peer-to-peer network. Each transaction is verified through Bitcoin’s network nodes and is recorded in a publicly shared ledger, known as the Blockchain.

Each piece of information is stored in a digital Bitcoin wallet, much like you might keep US dollars, euros, or British pounds sterling in e-wallets, such as Skrill, Neteller or PayPal. That wallet has a unique address, which identifies it as yours. It is encrypted so that only you have access to the digital currency inside it.

Using your address, you can send and receive Bitcoins from others over the peer-to-peer network. You can also trace the history of transactions by using the blockchain ledger. As every transaction is recorded, they cannot be reversed.

Because of its decentralised system, nobody “owns” Bitcoin. Instead, Bitcoins are acquired via various means (which we will go into shortly) and stored in a wallet. The transactions themselves are processed by miners, who physically verify and add each transaction to the blockchain. Being a miner is a lot of work, but their reward is that they are paid in Bitcoins for it.

A Bitcoin is the largest denomination of the cryptocurrency available, and there are 21,000,000 of these. As many as 18.5 million are believed to be in circulation at the time of writing. Of course, with a single Bitcoin sometimes being worth tens of thousands of dollars, there must be smaller denominations to make their use practical. There are, and these include:

  • 1BTC (1 Bitcoin)

  • 0.01000000 BTC (1 BitCent)

  • 0.001000000 BTC (1 mBTC)

  • 0.00000001 BTC (1 Satoshi)

Naturally, much of the value of Bitcoin is based on speculation, so Bitcoin owners are continually living in a bubble. One minute, a Bitcoin may be worth $30,000, and if that bubble crashes, its value could drop to much less. For instance, when BTC (Bitcoin) first appeared, programmer Laszlo Hanyecz bought two pizzas from Papa John’s for 10,000 BTC. Today, this would be worth $360 million!

The Legality of Bitcoins

With the value of Bitcoins sometimes soaring to truly astonishing figures, it is natural that governments and banks all over the world are curious. Some have seen cryptocurrencies, and Bitcoin in general as a threat, and have made moves to ban them. Others have seen the financial rewards at stake and taken a gamble by declaring them legal.

The trouble is every single nation has its own view concerning whether Bitcoins are legal or not. In nations such as the United Kingdom, Japan, and the United States, they are deemed to be legal. Meanwhile, in China, they are not. In India, their use is something of a grey zone. Elsewhere, the European Union refuses to take a stand on whether they are a currency or not but does seem the trading of them to be a service - ergo, they want taxes paid on any revenue made from the buying and selling of Bitcoins.

We will not get too in-depth into this section. As you can imagine, our readers come from all over the world. Instead, it is worth examining whether Bitcoins (or cryptocurrencies in general) are legal where you live before deciding to get involved.

Explain Mining to Me

Now, back to something that we touched on a moment ago. Mining, or rather, miners who acquire Bitcoins. Mining is the backbone which runs right the way through the Bitcoin cryptocurrency. What happens here is that specialised computers secure the Bitcoin network and blockchain, and process Bitcoin transactions.

Having a computer which acts as a manner takes a lot of power. Miners solve computer problems, which allows them to chain together transaction blocks, hence why the ledger is known as the blockchain. When they mine, they will be rewarded with newly mined Bitcoins and transaction fees from people who use the service. However, mining is so complex, and such a challenging task that it is thought that if you were to run your computer (and it would need to be a good one) to mine, it would take you years to acquire a Bitcoin. Moreover, you would probably have paid more in electricity bills than the Bitcoin value would be worth.

Instead, only people with a series of supercomputers tend to mine Bitcoins. Miners issue new Bitcoins, they confirm transactions, and they ensure that the cryptocurrency network is secure. As none of this is relevant to you, we will move over in the next section. However, mining is a fascinating topic, and we do encourage every Bitcoin user to read more about it if they have a curious mind.

What Can I Use Bitcoins For?

Because we can break down Bitcoins into smaller units, they can be used for various purposes in the online casino world. You can, for instance, use Bitcoins to purchase goods. However, only a small selection of online retail outlets accepts BTC and other cryptocurrencies.

