Bitcoin was in 2009 the first decentralized cryptocurrency project to emerge. The Whitepaper, signed by the pseudonym Satoshi Nakamoto, states that the goal is to facilitate payments between individuals without an intermediary through the use of digital signatures. As this kind of technology is not new, a solution had to be found for this disintermediation. This materialized in the creation of a decentralized P2P network powered by blockchain technology. It was Bitcoin that encouraged the emergence of the many cryptocurrencies that today make up this rich ecosystem.
Bitcoin in brief
- Bitcoin acronym: BTC
- Year of creation of Bitcoin: 2009
- Bitcoin Creator: Satoshi Nakamoto (pseudonym)
- Lousy? Yes
- Algorithm: Proof of Work
- Fixed money supply? Yes (21 million BTC)
- Smallest unit of BTC: the satoshi (or sat), 0.00000001 BTC
The 2008 financial crisis and its consequences, which gave rise to many concerns such as the European debt crisis, highlighted the risk posed by financial institutions. Bank customers who face bank runs may find themselves unable to access their money, or in a supervised manner. This was particularly the case in Cyprus, when capital controls were taken in 2013 and were not fully lifted until 2015.
With Bitcoin, users sort of become their own bank. No one can decide to freeze their funds. No one can prevent a transaction from taking place. In addition, devaluation of BTC is not possible since the maximum money supply is defined in advance. This is a real revolution in an economy governed by trusted third parties, centralization and the arbitrary decisions of central banks.
Bitcoin: how it works
Bitcoin works on the basis of blockchain technology. In short, it is a distributed database whose entries are gathered in blocks that add one after the other to form an immutable chain. While in a traditional centralized system transactions can be tampered with, this is not possible with blockchain. As this system eliminates intermediaries, it means that users can use Bitcoin freely, without external interference. Cryptographic algorithms ensure the validation of transactions. This validation process is carried out by so-called miners, people who provide the network with the computing power (hash rate) required to resolve the computer problems necessary to create the new blocks that contain the transactions.
To use Bitcoin, all you have to do is create a wallet. This becomes the equivalent of a bank account in the traditional financial system. This creation process takes less than a minute. With one click, the user receives their public key and private key. The public key is the account number. The private key to the password that a bank account holder uses to manage it online. Once the wallet is created, the user can freely send or receive funds anywhere in the world.
Besides Bitcoin, there are many cryptocurrencies that have a similar name. The best known Bitcoin Cash, Bitcoin SV, Bitcoin Diamond, Bitcoin Gold. These crypto currencies were born from Bitcoin forks. In short, a fork is a separate continuation of an existing blockchain. Any open source blockchain can be forked. These forks sometimes take place at the initiative of the project, when they want to make fundamental changes to the code. But they can also allow new projects to emerge.
Since a cryptocurrency like Bitcoin is decentralized, there is no central authority. This means that decisions must be taken collegially, and that there are inevitably differences of opinion when broad directions have to be decided. This is what led to the creation of Bitcoin Cash, Bitcoin SV, etc. Each faction has decided to use a fork to develop the vision of Bitcoin that they see as legitimate. In other cases, Bitcoin has simply served as the basis for the development of a completely different new crypto.
Which Bitcoin wallet to choose?
If it is possible to keep your Bitcoins in the wallet of a centralized player such as Coinbase or Binance, that goes somewhat against the idea. For security reasons, it is strongly recommended to keep your crypto currencies on your own wallet. This can take different forms, with its own advantages and disadvantages:
- Bitcoin Core: This is the official wallet for the project. It’s very secure, but it downloads the entire blockchain. This also means that it is very heavy, so not recommended
- Wallet desktop: This is a program that you install on your PC. You access your wallet via your private key. The most popular solutions of this type are Exodus, Electrum, Jaxx, Atomic Wallet, MultiBit HD, etc. The desktop wallet offers a good compromise between ergonomics / economy / security, especially for beginners in cryptos.
- Physical wallet: Any serious investor in Bitcoin should invest in a physical wallet. It is a compact device that connects via USB to your computer. In short, it allows you to store your private key cryptographically. Access to the physical wallet is protected by a password. The most popular hardware wallets are those of the French brand Ledger and Trezor.
