What are bitcoins
To understand what bitcoins are used for, it is first necessary to define what bitcoins are. Bitcoins are essentially a virtual currency, also referred to as a cryptocurrency.
Reconstructing the history of what has become a real digital phenomenon is quite simple even if some details are still a bit nebulous.
What are bitcoins for
The purpose of bitcoins was and is to provide the possibility for users who want to make use of it to be able to use an alternative currency online. This could have been possible because the cryptocurrency was mutually recognized a certain value.
If you have only recently heard of bitcoins, with their value above € 30,000 , you should know that at the beginning the story was very different. In fact, it was not a question of a “precious currency” to be bought in order to hope for an increase in its value.
The early bitcoin was more of an alternative payment method for nerds and geeks to use on some online platforms. This also explains, at least in part, what bitcoins are for.
It must be recognized that few have really glimpsed the potential of this cryptocurrency. Let’s try to proceed in order, however, and review the history of bitcoin together.
A bit of history
Although it was only born in 2009, bitcoin is a name we have all learned to familiarize with. The main goal of the creator and his collaborators was to make a decentralized currency. This means that the digital currency would have been independent from the banking system and functioning through blockchain technology , which we will talk about later.
The name bitcoin was mentioned for the first time in a 2008 paper, which described the characteristics of a potential currency that was supposed to guarantee transactions without the use of centralized payment systems, instead using a series of digital signatures and opposing the currency. fiat.
Similarly, it should be emphasized that fiat currency, that is currently legal tender, is also relatively recent. In fact, until 1971, the issue of money was closely linked to the gold reserves of a particular country.
With the transition to fiat currency, on the other hand, most developed countries broke away from this system, leaving the stability and control of the issue to the central banks.
This little flashback allows us to understand that the idea of always creating new forms for exchanges, commercial or not, has always been pursued and is not the exclusive prerogative of bitcoin.
A predominant role in the IT infrastructure that is used to manage this cryptocurrency is played by the miners , or miners. These are none other than users who make their PC or real server farms available to digital currency and in exchange are paid in bitcoins.
Bitcoin mining has become a very popular term among computer enthusiasts, see also Bitcoing mining: how to mine cryptocurrency . What led bitcoin to be interesting also for the general public was its great increase in value, which occurred above all from 2018 onwards.
This has made it an excellent speculation tool that, in the right hands, allows many to make big gains in a short time. But be careful, because it is equally true that even the most experienced in the sector can happen in a short time to see the value of the invested capital collapse.
Who is the founder
The name of the founder of bitcoins is well known. It is in fact Satoshi Nakamoto but beyond this detail his true identity is still unknown.
The interest of the media around this detail has always been very morbid but no one has yet managed to find out who is behind this stage name. The best informed theorize that he is a member of the Cypherpunk, a very active movement since the 90s and which seems to have inspired the birth of bitcoin and the blockchain.
The number one suspect is Hal Finney, a phenomenal cryptographer who disappeared in 2014. He was one of the first to work with Satoshi Nakamoto and the suspicions became more intense when in 2011 Hal fell ill with ALS and at the same time Satoshi disappeared from the radar of enthusiasts.
In second place we find Nick Szabo, creator of Bit Gold, a digital currency that inspired bitcoin. The combinations are based on his writing style, very similar to that of the author of the white paper and the fact that, shortly before the launch of bitcoin, Nick had asked some programmers for help to launch a new idea.
There are also the alleged Mr. Satoshi who have publicly declared themselves as such, with the Australian entrepreneur Craig Steven Wright. This hypothesis, however, quickly faded due to the inconsistencies contained in his story. What remains certain, however, is only the aura of mystery that surrounds the name of Satoshi Nakamoto.
What is the blockchain
One of the fundamental points to understand how bitcoins work and what they are for lies in the blockchain. This new technology, which is also very interesting for the traditional banking world, is the real financial revolution of the 21st century.
First let’s start from the meaning: blockchain means chain of blocks. It is a large digital register that groups together a series of chronologically ordered blocks. Each time a new segment is added, it is placed at the end of the chain.
One of the most interesting features of the blockchain is that the ledger is shared and everyone can access it, but nobody can modify the blocks that are protected by encryption.
The practical application of the blockchain to bitcoin is to be able to verify all transactions in order to avoid fraud. Its scope, however, is not exclusively this. A blockchain could also be used to verify the provenance of a food product and certify it. If there is a value to modify within the chain, it is not possible to act directly on the block created. In fact, a new block must be added and all users who are part of the blockchain would know immediately. The great strength of this method is that no one holds the keys to the system, thus turning it into one of the most democratic and decentralized methods for sharing information.
