No! Many people do not know that Bitcoin can be bought in fractions. Just like the Dollar or Euro, which have cents. Bitcoin actually has even smaller fractions, currently the smallest fraction is named after its creator Satoshi, which is equivalent to a hundredth of a millionth Bitcoin (BTC),
or 0.00000001 BTC.
You can buy fractions of a Bitcoin for as low as $1 worth.
Bitcoins are stored in digital wallets, think of wallets as your bank account. Wallets are free, you can have as many as you like. Wallets are used to send and receive Bitcoins.
Wallets have public and private keys which are comprised of a unique set of numbers and letters. Private keys are like the pin number of your bank account, so they must be kept safe from prying eyes. Public keys on the other hand, are made to be shared with others to receive Bitcoins; think of it as the numbers on your bank cheques.
It is extremely important to be in control of your private keys. In reality, coins actually never leave the blockchain network; it’s your wallet’s private key that certifies you as the owner of those coins. Basically, if you do not own the private keys, you do not own the coins.
To be 100% safe, do not show your private keys to anyone, do not send your private keys over an email, or store it on Dropbox or a similar service on the Internet.
There are different types of wallets, Hot Wallets which are software that sit on your computer or mobile device, and Cold Wallets which are either USB devices or paper wallets where your coins are kept offline.
Every cryptocurrency has its own hot wallet. Hot wallets are a free and convenient way for spending and receiving payments, but because your computer is always connected to the internet, it’s not recommended to keep large amounts in them.
To put it simply. Think of a hot wallet as your physical wallet that you use to store some cash for spending.
Hardware Wallets are a lot safer to keep significant amounts, they are offline, therfore unreachable by hackers, and in case of a robbery, they are protected with a pin number. And If you’re worried that the hardware might get lost or damaged, you have a secret backup code to retrieve your coins.
Think of the hardware wallet as your vault, where you store a significant amount of crypto.
Although Bitcoin is the most popular and first digital currency to ever exist, some other major cryptocurrencies are Ethereum, Ripple and Litecoin to name a few. There are currently around 2000 other cryptocurrencies, different cryptocurrencies are created for different functionalities.
Bitcoin was the first cryptocurrency ever created back in January 2009, by an anonymous individual using the alias Satoshi Nakamoto, who disappeared since.
The bit more complicated way to buy Bitcoins would be using an online Exchange, where traders buy and sell Bitcoins and other cryptocurrencies.
There are many exchanges today where you can trade fiat for crypto, almost all of them will ask you to verify your identity by sending them your Passport, personal identification card (i.e driver’s license), a photo of yourself, your address and other personal information. Once you are verified, you will be able to wire transfer money to your account on the exchange, which also come with fees that banks usually charge.
Fees for a bank wire transfer normally ranges between $15 and $45 minimum per transfer. If the amount being transferred is too big, some banks charge a percentage. Wire transfers usually take around 5-7 business days to arrive.
When your account on the exchange is credited, you will able to trade your fiat money (dollars) for Bitcoins or any other cryptocurrency at the market price, plus a trading fee that the exchange carries.
Any coins that you trade over an exchange are kept in wallets that are assigned to you. Remember that those wallets are lent to you; their private keys will never be shared with you, therefore if the exchange is hacked, or if it suddenly disappears your coins and money will be lost.
We highly recommended that you do not keep any of your coins on online wallets. Exchange sites will give you the option to withdraw or deposit coins to and from your wallet that is under your control.
There are about 18 million Bitcoins in circulation today, and only 21 million Bitcoins will ever exist. Bitcoins are generated and given away as a reward to computers that help in validating transactions, these computers are called miners.
Miners help resolve each block and add it to the blockchain. The reward for mining each block started at 50 Bitcoins and has since “halved” twice. The current reward is 12.5 Bitcoins per block which is distributed over to miners.
The next halving is in May 2020. Historically, the Bitcoin price has significantly moved up a few months before every halving.
Miners are computers that facilitate transactions, and together with other miners in one pool resolve a block and add it to the blockchain. Miners, are then rewarded with coins and transaction fees for operating the network.
Yes, but they are a lot lower compared to traditional money transfer services. The transaction fee fluctuates based on the blockchain network activity. Busier network means higher fees. As of this writing the transaction fee to transfer any amount in Bitcoin is around $2.25. Other cryptocurrencies (sometimes referred to as AltCoins) have different transaction fees, some are even a lot lower, the lowest of all being Ripple (XRP).
There are two factors that determine transaction fees, network load and transaction size (in bytes). Bitcoin requires a minimum of six confirmations for a transaction to be completely validated by miners. Usually, the first confirmation arrives within ten minutes (time taken to mine a block). Normally, transactions are successfully processed in an hour.
Some wallets let you control the transaction fees, but if you send a transaction with very low fees attached to it, miners will not prefer picking that transaction because of its low incentive, in which case it could take several hours for the transaction to be confirmed.
The market cap of all cryptocurrencies at the time of this writing is $385 billion US dollars, $242 billion of which is in Bitcoins.