- Mobile wallet: Mobile wallets are great for storing satoshis that we can use for our daily payments. Due to the portable nature of the phone, it is not advisable to keep substantial amounts of BTC in such a wallet. The best mobile Bitcoin wallets are Jaxx, Mycelium, Blockchain, Coinomi, etc.
How to mine Bitcoin?
Bitcoin being a Proof of Work type cryptocurrency, you will need to make significant computing power available to the network to mine BTC. This can come from several sources:
- From ASIC miners
- Graphics cards (GPU)
- From a dedicated cloud mining service like Genesis Mining
Today, the Bitcoin mining market is dominated by ASIC miners and cloud services. These are particularly interesting for people who live in countries where electricity is relatively expensive. Indeed, in addition to the necessary investment in equipment, the energy bill weighs very heavily in the running costs of a miner. Because cloud mining services are installed in countries where electricity is the cheapest, they are often more economical. In addition, they benefit from preferential rates due to their industrial consumption. They are also much more comfortable. In short, you just have to pay and the cloud mining operator takes care of everything.
If you choose to invest in ASIC machines to mine BTC, you must configure them, join a mining pool, have the required space at home, ensure that they are running 24 hours a day, 7 days a week. , etc. A pool is a special group that compiles the computing power (hash rate) of its members in order to have a better chance of finding blocks, and therefore of receiving the associated reward. Each member is then remunerated in proportion to the hash rate provided.
How to buy Bitcoin?
While Bitcoin mining is one way to profit from the rise in cryptocurrency, buying crypto is a way to invest in its future. Buying Bitcoin is a cinch today thanks to the growing banking availability of cryptocurrency exchanges. In short, all you need is a bank card, bank account, or even cash to be able to buy Bitcoin. Before making your investment, you will need to create a Bitcoin wallet to store your BTC (see above for the different options available to you).
To buy Bitcoin with euros, here are some proven solutions:
- Bitit: this French start-up is based in Paris. It allows you to buy Bitcoin in immediate purchase by payment card, transfer or in cash via the prepaid CASHlib and Neosurf coupons sold at tobacconists.
- Coinbase: Coinbase also offers immediate purchases of Bitcoin (at market price, there is no order book) with payment by credit card or after funding their account with a SEPA transfer.
- Binance: Thanks to its collaboration with Simplex, it is now possible to buy Bitcoin in euros with your bank card on Binance, the world’s largest crypto exchange
- BitPanda: this Austrian exchange is distinguished by the wide range of payment methods offered to buy BTC (card, transfer, Skrill, Neteller, zimpler, etc.)
- Changelly: this decentralized solution allows you to buy Bitcoin by card or by transfer
How to sell Bitcoin?
While it is very easy to buy cryptocurrencies with cash, when it comes to selling them the choice narrows somewhat. That said, there are still plenty of options compared to the list above:
- Bitit: the platform being regulated, it also allows you to sell Bitcoin against hard currency (withdrawal by SEPA transfer)
- Coinbase: This exchange is one of the preferred intermediaries for crypto investors to sell Bitcoin. Withdrawals in euros are made by transfer
- BitPanda: BitPanda offers many ways to withdraw your euros after selling Bitcoin. The SEPA transfer, of course, but also withdrawals via bank card, Skrill, etc.
- Changelly: through its partnership with Bits of Gold, Changelly allows you to sell Bitcoin for euros which will be transferred to the bank account of your choice
- CoinMama: Here is a final alternative to sell BTC. The proceeds of the sale will be transferred in euros to any European bank account
What is Bitcoin?
Bitcoin is nothing more and nothing less than a decentralized currency usable on the internet. World wide web cash.
Can I use Bitcoin from my mobile?
Of course, many e-wallets exist as an application! You can quickly discover them in our guide!
How does Bitcoin computing power work?
Bitcoin’s computing power runs on a computer network trying to solve a problem. As soon as the necessary calculation force has been implemented, the winner receives a little of this virtual currency.