If you’re new to Bitcoin and cryptocurrency, you can be forgiven for feeling overwhelmed at first. There’s a lot to get your head around, and a lot of new jargon to get to grips with. We’ve put together this Bitcoin for beginners guide to point you in the right direction, so you can start to get a better feel for how it all works.
What Is Blockchain?
In its simplest form, blockchain is a chain of time-stamped data recorded on a distributed ledger, spread across individual computer systems, known as nodes. It is the technology that underpins cryptocurrencies like Bitcoin, recording the time’s specific transactions that take place between different parties.
Blockchain technology is incredibly powerful and goes way beyond just payments. While payments through Bitcoin SV (BSV) are superior to other cryptocurrencies and fiat cash, the network protocol also supports an entire ecosystem of apps and services which are already revolutionizing the world.
What Is Bitcoin?
Bitcoin, or BSV, is the network protocol that operates on the BSV blockchain. It is the infrastructure on which payments can be sent and received, with a permanent ledger record of all transactions recorded to the blockchain.
It’s also the rails on which apps and automated “smart contracts” are built, allowing for greater automation, as well as a host of other features for app developers.
For most beginners, BSV is best thought of as the currency of the digital world—the world’s new money, powered by public blockchain technology rather than central banks.
What Is a Bitcoin Wallet?
A Bitcoin wallet is the BSV equivalent of the wallet in your pocket. It’s a location where you store your BSV, and from which you send and receive crypto. Wallets can be online, offline, or physical, with physical wallets being the most secure.
They involve a public key, which is the unique identifier for your wallet (and the address for sending BSV payments), and a private key, which is the only way you can recover access to your wallet. Guard this with your life—get locked out without the key, and you could lose access to your funds permanently.
Every BSV user needs a wallet to receive or send cryptocurrency. Without it, there’s nowhere for your cryptocurrency to ‘live’ on the blockchain. Wallet services are widely available, with an increasing number designed specifically for use with BSV.
What Is Bitcoin Mining?
Bitcoin mining is the process by which new BSV tokens are uncovered. Miners use software to solve cryptographic puzzles, the node that solves the possible first gets to record a block of transactions on to the blockchain. In return, miners receive a block reward of several tokens for their trouble as well as all of the microtransaction fees. A distributed network of miners validates transactions on the blockchain to ensure the ledger presents a single source of truth. Miners also reconcile discrepancies, ensuring accuracy on the ledger across the board.
Nodes (miners) play a vital role in enforcing the rules of the Bitcoin protocol as well as distributing new BSV tokens after they are received as a block reward.
What Is a Cryptocurrency Exchange?
Cryptocurrency exchanges are platforms for buying and selling cryptocurrency. These can either be crypto to crypto transactions, for example, trading in any BTC for Bitcoin BSV, or for fiat to crypto transactions, such as exchange fiat dollars for BSV.
Exchanges either fulfill transactions on execution or match buyers and sellers, operating in much the same way as markets and exchanges in other sectors. Nodes use exchanges to liquidate their newly received tokens so they can operate their business with the revenue they receive from the sale.
Hopefully, that helps you sort your bitcoins from your blockchains, and get a clearer idea of what’s involved. The easiest way to properly understand BSV and how it works is to jump into your first transaction, to see just how straightforward it is in practice to use Bitcoin for digital payments.
From there, you can begin to explore the wider possibilities of BSV as a network protocol and learn more about how bitcoin is shaping the next generation of technologies.
Featured image: TheEconomicTimes