Bitcoin was the first decentralized cryptocurrency stored in bitcoin wallets as a digital asset. It was released as an open-source software 11 years ago in 2009. But first, what is cryptocurrency? Cryptocurrency, in general terms, is a digitized fund secured using strong cryptography to direct its management and formation rather than being dependent on the central banking systems or central authorities. Cryptocurrencies are sketched to work as a medium of exchange wherein individual cryptocurrency (Bitcoins, Altcoins, etc.) ownership records are preserved in record books or account books existing as digitally organized databases to keep hold of the transaction records and to substantiate the transfer of currency ownership, thereby providing safety. There are a lot of cryptocurrencies at hand that you can consider investing: Bitcoin (BTC), Litcoin (LTC), Ethereum (ETH) and so on.
To acknowledge what bitcoin really is, it is necessary to know why it was invented in the first place. It was solely created to eliminate one kind of middle man- the banking systems. Each bitcoin is technically a computerized file stored in a “digital wallet app” on your mobile phone or computer. By using this, you can send bitcoins to other people or receive them without an intermediary. Each transaction is tracked in a public list known as the blockchain. Bitcoin uses decentralized control in contrast to centralized digital currency (aforementioned, it does not depend on central authorities). Once the cryptocurrency is furnished by an individual, it is considered decentralized, and it routinely follows the blockchain pattern. Blockchain works as distributed public ledgers where the track of all transactions made by the cryptocurrency holders is stored to prevent insecure transactions, contractual violations, and computer errors. It basically works as a public financial transaction database. They neither exist in the physical form, i.e., paper money, nor do they have a location for traditional money like bank vaults.
So now, you’ve got an idea about cryptocurrencies, and you’ve decided to invest in bitcoins. Great! But where shall you store it? Here, we introduce to you the Bitcoin Wallets. Wallet- the place where you store your hard-earned cash. That’s how bitcoins wallets also work, sort of. The only difference is you store bitcoins digitally in a bitcoin wallet. Bitcoin wallets are similar to safety deposit boxes that one utilizes to store valuable possessions. And just like the safety deposit boxes do, the bitcoin wallets have a key called the digital key.
Bitcoin wallets keep a secret piece of data- public key (username) and private key (password) of the owner and that is used to store, send, receive or make transactions without revealing their real identities and thereby providing a mathematical evidence that it was made from the owner of the bitcoin wallet. You really need to protect your bitcoin wallet by hook or by crook. The world, you know, is full of good and bad people and the internet world is no different. Hackers all around are just after one thing- Bitcoins! After all, it’s worth hell lot of money. For that, they need access to your private key (the password of your bitcoin wallet), and therefore you need to make sure that your bitcoin wallet is totally secure.
Bitcoin wallets are namely two types: Hardware and Software wallets. These wallets are digitally processed series of measures that are used to send or receive crypto. It stores your private key and public address ensuring legitimate safety. Hardware wallets are way better as compared to software wallets as the private key in here is secured in the hardware wallets, and it cannot be transferred out of the device even if the computer is prone to viruses. These wallets depend on the safety of Random Number Generator or RNG, which is placed in the hardware to give topmost safety to your private and public keys. This RNG might be recreated by the hackers, and sometimes it becomes difficult to locate the randomness of the RNG. Therefore, the quality of implementation and the security of all computing devices has to be perfect.
● You can buy them off with ‘real’ money.
● You can sell your stuff and let others pay you with bitcoins.
● You can create them from your computer. This is called bitcoin mining. However, the sums are increasing rapidly every day. So if you start mining now, it could be years before you make one bitcoin.
● Gambling: As bitcoins or other cryptocurrencies are gaining popularity over the span of time, it has become a recently developed online field for lotteries, gaming and gambling. This is one of the most distinguished ways that bitcoins are utilized in decentralized settings. With an increasing number of online casinos running on every corner of the world, they provide myriad options for people to bet their bitcoin money on the traditional casino games, online lotteries, gambling games and so on.
● From hyperinflation protection: In countries like Zimbabwe and Venezuela, cryptocurrencies are used as a goof-proof against hyperinflation. Citizens buy crypto to protect themselves from hyperinflation if their country’s currency pitches down.
● Charitable donations: As more and more charities are accepting donations in the form of digital money, the cryptocurrency charity list is soaring to great heights. ‘Omni Nano’- a public benefit organization true to nanotechnology education or ‘The Water Project’ that provides sustainable water programs for communities, and many other charities accept donations in the form of bitcoins.
● To keep money out of sight in divorce: Bitcoin is not a physical currency and is stored in digitally made bitcoin wallets or virtual clouds. No names are required while dealing with cryptocurrencies, and this makes it one of the most innovative and safe methods for hiding money in the divorce. All the transactions take place over the internet and bitcoins can be easily transferred elsewhere, making it arduous to even trace it down. Thus, it is now a modern and uncommon way of keeping the money out of sight so that one couldn’t find it while dividing the marital estate.
Subscribe to our Newsletter to be a part of our future $1,000 per month contests.