Guide for understanding Bitcoin Basics


Who Developed Bitcoin?

The original Bitcoin code was designed by Satoshi Nakamoto under MIT open source license.

What is the Blockchain?

 The blockchain is the vertebrae of the protocol and the glue that holds the network together. It is simply a vast, distributed public ledger of account. It keeps track of every transaction ever made in the network, and all transactions are timestamped and verified by network miners. 

What Is A Bitcoin Wallet?

As the name suggests, a Bitcoin wallet is an application that stores send and receives bitcoins. You can think of it like you would a leather wallet full of physical cash, and basically, that’s all you need to use Bitcoin.

Why Trust Bitcoin?

Bitcoin is a network operating by the three foundational principles of technological freedom: Decentralization, open-source code, and true peer-to-peer technology.

Bitcoin’s trust is based on the subjective valuations of human faith in mathematical algorithms, encryption, and numbers. With the three pillars of technological principles Bitcoin’s blockchain is a peer-reviewed system of integrity.

How to Buy Bitcoins?

Bitcoins can be bought from various sources. You can purchase them online using an exchange or brokerage service that will enable you to buy Bitcoin with a bank transfer using fiat currency, a credit card, and some services also offer to buy opportunities using Paypal.

Bitcoin Cash can be purchased locally using Local Bitcoin, and from Bitcoin Teller Machines which are similar to cash ATMs that you find worldwide.

How Can You Sell Bitcoin?

Bitcoins can be sold in various ways. The currency can be sold online to an exchange or live in-person locally. These same instances work similarly to the buying process. You can sell your Bitcoin to the exchange at the current price it’s being sold for.

What Can Bitcoin Do?

The Bitcoin protocol can change the financial landscape we see today. The protocol can act as a currency, voting mechanism, global identification and reputation application, a micro-tipper, crowdfunding platform, initiate trusts, wills and contracts, decentralized domain names, future markets, and basically everything the financial system of today can handle plus so much more.

The currency application is just the beginning of this evolution of the world’s finances.


How Does The Blockchain Work?

The blockchain records all of the newly minted bitcoins rewarded to miners who find blocks. Blocks are sets of sent/received transactions that miners confirm for the network.  As these actions take place within the Bitcoin protocol the blockchain acts as a ledger of account for all transactions undertaken within the Bitcoin network.

What Is A Full Node?

Full nodes validate transactions within the blockchain and are voluntarily maintained by individuals, groups, and organizations (such as merchants for example) all around the world and broadcast all the messages within the protocol.

Full nodes add an additional layer of security for these participants within the Bitcoin network and operate in an altruistic manner meaning they work without reward. Some use cases for individuals or groups such as merchants running a full node is for detecting double-spends or for increased privacy.

What Are The Fees Involved?

There are fees involved with sending Bitcoin called the ‘Miner’s fee.’ Fees are paid to the miners in order for them to verify and secure Bitcoin transactions within the network.

A website/developer’s solution named ‘21’ offers an online guide detailing the fees within the network for certain time frames. Typically, a larger fee will confirm faster than a relatively low one.

What Does “Unconfirmed Transaction” Mean?

An unconfirmed transaction is a transaction in the network that the miners have yet to confirm. Typically, confirmations take roughly 10 minutes.

However, due to the increased popularity of the Bitcoin network confirmation times have increased quite a bit and can sometimes take op to an hour or more. 

Is Bitcoin Legal?

Bitcoin is legal in most jurisdictions in the world but there are a small number of nation-states that have banned its use, such as Ecuador. Wikipedia has a great guide on how Bitcoin is treated in all the countries around the world and explains the regulatory policies surrounding it.

Regulations vary from one border to the next so you should always research your location’s laws before participating in the network.

Who Is Satoshi Nakamoto?

Satoshi Nakamoto is a pseudonym/name of a person or group of people who created the original Bitcoin client and author of the original reference white paper which details the protocol. 

Nakamoto participated in the network by helping with the code and mining until 2010 when he/they disappeared, never to be heard from again.