Beginners Guide To Bitcoin For 2020
This is just another beginners guide to Bitcoin aimed towards general consumers that wish to adopt in 2020.
This article will cover a lot of information on a top level with external links to explain further.
At the end of this article you will:
- Know a little history about Bitcoin,
- Know how to setup a Bitcoin Wallet,
- Know where to Buy Bitcoin,
- Be left with a fascination on knowing who Satoshi is.
A lot of people that walk into the crypto world for the first time ask themselves “which company is the most trustworthy to hold my money” and this is what we are accustomed to.
A natural reaction for many internet users is loading Google and looking for a centralized authority, much like a bank/company. Many of us end up at Coinbase.com because they have great marketing.
The first mistake many of us make, including myself, is entering a decentralized market with a centralized market attitude.
Centralization means the decision making is exclusively in the hands of top management. Decentralization refers to a delegation of authority to all levels of management.
To kick this into gear, let’s just say what Bitcoin is in black and white terms.
Bitcoin is a system built to transfer money without the need of a bank. It is a secure Peer2Peer system to transfer value.
What Crypto Coins Should I Focus On?
There are so many digital coins now and it is easy to become confused. The good news is 99% of them you will never need to know.
The main cryptocurrency today is Bitcoin (BTC) and is considered to be the gold of the digital world. This is also known as Bitcoin Core. This holds the most value if sold to your local currency.
Other interesting crypto to keep an eye on:
- Basic Attention Token (BAT) — Brave Browser,
- Ethereum (ETH) — The finance blockchain, known for Smart Contracts and soon Decentralized Finance.
Why are there so many Bitcoins?
The three commonly known Bitcoins:
- Bitcoin Core (BTC) — Hard Fork Segwit2x implemented in 2017,
- Bitcoin Cash (BHC) — Hard Fork Bitcoin Cash started in 2017 as a response to Segwit,
- Bitcoin Satoshi Vision (BSV) — Hard Forked from Bitcoin Cash in 2018,
Update: 30th December 2019: After some more research I’ve added in the video below which is a discussion between Roger Ver and Samson Mow.
Who Invented The Real Bitcoin?
That is a good question, nobody really knows.
The name of the account that launched Bitcoin is Satoshi Nakamoto.
Bitcoin was spoken about in an email during 2008. https://www.metzdowd.com/pipermail/cryptography/2008-October/014810.html
The name Satoshi was also registered to the domain name bitcoin.org with Satoshi’s email and PGP key in the footer.
Interesting Note: Gavin Andresen blogged about meeting Craig Wright in 2016 and is convinced that Craig is the person he communicated with on Bitcoin. — http://gavinandresen.ninja/satoshi
Interesting Note: Hal Finney is a major suspect for being Satoshi Nakamoto.
Satoshi opened the discussion Bitcoin open source implementation of P2P currency where Sepp and another person named Joerg Baach made first comments.
Fun Fact: Joerg worked on a project at the time called OpenCoin which was invented by David Chaum. This is not to be associated with OpenCoin Inc, which was renamed in 2015 to Ripple Labs Inc, and is commonly known as XRP. The two are not the same as stated on the opencoin.org website.
Hopefully this will keep you occupied and interested into finding out who Satoshi Nakamoto is. There are a few people that claim to be Satoshi Nakamoto with the most popular one being Dr Craig S Wright.
If Dr Craig S Wright is Satoshi and did work on digital money with David Kleiman then all will be revealed in just under two weeks time when the Seychells Tulip Trust keys are delivered and 1,000,000 BTC is unlocked.
Update: Craig Wright seems to have lied about a lot of things and the real satoshi signed a message on the blockchain saying Craig is not satoshi.
One thing is for sure, Bitcoin was the cherry on the cake for Crypto-Anarchism Movement which started from a manifesto by Timothy C. May, with some of the earliest adopters being dark web marketplaces like Silkroad during 2011–2012.
What Do I Need To Know As A Consumer?
There are a couple of things you must know before jumping into Bitcoin.
Bank Account Comparison
In the traditional world you would normally walk into your local bank where a bank teller is paid to go through a process with you, leaving you with an account you can access.
In the Bitcoin world you are the bank teller and need to open your own account, you just need to know how.
ATM Card Comparison
Where you would normally receive an ATM card from your bank, Bitcoin can use an App on your phone.
Types of Wallets:
- Hardware Wallet <- Ledger or Trezor,
- Desktop Wallet <- Electrum,
- Mobile Wallet <- An app on your phone,
- Web Wallet <- MyEtherWallet,
- Paper Wallets <- When you buy BTC from an ATM.
The most common and easiest wallets to use as a consumer are Mobile Wallets and Paper Wallets.