You can also use Bitcoins to make money. However, you will need to familiarise yourself with the cryptocurrency exchange markets and learn a bit or two about knowing when Bitcoins’ value is right to buy and sell.

One of the most common ways to use Bitcoins is gambling. There are dozens of top, quality online casinos and sportsbooks that accept BTC as one of their available currencies, if not their only digital currency. We will explore the nature of cryptocurrency gambling with Bitcoin in greater detail in a few moments.

The Security Side of Bitcoins

One of the perks of Bitcoin and cryptocurrencies, in general, is the security that it brings. Because it is decentralised, it is not controlled by any one bank or person. Moreover, there is a fair degree of anonymity attached to Bitcoin.

Of course, because all the transactions are logged in the blockchain ledger, it is theoretically possible for any skilled miner (or Bitcoin user) to follow the blockchain transactions, thus eliminating any anonymity. However, the blockchain only tells you where a transaction came from and where it went to, not the wallet’s actual holder.

From a security point of view, Bitcoin is nigh-on uncrackable. In fact, that has posed quite a few problems for people using the cryptocurrency. For instance, some wallet owners who have reformatted their computer, swapped out their hard-drive or lost their phone have found themselves losing the keys to their wallets. Because each Bitcoin wallet is fixed in one place, if you were to lose your access to it, you will lose your Bitcoins. This has happened to some reasonably high-profile people, some of whom have millions of dollars locked out in Bitcoins.

Bitcoin is also so secure and anonymous that it is regularly the currency of choice for those engaging in scams and ransomware attacks, such as hackers and digital terrorists. While this speaks volumes to Bitcoin’s alleged lack of traceability, it tarnishes the cryptocurrency’s image somewhat.

Fees and Charges Explained

You will never get away without paying fees for something in life, and digital currencies such as Bitcoin are no different. In most cases, you will be charged a fee at an exchange for acquiring BTC. You may also be charged a small fee (known as a miner’s fee) for processing transactions. The miner determines this charge. Miners may instantly process transactions (for a large fee) or take their time with it (for a smaller one).

Some websites may have their own time which processes Bitcoin transactions free of charge. This is often the case at online casinos that accept cryptocurrency. On the upside, any fees you may have to pay which are associated with Bitcoin are usually minimal.

It is worth pointing out once more that you may be charged tax on any revenue you make by buying and selling cryptocurrencies in some countries. This will vary from nation to nation, so you need to look up the legality of Bitcoin in your country first and foremost.

Other Top Cryptocurrencies You Can Try

While Bitcoin is unquestionably the top cryptocurrency around, it is not the only one. There are others. Commonly known as altcoins (alternative coins), these include Ethereum, Dogecoin, and Tether (USDT). The latter has its value tied to that of the US dollar.

Bitcoin Cash and Litecoin are two other top cryptocurrencies which you can explore. Both are Bitcoin forks - meaning that their system is (or was) based on Bitcoin’s at some point before it diverged into its own cryptocurrency.

There are pros and cons to using these altcoins, but as Bitcoin is the largest and most popular cryptocurrency on the net, and arguably the most valuable (if volatile), we would recommend starting there.

Acquiring Bitcoin

Now that we have discussed the ins and outs of the cryptocurrency, you might fancy trying Bitcoin. How do you get hold of it? The best place to get your hands on BTC are exchanges, and there are a few of those out there.

You will also need to get your hands on a Bitcoin wallet. Fortunately, that process is relatively simple and should be free of charge. Let us move on to these crucial starting steps to help you begin life as a new Bitcoin user...

Get a Bitcoin Wallet

Before you can acquire Bitcoin, you need to have a wallet to store it in. As mentioned, you will need a key to access your wallet, and you will need to make a note of your address, too. Lose either of these, and your Bitcoins are as good as gone forever.

There are several Bitcoin wallets that you can get for yourself. These include both hot and cold wallets. A hot wallet is one which is connected to the internet. Cold wallets are stored offline on devices. Cold wallets are ideal for hoarding Bitcoins, while hot wallets are suitable for daily transactions.

Wallets include:

  • Hardware: These are specific devices that handle addresses and keys. These cold wallets look like USBs and cost anything from $70 up to $150.

