Your Quick Introduction to Bitcoin

Your Quick Introduction to Bitcoin

With so much information to get through with Bitcoin and everything that goes along with it, it can get a little overwhelming. So, check out our guide below for your simple and quick introduction to Bitcoin!

What Is Bitcoin?

Bitcoin is a digital currency that is completely unregulated by any government or third-party authority. It is the first digital currency ever created, and while many similar options have followed, Bitcoin will always be the original cryptocurrency that had a massive impact on the world.

From the user’s point of view, Bitcoin is like cash but online, a payment and transaction currency that the governments can’t control.

Who Is the Bitcoin Network Controlled By?

One of the key selling points of Bitcoin and a big factor in its success is that no one person controls the network. Rather, it is controlled by all the users on the network.

Developers can make improvements or fix issues in the software but they can’t force large changes or redevelop the network.

For the network to run and operate as it should, there has to be a consensus among all the users which means it's in the best interests of all users and developers to safeguard this consensus.

How Does Bitcoin Work?

The actual currency itself can be likened to the currency or coins you have within mobile or computer games. You can store coins, send coins, trade coins for goods and services, perhaps do tasks to earn more coins, or sell any valuables you have to other players in exchange for their coins. Bitcoin is like this, except it has real value.

However, while this is how it looks on the surface, processes are happening in the background to keep everything running as it should. Namely the Bitcoin network.

The network shares a public ledger called the blockchain. All transactions are recorded on the ledger and this allows users’ computers to verify and validate each transaction.

This verifying process is essential to the security of the network and prevents double-spending.

Added to this, anyone with access to the correct hardware and computing power can mine for Bitcoin and earn rewards this way.

How Does an Online Exchange Work?

An online exchange or Bitcoin exchange is a platform that allows users to trade their cryptocurrency for fiat currency, other cryptocurrencies, or even goods and services.

An exchange is simply a third party that enables people to buy and sell without having to take the risk of dealing with anonymous people on the internet directly. Unless you are sending BTC to a wallet address of someone you know or receiving crypto in your wallet address from someone you know, you’ll need an account on an exchange platform to trade.

How Do I Create a Bitcoin Wallet?

If you want to start investing in Bitcoin then you’ll need to set up a wallet. A wallet is used to store your Bitcoin where you can interact with the network by sending, receiving, and trading with your unique wallet address. Setting up a wallet is as easy as downloading an app or signing up for an exchange. But you’ll have to think carefully about what type of wallet you want, a hot wallet, cold wallet, or paper wallet. You can read about the differences here.

The more Bitcoin you own, the better it is to set up multiple wallets. Just like you would keep all your money with one bank, it’s a wise idea to have several wallets and spread your Bitcoin out.

What Is a Non-Custodial Bitcoin Wallet?

Bitcoin wallets are available in custodial and non-custodial forms.

  • Custodial - T wallet provider has access to your bitcoin
  • Non-custodial - The wallet provider doesn't have access to your bitcoin

How to Buy and Sell Bitcoin?

You can buy and sell on any online exchange, listed below are some of the most popular options right now.

  • Coinbase
  • BitMart
  • Gemini

Can You Send Bitcoin As a Gift?

There are two options for sending.

Wallet to Wallet Transfer

Secondly, you can take the traditional route of sending from your wallet to the recipient's wallet. All you need is their wallet address and your exchange to make the payment. It’s much the same as making a bank transfer and often just as fast. Although, if the network is busy, it can take around 30 minutes for some transactions to complete.

When inputting your recipient’s wallet address, double and triple-check that you have copied it exactly as there are no chargebacks or returns once sent.

Gift Cards

Firstly, you can buy a cryptocurrency gift card from any participating retailer. These gift cards are digital and you’ll receive the card via email more or less instantly after purchase. Bear in mind that you may have to pay a small fee to buy the gift card, although this isn’t always the case.

Once you have the gift card, just send it on to the sender and they’ll be able to redeem it like with regular gift cards.

How Can I Receive Bitcoin?

To receive Bitcoin is just the opposite of the above. The sender will need your wallet address and they can send you however much they want.

Can You Receive Bitcoin When Your Computer Is Off?

Yes, absolutely! Your computer being off won’t affect the transactional process of receiving Bitcoin. Your Bitcoin will be in your wallet the next time you open it up.