When you purchase BTC from an ATM you are given a print out of a Private Key holding the amount of BTC you purchased. You can then scan the QR code the ATM gives you into your Mobile Wallet — called Sweep Paper Wallet — and the BTC transfers to your wallet.
Mobile Wallets are safe provided you keep your private key backup on a USB device — somewhere safe — and don’t tell anybody your password / pin number.
I recommend looking at the Bitcoin.org website for downloading a wallet.
If you prefer a centralized solution then I recommend looking at Coinbase.com which gives you an easy buy in solution. Be warned that Coinbase is an exchange and a lot of exchanged are hacked all the time: to avoid being hacked always use 2FA.
Bitcoin isn’t much different except you scan a QR code with your phone instead of swiping a card.
All wallets act the same way where you can Send Bitcoin or Receive Bitcoin.
Setting Up Bitcoin Wallet On Android
This is a super quick walk-through on setting up a Bitcoin Wallet.
I use this wallet, it is recommended on Bitcoin.org.
When you open the app for the first time it will synchronize with the Bitcoin network.
You can click the GBP symbol and choose your own local currency.
You can also change the mBTC value to just BTC by clicking the three little dots on the top right corner.
Go to Settings then Denomination and precision.
Then you can select the common BTC setting.
Now you’re going to need to backup your private key.
THIS IS IMPORTANT!
Once you backup your wallet (exporting your Private Key) save it onto a USB and put it in a safe place, delete the file from where you downloaded it.
Then come back and Set spending PIN.
Now you’re safe, you can start using the wallet!
If you prefer a video, I found this one on Youtube that gives you a good walk-though.
What If I Lose My Phone?
Bitcoin is a secure if you have a pattern or pin number to enter your phone, then another pin or password to access your wallet. However if you lose your purse/wallet whoever finds it can spend until you report your card stolen.
You can recover your Bitcoin Wallet on a new phone by importing your Private Key, import it from the USB you backed it up on and continue as normal.
How Do I Get Bitcoins?
You can either buy them or mine them.
This is the easiest solution. The most common places to buy Bitcoin is at a Bitcoin ATM or online using an exchange.
Recommend: Choose the exchange based on the fee’s they charge.
Another way to buy Bitcoin is from people. There are lots of Bitcoin sellers and Buyers in marketplaces like LocalBitcoins. Don’t be fooled by clever marketing by Roger Ver, local.bitcoin.com only deals with Bitcoin Cash.
This isn’t very profitable and you would essentially be swapping electricity for Bitcoin. If you’re in a country that offers cheap electricity then you could make a profit.
If you just want to mine a little bit from your computer at home. Check out CryptoBrowser and let it run for a few weeks, you’ll make enough Bitcoin to make a withdraw and send it to your new wallet.
You can also check out some previous article I’ve written in the past:
There are a few things you might want to know about Bitcoin before diving into the crypto world.
If you didn’t dig into the information on Bitcoin from the “who is Satoshi” section I’ll bullet point them below:
- There will only be 21 million Bitcoins in total
- Miner rewards halves approximately every 4 years, which usually drives up the price
- Bitcoin price is still volatile
- Bitcoin has no CEO or central authority
This is still a very new industry but it is the future.
Think of Bitcoin similar to when EFTPOS (Electronic Funds Transfer Point Of Sales) came out, nobody trusted that system and now almost everyone on the planet has either a credit card, debit card or bank card. Another thought is when the internet was released, not many had faith in that either, now almost everyone on the planet has access to the internet.
My point is that when new technology is released there is always an automatic reaction to something different.
Should I Ignore The Fear To Sell?
Yes you should.
Bitcoin today is a complex market with a lot of manipulation at play before global regulation takes place.
You will have many people from different markets saying things against Bitcoin, this isn’t new, they’re looking after their own investments.
Many people are now starting to come out as they’re buying Bitcoin where a few years back they said it was dead.
The price of Bitcoin is purely based on supply and demand. In the graph you can see the little light blue spikes (volume) under the yellow line (price timeline).
The timeline above is Bitcoins overall lifespan so far and you can see when there is large volume spikes the price either pumps (more being bought) or dumps (more being sold).
It is a weird concept that a global currency system has no central authority and a lot of people are very quick to point out the negative impacts of Bitcoin such as funding terrorism. The reality is that Banks aren’t exactly the most trustworthy either, especially here in Australia where two out of the four major banks are under investigation: Westpac for child exploitation funding and NAB for fraud.
Bitcoin solves a lot of issues, such as money control and tracking since the blockchain is a public ledger that you can explore here.
One of the biggest issues Bitcoins solves is inflation.
To leave you with one last thought.
If you think that this is all too much work, and you’re here because you heard Bitcoin was a “get rich quick” system then I ask you to watch the video below.