As described by its creator, Satoshi Nakamoto, in the defining document and the rules and mechanisms for creating and managing that cash.
Second, electronic cash points out that these “bills” or “coins” used money are not physical but digital.
In Bitcoin, anyone can participate in the system at any level they want: they can be a simple user of the money through accounts .
However, using cash becomes cumbersome for more significant amounts because of the counting and verification of the bills and the space they take up, affecting saving or storing cash and the care taken to avoid damaging the bills.
When using banks or companies such as PayPal, the money in a certain way ceases to be the owner’s property and becomes the property of these companies.
Likewise, every movement the user makes with his money is registered and scrutinized by these companies.
Because it works digitally, it also allows to save minor to large sums of money and move them to and from anywhere in the world.
With Bitcoin, a person can open, at no cost, a digital account and store as much money as they want; if done correctly, their money will always be accessible to themselves and protected from access by others.
So, just like a central bank, the Bitcoin system defines how many coins it issues and at what rate , with the difference of doing so regardless of demand.
Wrong money issuance is the leading cause of the loss of purchasing power of money in the world since the random and disproportionate increase in the money supply, by simple mathematics, only leads to the money as a whole being worthless.
Given this condition, the demand for bitcoins logically and predictably affects the price of money and, therefore, the purchasing power of those who have it: if more people use BTC than before, the price will rise; conversely, if fewer use it, its price will fall.
The units issued halve every four years; for example, from 2020, 6.25 BTC are regularly issued, and by 2024, the reward will amount to 3.125 BTC.
From a user’s point of view, Bitcoin works like a digital bank account: the user has an account or wallet to deposit money and withdraw it to another account.
Types of Bitcoin addresses Bitcoin addresses can come in different formats and, depending on this, allow the user to use more or less technological advances for managing their money.
Unlike the types of money we use in our day-to-day lives, such as the dollar, or euro, whose values people believe to be stable, Bitcoin has sharp value changes over time.
However, this only alludes to the ledger, an encrypted data file containing the history of transactions made on the network.
They also synchronize it with other nodes and keep it in order, just as if you were to open WhatsApp and keep it on by synchronizing messages, making sure only to save those in a specific language.
Types of Bitcoin nodes There are two types of nodes: – Full nodes*, which run the Bitcoin software, store the ledger and keep it synchronized and in order.
The second task is performed by “miners.” These are also computers but specialized in carrying out a single task with very high performance.
As if it were a lottery, they try to win the reward for the correct block of transactions every 10 minutes.
You need to create a digital account using some dedicated software, hardware, or website and then acquire bitcoins using one of the many ways that exist: through another person, at an exchange or bank, at an ATM, or an exchange house.
In the case of accounts or wallets, the easiest way to start is through a mobile application.
To acquire your first bitcoins and use this electronic cash system, you must give the person or institution with whom you are making the transaction the Bitcoin address of your account: either copying and pasting it in text or showing it the QR code.
Using an analogy, Bitcoin is the dollar, the Federal Reserve, and the banking network, all at the same time.
Computers create Bitcoin, transforming energy into money, meaning that, while you can make a physical representation of that electronic cash, its original form is digital.
An auditor of the scenario through node software on their computer can also be an issuer of currency through mining equipment.
The first way, cash, is highly convenient for payments of small to medium amounts in person, for example, up to about a hundred dollar bills; it’s instantaneous, private, and costless.
Apart from the problem of high costs, two other problems of profound importance are the lack of control of money and privacy in transactions.
Depending on their policies, they judge and decide what the user can or cannot do with “his money.” To top it off, the data they record of each transaction of their users is shared with third parties all the time .
Bitcoin, the fourth and best way to handle money today, changes everything.
Once you have your money in your Bitcoin account or wallet, you can move it 24/7/365 to other Bitcoin accounts worldwide in moments and with costs that approach zero, independent of where you send the transaction.
Whether many or few people want to use it, the Bitcoin system will keep issuing money at the rate agreed upon by the users without modifications to its programming.
In contrast, a central bank pretends to assess demand and modify the money supply accordingly, seeking to keep the value of its currencies “stable” .
Since it is defined from the beginning of the system how to issue new coins, the danger of loss of purchasing power due to random and disproportionate printing disappears.
Likewise, the issuance rate of these new coins started at 50 bitcoins created approximately every ten minutes.
The user uses a “Bitcoin address,” similar to a bank account number, which is nothing more than a finite series of alphanumeric characters.
The difference is evident at the beginning of each address.
Volatility does not necessarily imply a problem since, as users are Internet-connected, buyers can know exactly how much bitcoin to receive or spend when paying for whatever.
The word “blockchain.” It is essential to clarify a widely spread misconception before continuing.
These are ordinary computers that run the Bitcoin software permanently to store the ledger.
They also serve to send and receive bitcoin without maintaining the network.
In this case, the task is to guess a number, among infinite possibilities, that allows it to compose a group or block of transactions sent by users under the rules established by the system and corroborated by the nodes.
That reward comprises new coins issued by the system and fees paid by users for sending their payments.
Each account and purchase option has advantages and disadvantages: cost, convenience, control, and security.
The interested party should go to his phone’s app store and search for “Bitcoin.” You will find a sea of applications, and you can choose the one you like best.
The bitcoin account or wallet software for desktop shows the primary functions of sending, receiving, showing balances, and transaction history.