Even when applied to the bitcoin system, it is easy to understand how the blockchain works. A new transaction consequently gives rise to a block of data, which is verified and validated by all computers connected to that chain. It can be hard to think but we are talking about thousands if not millions of PCs acting with the same goal. Once recognized as valid, the block is permanently added to the chain. The security of the information residing within the individual blocks is entrusted to cryptography. This is perhaps the most effective weapon for maintaining the cybersecurity of sensitive data and has also proven itself valid in the case of cryptocurrencies. It is probably a little clear to you now how bitcoin works but we haven’t finished our journey yet.
How bitcoins are produced
It is often easy to think that bitcoins are created with some kind of magic, but we guarantee you that this is not the way things are at all. The new bitcoins, which are added to the existing ones, are produced through mining.
This process, which you have surely heard of, is based on competitiveness and decentralization. In fact, all users who wish to be involved are involved and who make the computing power of their computers available to the structure.
Their main goal is not to mine bitcoins , as is erroneously thought. Cryptocurrency is just a “reward” for the work done by validating and processing transactions.
The protocol established by the creators determines the pace of creation of new bitcoins: as the number of users on the network increases, it becomes increasingly difficult to make significant profits and miners must optimize their efforts to be rewarded.
One of the most interesting points of this process is that no one, not even the creators of the digital currency, has the power to influence the protocol that leads to the creation of the new bitcoins. You must not forget that the number of bitcoins created gradually decreases over time, up to the quota of 21 million, established as the limit for the creation of new currency.
Of course, it is estimated that the last bitcoin will be created around 2140 but since we have already reached the quota of 19 million bitcoins, the mining activity is no longer so profitable. For this reason it is very likely that in the future network members will be rewarded with small commissions instead of portions of bitcoin.
The advantages and disadvantages of bitcoin
So far we have shown you what bitcoins are and what they are for. After this first part it is time to move on to the advantages and disadvantages of this virtual currency.
It should be immediately emphasized that despite the spread of cryptocurrency is increasingly widespread, bitcoin is not yet ready to replace traditional coins. Using it, however, guarantees absolute freedom of payment , as it is possible to send and receive any sum instantly, without time or geographical limits. Another point in favor of bitcoin is undoubtedly the extremely low cost of transactions.
These are mostly free or with extremely low tax rates. Likewise, thanks to cryptography, the security of Wallets and transactions is practically absolute. But be careful, because in case of loss of credentials this could become a double-edged sword that would prevent you from accessing your account.
Although bitcoin is the digital currency that is closest to perfection, it must still be said that it is not free from defects. Among the disadvantages of cryptocurrency, its scarce diffusion must certainly be pointed out. This therefore prevents it from being used for most payments in everyday life. Another negative point of bitcoin is certainly its fluctuation in value.
Don’t be surprised if you notice changes in the order of 30% within a few hours. This can mean both big gains and big losses. Finally, don’t forget that the software part that regulates the use of bitcoin is not yet in the final phase, with many parts still to be developed. The complete maturation of this currency will therefore probably only take place in the next few years.
Is Bitcoin worth it?
Another question, in addition to what are bitcoins, which many users ask, when they approach this world for the first time is the following: “is bitcoin worth it?”.
The most interesting part of bitcoin is certainly linked to its future developments which should guarantee an increasingly widespread and rooted spread also in the territory. Probably, in the near future, you will be able to buy many everyday goods with this currency, without necessarily going crazy.
At the moment, however, even with encouraging news from some companies with particularly pioneering visions, the use of bitcoin is quite limited. Even the “easy money”, often heralded by many traders or presumed traders, who have built real assets with bitcoin, is no longer so easy to achieve.
Buying a single bitcoin currently requires around $ 30,000 and it is therefore not within everyone’s reach to purchase this currency and then wait for a rise. For most of the population, a drop of only 20% would result in losses of thousands of dollars. This detail automatically places bitcoin out of the safe haven category as well .
To be such, in fact, the fluctuation in value must not be particularly high in the short term and must, if anything, tend to rise. In case you decide to buy bitcoin or invest in the bitcoin market, always remember that the risk of losing everything is always around the corner.
The giants of the economic field and long-time investors, who can afford to invest huge amounts of money and exploit their knowledge of the markets, are now making a real fortune in this field. However, they too are not free from risks, in any case.
Getting started: opening an account / wallet
To start buying bitcoins or trading with them, you need to open a wallet. We prefer this term to the classic “account” because it is nothing more than the technical name given to wallets containing bitcoin.
