What is Bitcoin ?
To be very simple Bitcoin is a currency, but not physically printed currency like USDollar or Euros or Indian Rupees. If you ask “How does a currency exist without printing”? The answer is very simple, ‘Bitcoin is a currency created and held electronically’
If you ask “Who is creating the electronic currency Bitcoin”? The answer is ‘Bitcoin is not created by any single Government or Single Agency or Single person but it is created and maintained by a community of people’. You may ask “Who is that community of people creating and maintaining Bicoin”? The Answer is ‘Even you may become part of the community by joining the Bitcoin community as Bitcoin uses Peer to Peer technology to operate without any Central Bank or Central Authority. Nobody owns Bitcoins and No controls Bitcoins.
How to use Bitcoin ?
As Bitcoin does not have Physical currency, it cannot be used in market to buy goods, but it can be used to buy things electronically. In the past, very few merchants were accepting Bitcoins but now lot of merchants is accepting bitcoins in exchange for their service and products and surprisingly this number is increasing. Check ‘List of Companies who accept online Bitcoin payment’
Now you have understood basics of Bitcoin and you have the List of Companies who accept Bitcoin payment. Next step is to understand the procedure to get Bitcoins. You can buy Bitcoins from Bitcoin exchange or from other people through Marketplace. Depending on the country you live and from whom you buy Bitcoin, You can pay them as Cash or Credit / Debit card etc. In some cases you can exchange other cryptocurrencies like Auroracoin, Blackcoin, ZCoin etc . View the list of cryptocurrencies
As Bitcoins are not Physical currency you can’t store it in your purse, you need to have Bitcoin Wallet to store it. As you don’t store physical currency you store only digital information’s of your currency which is used for digital transactions.
What is Bitcoin Wallet
A ‘Bitcoin Wallet’ is equivalent to your Bank account. Using your Botcoin Wallet, you can receive your Bitcoin, store them, and transfer to other Bitcoin Wallet just like your Bank account, only difference is here you cannot do it physically as Bitcoin dont have physical currency. All transaction in Bicoin Wallet is carried out digitally.
The main feature of Bitcoin wallet is ‘they store your Public key and Private Keys’ Actually they are not stored in your wallet rather they are stored in Block chain which is stored on all node computers around the world. Your wallet contains your Bitcoin Address (What is Bitcoin Address) which can be seen by anyone as this is public information.
Types of Bitcoin Wallets
You have understood what Bit coin is and How to use Bit coin, Let’s learn more about Type of Bitcoin Wallets. There are four type of Bitcoin wallets, they are Desktop wallets, Mobile Wallets, Online wallets, Hardware wallets, USB wallet and Paper wallets.
Bitcoin Core (Formerly referred as Bitcoin-Qt) is one of the widely used and Original Bitcoin Desktop Wallet. The Bitcoin core is a Bitcoin client (peer-to-peer) Open source Software developed by Satoshi Nakamoto, the network’s founder. Bitcoin core can be downloaded for free from Bitcoin website (https://bitcoin.org/en/download )which is available for all OS. This is like any software installed in your computer but the code which represents your Bicoin and its value are not stored in your Desktop wallets but they are stored in other computers.
Many users are happy with Desktop wallet but one major disadvantage is they can’t use it on the Go. And these users find Mobile wallets very handy. Mobile wallet is nothing but an App which can store the basic key informations about your bitcoin address and enable you to pay directly from your Mobile phone.
Mobile Wallets are not full Bitcoin Client like ‘Desktop Wallets’. Afull Bitcoin Client has entire ‘Bitcoin Block chain’ which contains lot of data and the file size is in Gigabytes. As Mobile phones cant afford to allot this much of space for one App, the Mobile Wallet are designed with Simplified payment Verification (SPV). Few Bicoin Mobile Wallets are Bicoin, (https://play.google.com/store/apps/details?id=de.schildbach.wallet) Mycelium, (https://play.google.com/store/apps/details?id=com.mycelium.wallet) Xapo (https://play.google.com/store/apps/details?id=com.xapo) and Blockchain (https://blockchain.info/wallet/android-app)
Web based Wallets are otherwise known as Online Wallets. One big advantage of Online Wallet is that you can access it from anywhere regardless of device. These online wallets also have a major disadvantage in the form of security.
Few Online wallets are listed below CoinBase ( https://www.coinbase.com/home ) Circle ( https://www.circle.com/en ) Block chain ( https://blockchain.info/) Xapo ( https://account.xapo.com/?cid=&sid=&f=&ref=3760421&rhash=d1b30a726782a444c7b0ab9cfc2c4c92ca1f2deca76610a5fc8600624ca3a49ff16b3b12663055a347aba7e3081a057f5e8d788a7d6141613967028a4aec1d4b&signup&callback=aHR0cHM6Ly9hcHAueGFwby5jb20v )
Hardware Wallets are dedicated devices loaded with private keys and programmed to do all the transactions like payment etc. Trezor hardware wallet, Ledger USB wallet, KeepKey Wallet are few Hardware wallets.
Many people prefer Paper Wallet as they are cheap and safe. To get a Paper Wallet, visit any one of the site offering Paper Wallet. An unique Bitcoin address is generated and an image with couple of QR code. The QR code contain the public address used to receive Bicoins and the other QR code is Private Key used to spend Bitcoins which are stored in your address. As the private keys are stored in paper and not in any wallet, the details cannot be accessed by hackers.
How to setup my first Bitcoin Wallet and start Bitcoin transaction
STEP 1: Before you setup your first Bitcoin Wallet, please make sure that you understand basics of Bitcoin Wallet and Bitcoin
STEP 2: As there are different types of Bitcoin Wallets like Desktop Wallet, Mobile Wallet etc., decide on the Type of wallet you are looking for. Then setup your Bitcoin Wallet
STEP 3: Now your Wallet is empty, you get Bitcoin from Bicoin market place in exchange with your currency (www.btcxindia.com is one of the famous Bitcoin Marketplace)
STEP 4: To spend your Bitcoin from your wallet, visit any online store which accepts Bitcoin and pay using Bitcoin