  • Paper: These are QR code wallets. Paper wallets are less secure and cannot be reused.

  • Desktop: These can be both hot and cold wallets. They are software stored on your computer. However, if your computer were to need formatting, it will take your BTC wallet with it. Desktop wallets typically do not cost anything.

  • Mobile: Again, ideal for daily transactions, but should something happen to your phone, then you are likely to lose your wallet. These are typically free.

  • Web: These hot wallets are known to be the least secure, but they are ideal for those who regularly reboot devices, or lose USBs, etc. These wallets are usually free.

Purchasing Bitcoin

Once you have acquired a wallet, it is time to get yourself some BTC. You can do this by visiting an exchange. There are several types of exchanges, and we will look at each of them below.

  • Crypto-to-Crypto Exchange: These exchanges allow you to purchase BTC using another cryptocurrency.

  • Local FIAT Exchanges: These will allow you to purchase BTC using a FIAT currency. Your credit or debit card can often be used for this.

  • ATM: In a few selected countries, cryptocurrency ATMs will allow you to deposit cash in exchange for BTC.

  • E-Wallets: Many e-wallets, such as Skrill and to some degree, PayPal will permit you to purchase Bitcoin using the funds inside your account. Some, such as Skrill, may also act as their own exchange.

Note that you are likely to have to pay for acquiring Bitcoin via any of these exchanges.

Using Bitcoin for Gambling Online

As mentioned, one of the main uses for Bitcoin is to gamble online. In years gone by, Bitcoin casinos were shoddy places, where there were just one or two proprietary, in-house games, and virtually no support.

That has changed over the years, though. Nowadays, you can expect to see various quality casino games from the world’s top developers at Bitcoin casinos. Moreover, the Provably Fair certificate has become a hallmark of a safe and trusted casino. These sites are usually licensed and regulated, and their games have been RNG (random number generator) certified as being fair to play.

Bitcoin casinos (and other casinos which accept cryptocurrencies) are typically offering around the clock support and may even include a few promotions and bonuses for you to snap up. These can consist of faucets, welcome bonuses, and loyalty rewards. Faucets are interesting, as they can also be found outside of the online casino world. They will typically trickle out a small amount of mBTC for you, solely for visiting the page.

Playing with Bitcoins brings some unexpected perks to casino players. For instance, by choosing to deposit with BTC at online casinos, you can expect instant transaction times. Moreover, the deposit limits are considerably more flexible than they would be with FIAT options. On top of that, there is never a fee for depositing at a casino.

It is also worth considering that virtually no top online casinos charge fees for withdrawals. Moreover, you can often withdraw sizable sums with cryptocurrencies. Casino cashouts using BTC are usually amongst the fastest banking options you can go with, with transactions usually completed in under an hour and no more than a few hours tops.

Things to Note About Gambling with Bitcoin

For many of our readers, online gambling will be the very reason that they want to use Bitcoin in the first place. So, before you do just that, are there any points or tips we can provide to help get you started? Let us see…

  • Even though Bitcoin offers anonymity, some of the more secure and regulated casinos may require you to go through the KYC process before processing your withdrawals.

  • The volatility rate of BTC ensures that you can usually claim larger value bonuses and promotions at casinos than you could with FIAT currency options.

  • Of course, this may mean that the wagering requirements are stricter than they might be with conventional casino bonuses.

  • Just because a casino accepts Bitcoin deposits, does not mean that you can wager with it. Some casinos convert BTC into a FIAT currency, such as USD for the wagering part. This may mean that you suffer from in-house currency conversion rates.

Am I Ready to Start Using Bitcoin Today?

At the end of the road, we think that we have done a reasonably decent job of rolling out this bag of snakes to help you understand what Bitcoin is, how it works and what the practical (and non-practical) implications of it are.

There is one big question that you need to ask yourself. Do you know what Bitcoin is and are you ready to give it a go? If so, follow our advice and get yourself a Bitcoin wallet to get started. If you are interested (even a little) in betting on the internet with Bitcoin, you can also check out any number of reputable, safe, and secure Bitcoin casinos right here.