The reason why the process isn’t affected by your computer not having power is that the transaction isn’t happening through software. Rather, it’s happening on the public ledger and therefore, will still work.

What is Bitcoin Mining?

For new bitcoin to enter into circulation, they must be mined. Mining also enables new transactions to be confirmed by the network, as well as being a key part of the development and maintenance of the blockchain ledger.

The action of mining is carried out via means of the miner (you) using sophisticated and powerful hardware which can solve incredibly complicated math problems. The first computer to solve the problem validates the block and collects the reward - the bitcoin.

This process then repeats itself over and over again. Roughly 900 bitcoin are currently mined each day, although this will become less as the years go by.

Is Bitcoin Mining Legal?

The answer will depend on your location. Some countries aren’t happy it exists but allow it nonetheless. Others have outright banned ownership. There are no universal laws or agreements as to whether it should be completely legalized or not.

As of September 2021, China announced all crypto transactions are now illegal. Likewise, BTC is also illegal in Bolivia, Indonesia, Turkey, and Egypt. However, previous countries have changed their laws in recent years to make BTC legal in their territories, so this list could become smaller still in the future.

Is Bitcoin Taxed?

As the years have gone by, governments all over the world have started taking more interest in Bitcoin. Or rather, the taxation of Bitcoin. Over the years, countries have started introducing tax laws on Bitcoin profit earned, Bitcoin spent, and Bitcoin withdrawn.

Some countries have pages of laws, some have none at all. Because of this, finding out the tax laws in your country before getting started with Bitcoin is essential. You don’t want to lose any profit you make because you didn't check the taxation status and get in trouble.

How does Bitcoin Governance Work?

Over time, Bitcoin changes, evolves, and continues to develop. It’s not static and needs to change in response to the community demands and environment.

When changes need to happen to Bitcoin and the network, a process known as Bitcoin governance happens. This means there is a consensus on the network and formalized procedures and a form of decision making takes place.

However, there is no one person at the top of the chain. Bitcoin is not controlled by an individual, an organization, or a mediator. The collective sum of users “owns” the Bitcoin network and many processes have to happen for the governance to be carried out fairly.

What Gives Bitcoin Value?

There are two main reasons why Bitcoin has value, these are:

  • Because a large number of people agree that it has value
  • It’s a useful and innovative way to store and exchange value

Will We Ever Run Out of Bitcoin?

Yes. It’s estimated that in 2140, there will be no more Bitcoin left to mine. There is a limit of 21 million coins available and every day we are getting closer to that limit. You can read more about this here.

Join Texas’ Largest and Most Trusted Mining Pool

A mining pool is a group of people who collectively agree to pool their resources and share the profits.

For example, have you ever split the cost of a bunch of lottery tickets with work colleagues or friends with the agreement that if one of the tickets wins you all share the prize? While you might have to share the prize, there is more chance of you winning in the first place. After all, it’s far better to share $1 million, than it is to keep 100% of nothing.

Well, a mining pool works in the same way. The group of miners will collectively use their resources to create more mining power. The more mining power you have, the higher the chance is that you will generate a block on the blockchain and therefore, receive the reward.

One of the best parts of joining a mining pool is that you don’t have to match other investors. The reward is divided relative to how much power each member contributed. This means you don’t have to be stinking rich or own a ton of resources in the first place. You simply take out proportional to what you put in.

You should also bear in mind that the mining pool will have an owner who will, rightfully, charge each member a fee for joining. The amount will vary from owner to owner, but it’s unlikely to ever be an unaffordable amount since the owner also benefits from having as many members as possible.

Enjoy a Better Future with Mining Syndicate

If you would like any more information about starting or expanding your Bitcoin horizon; reach out to us at Mining Syndicate. Our mission is simple: Strengthen the Bitcoin network by enabling small-scale miners to affordably purchase and reliably host miners.

As a small miner, Chris became frustrated by the lack of hosting options available for miners with under 100 units. As luck would have it, he found a 2.5MW mining facility for sale right down the road, and thus, Mining Syndicate was born. Facilities #2 and #3 are currently launching and #4 and #5 are in the works.

Why is Mining Syndicate so successful? Because we have a team of people who are just like you, eager to be a part of the future of mining. If you would like more information about how you can be a part of Mining Syndicate, how our facility works, or the products we sell, you can reach out to us here.

You can also check out our list of miners we currently have in our catalog, as well as our list of best sellers.