If you are thinking about buying coins other than Bitcoin then think again. 95% of them are scam. Rest of them have not proven to be of any substantial use. It seems that all the coins other than BITCOIN will loose it’s value over time.
So What is Bitcoin???.
Consider a group of people stuck on an island and no way to get out of this island. Now think of these people living happily in this island but with a huge problem. They don’t have a currency to exchange stuff. One solution is to decide a leader of this community and give him the power to create a currency. Thus leader can create currency. Then he can distribute and can regulate also. But in future, they may lose trust in him and they have to come up with another leader.
Now they came up with an innovative Idea which does not require any central authority. By some magic they created infinite length of pieces of paper and magic pens. Initially, they decided that each of them has 100Rs. So each of them wrote 100Rs against their name on that paper. Something like this.
- Sachin : 100Rs
- Dhoni : 100Rs
- Virat : 100Rs
And so on…
Now if Sachin wants to send 20Rs to Dhoni, he has to write that transaction on this list. Something like this:
Sachin to Dhoni : 20Rs – Current Balance: 80Rs
This way, now onward, if anyone makes a transaction then he has to put that transaction on that list. Thus, In future, Sachin can’t do a transaction of more than 80Rs and Dhoni can’t spend more than 120Rs until he does not receive extra money in future transactions from someone.
If there is just one copy of this list then it is problematic. It may get damaged or lost. So think about identical copies of the list for each person on that island. And think of magic pens such that if you write a transaction on your list with this pen, it appears on each and every other list. And also if someone new person comes on that island and wants to take part in transactions, then he also gets copy of this list and that magic pen.:) In other words, everyone should be allowed to take part in this system. This idea seems good. No central authority and everyone can take part. But there is a problem with this idea. There doesn’t exist magic pens and papers in real world. So How to maintain this lists? How to make sure that all the lists are identical ??? People could be dishonest. They may not trust each other. Who stops them from putting wrong transactions on that list.?
In 2008, an unknown person Satoshi Nakamoto came up with an innovative solution to this problem – the problem of maintaining this long, forever growing list of transactions. In the real world, infinite length of papers are not possible. In the age of fast computers, fast Internet and highly secure cryptography, we don’t need a magic paper and magic pen also. Satoshi Nakamoto published a paper named Bitcoin: A Peer-to-Peer Electronic Cash System in which he (or she or they – satoshi nakamoto is anonymous as of today) solved a problem in computer science which is how to establish trust in decentralised trust less network. He put together some existing technologies like cryptography and other few and a miracle happened. We got a fully decentralised currency, know as BITCOIN.
I would strongly suggest this video which explains beautifully the fundamentals of cryptocurrency in less than 30 minutes. To read further you need to watch above video.
So what does it mean ” You have 10 BITCOIN “. It means that in that list – or chain of blocks or ledger – there is your name address (a public key) with 10BITCOIN written against you and you have the the private key which only you know :). Here name address is not your actual name but it is something like this 1LU22GzF9r6JCV5bNAUypGdvpifqHqzpmH
A website if you want to learn more : https://sites.google.com/view/ilovebitcoin
Follow the people who have batter understanding of BITCOIN and learn from them. Here is a small list :
- Andreas M. Antonopoulos https://twitter.com/aantonop
- Peter Todd https://twitter.com/peterktodd
- Pierre Rochard https://twitter.com/pierre_rochard
- Murad Mahmudov https://twitter.com/MustStopMurad
- Saifedean Ammous https://twitter.com/saifedean
If possible, read these books: Mastering BITCOIN by Andreas and The BITCOIN standard by Saifedean
List of best resources to learn about BITCOIN :
Don’t keep your BITCOIN in exchange. As soon as you buy your BITCOIN from exchange, transfer your BITCOIN to your own wallet. If you have large amount, store in hardware wallet.
- Hardware wallet : TREZOR
- For android : Electrum, Samourai
- For PC : Electrum
You must keep your private keys safe.
Feel free to ask in comment section 🙂