The Complete Beginner’s Guide to Bitcoin in 2019

This is a beginner’s guide to Bitcoin which means that if you’re reading this, you’re curious about Bitcoin and haven’t found answers to some of your questions.

You might also have heard that you could make a fortune from it and that could be the reason for your curiosity. Or, you may just be fascinated with the technology and may want to know if it’s time to get on-board.

Whichever side of the dice you’re on, this guide to Bitcoin will lay the groundwork for you and enable you to understand Bitcoin a lot better.


Inside This Bitcoin Guide:

What is Bitcoin?

How Does Bitcoin Have Value?

How is Bitcoin Created?

Who Created Bitcoin?

A Little History

How to Buy Bitcoin

Is a Cryptocurrency Exchange Secure?

What is the Relationship Between Blockchain and Bitcoin?

What is the Future of Bitcoin?


What is Bitcoin?

Guide to Bitcoin

Bitcoin is a type of cryptocurrency. That is by far the simplest way to describe this rather audacious currency. So, like you’d need to begin from the back of an orange to get to the inner part, we’ll need to begin from the word “cryptocurrency” in this guide to Bitcoin.

A cryptocurrency is a digital asset that’s created to serve as a medium of exchange, a unit of account and a store of value. It secures information using cryptographic protocols. Hence the “crypto” in its name. 

We all understand that currency is a value that’s exchanged in return for goods and services. Hence, if Bitcoin is a type of currency, this means it is a value that can be exchanged in return for goods and services. Value gets you some form of product or service, and that’s what Bitcoin does. 

How Does Bitcoin Have Value?

Guide to Bitcoin

Imagine you bought an antique accessory for as low as $5 from a local store. Only for it to be discovered 4 months after you purchased it that the antique item you bought was in fact made by an old legend in the industry whose works were highly revered and its actual worth was $500,000. How would that make you feel? But even more important than that, where did all the extra value of $499,995 come from?

One word – belief.

People believe it’s worth that much and are willing to pay the $500,000.

It’s the same way with Bitcoin. 

Bitcoin is such a wonder today because people have attached value to it. The more people believe in Bitcoin, the more value it has, the fewer people believe in Bitcoin, the less value it has. The question of value partly contributes to why Bitcoin experiences price fluctuations.

How is Bitcoin Created?

Guide to Bitcoin

Think about how your local currency is created. It’s made by the central bank of your country and they can create as much as they want to.

Each Bitcoin is created through a process called Bitcoin mining. Bitcoin mining is difficult. It involves loads of electrical and computing power.

In this process, Bitcoin miners solve increasingly complicated mathematical equations to verify transactions and are in turn rewarded with Bitcoin.

Currently, 1 Bitcoin is produced every 10 minutes and the reward for every successfully mined block is 12.5 BTC.

Who Created Bitcoin?

Bitcoin was created by Satoshi Nakamoto. Satoshi Nakamoto is a pseudo name for the Bitcoin creator whose identity remains unknown to this day.

Till date, whether Nakamoto is a group of people or just one person is still unknown.

Several people have claimed to be Satoshi. But, there hasn’t been substantial evidence to prove that any of them is truly Satoshi.

Nakamoto was active in the Bitcoin process from October 2008 when s/he published the Bitcoin white paper till December 2010 when s/he disappeared just as mysteriously as s/he had appeared in the beginning. 

A Little History

Up until this point, you may have thought that Bitcoin was the first attempt at cryptocurrency. But it wasn’t. Not to worry though, you are a step ahead of those who think Bitcoin is the only cryptocurrency.

Bitcoin is neither the first attempt at cryptocurrency nor is it the only existing cryptocurrency on the planet. Bitcoin is one of 2000+ existing cryptocurrencies. 

Before Satoshi came into the picture, Nick Szabo introduced Bit Gold. Bit Gold was set to break history by becoming the first digital currency on the globe. But, sadly, the Bit Gold project remained at the level of theory. It was never executed.

Before Bit gold, there was yet another attempt at creating a digital currency. In 1983 David Chaum put out a scientific paper about a digital currency built without the blockchain. The name of this digital currency was Digi Cash. But, like Bit gold, this one too never became a reality.

How to Buy Bitcoin

You can buy Bitcoin on a Bitcoin or cryptocurrency exchange. An exchange offers liquidity and makes it possible for you to buy and sell Bitcoin with your local currency. The difference between a Bitcoin and a cryptocurrency exchange is that while a Bitcoin exchange offers liquidity for Bitcoin alone, a cryptocurrency exchange offers liquidity for Bitcoin and one or more other cryptocurrencies. So, while a Bitcoin exchange can be grouped under a cryptocurrency exchange, a cryptocurrency exchange isn’t a subset of a Bitcoin exchange.

Quidax is a perfect example of a cryptocurrency exchange because you can buy and sell Bitcoin and a couple of other cryptocurrencies including Ethereum, Litecoin, and XRP on Quidax.

In addition to buying and selling a cryptocurrency, a few cryptocurrency exchanges enable you to send, receive and store cryptocurrency.

Think of a cryptocurrency exchange as a bank for cryptocurrencies except they run a different model from the traditional banking system.

The 4 most common cryptocurrency exchange models are the over-the-counter, peer-to-peer, instant buy/sell and order book exchange. Of the four, the instant buy/sell is the easiest to use.

Is a Cryptocurrency Exchange Secure?

Guide to Bitcoin

Security is a big topic in the cryptocurrency space. When you choose what exchange to carry out cryptocurrency transactions on, this should be your primary focus.

You also need to make sure that the exchange is reputable and big on security. When you trade with a secure exchange, you have nothing to be bothered about.

What’s the relationship between Blockchain and Bitcoin?

Because this is a beginner’s guide to Bitcoin, we’ll only be taking a surface look at blockchain technology. But, you can click here to learn more about this technology.

Blockchain technology is the technology behind Bitcoin. 

Blockchain is a distributed ledger that’s immutable. This means that when information is recorded on the blockchain, it can’t be changed or tampered with. The fact that it’s a distributed ledger also means that there are several copies of it around the world.

Bitcoin transactions are processed and recorded on the blockchain, it powers the entire system.  Some argue that the blockchain is the greatest part of what Satoshi created, as its impact extends beyond finance.

The Future of Bitcoin

Guide to Bitcoin

To understand the future, we need to take a look at the past. Let’s take a quick look at Bitcoin’s journey thus far. 

Bitcoin has grown from being a largely controversial and misunderstood technology to becoming the most valuable digital currency in the world. In spite of a few hurdles it’s encountered in its journey from its inception up until this point, it’s still standing strong and several signs still point to the fact that this phenomenal technology will keep growing even stronger.

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Quidax is an African focused cryptocurrency exchange that provides a simple platform for you to send, receive, store, buy and sell digital currencies. Our aim is to educate you about cryptocurrency. It should not be considered as financial advice. We recommend conducting your own research before deciding to buy, sell or hold any cryptocurrency.