Online bitcoin wallets are certainly the simplest and most immediate to use. Many service providers have in fact invested in this market and allow you to buy cryptocurrencies of all kinds.
The most famous names are certainly Coinbase , eToro and Coinmerce , real authorities in this field. To start using them, just go to the respective sites and register.
Once the procedure is complete, you can buy bitcoin or other cryptocurrencies, such as those contained in our guide and use them as you see fit.
The alternative to online wallets are downloadable wallets, which are less immediate to use but much more complete for the advanced user. These are real programs that need to be downloaded and installed on your devices.
There are both for PC and smartphone and now the names in this “market” are so many. But what is the reason that should lead you to use a downloadable wallet?
The number one point is security: if your password is intercepted, anyone can access your online wallet and easily empty your account. In case of failure of the platform that hosts your online wallet, what has already happened, the result would be to lose all your investment.
A downloadable wallet, on the other hand, is completely independent and at the same time closely linked to the device on which you install it. Remember that even in this case it is possible to lose everything, especially if your smartphone is stolen or the PC breaks and you have not backed up or transferred the sums on the wallet.
Virtual wallets are still for the most part free, but they need to be filled and you won’t be able to rely on the platform like online wallets.
So how do you go about buying bitcoin in this case? Well, even the topic is not at all simple or quick to unravel, find all the information you need in our dedicated guide .
Bitcoins can be earned in 2021
As mentioned earlier, it is possible to earn Bitcoin in 2021, although over time it will be increasingly difficult to “extract something” that has a certain value: the Bitcoin train has now left and it is difficult to get on it now that the prices of the single currency are skyrocketing.
This should not discourage us: with a little patience and with the right methods it is possible to earn Bitcoin without investing even a single euro and, for those who have no time to waste, you can consider buying the cryptocurrency directly.
How to earn Bitcoins without investing
To immediately start earning a few fractions of Bitcoin without making any type of investment, in the following chapters you can find all the still valid methods to earn Bitcoin for free.
Selling services and goods
One of the most effective methods of obtaining Bitcoins involves the sale of a service or good, choosing Bitcoin as the exchange currency . By selling objects, dedicated services, information services but also common goods (such as clothing, shoes, objects but also expensive goods such as houses, cars and boats) it is possible to quickly obtain Bitcoins to insert in your virtual wallet.
To complete this type of transaction it is necessary to rely on sites that are experts in the sale and exchange of goods and services such as Bitify or Purse , which offer a section dedicated to the sale of goods and services with a Bitcoin payment system. Obviously the amount of Bitcoin that we will be able to collect with this method is directly proportional to the value of the Bitcoin at the time of the transaction: in most cases we will only be able to collect a few infinitesimal fractions, without obtaining a large gain in the long term.
Mining
The most “ancient” method to earn Bitcoins without investing involves setting up a PC for mining , that is a computer equipped with cutting-edge hardware to mine new cryptocurrency . This process has become decidedly difficult to implement nowadays, given that the required computing power is very high: it is no longer enough to have a good video card to be able to mine effectively, considering that we will hardly re-enter the indirect costs of mining. (such as the consumption of electricity, having to leave the PC switched on H24).
The gain that can be obtained with solo home mining is really very small (tending to zero as time passes) , to the point of making it currently the least convenient method among all those presented in the guide.
Mining pool
To increase the chances of mining Bitcoin, it is possible to create a cooperative mining or mining pool , using a centralized server to coordinate mining operations between two or more people. By working together in mining it is possible to increase the computing power to extract blocks for the blockchain, thus increasing the chances of obtaining much larger fractions of Bitcoin than single mining.
By increasing the number of people participating in the mining pool, the gain in terms of Bitcoin also increases dramatically, but obviously the gain obtained will be divided among all the participants . Of course we can also participate in already active mining pools without having to create a new one, lending our resources to increase the power of well-started pools.
This method is effective only if we have a good number of “miners” to add to the server and only if each participant has a very effective video card in mining.
Faucet Bitcoin
One of the easiest methods to earn Bitcoins without investing involves taking Bitcoin through the faucet , that is real “virtual taps” that release small amounts of cryptocurrency for anyone who opens the site. As a counterpart, the faucet sites have a very high amount of advertisements and pop-ups , which we will have to open and view in order to take our “drop”, that is the infinitesimal fraction of Bitcoin given away by these sites.
Faucet sites often have an anti-bot system, flanked by one or more CAPTCHAs, to avoid automatic scripts, thus avoiding accumulating cryptocurrency without displaying advertisements or without following the paths or links displayed on the page. When we use faucet sites we will have to be very careful, since the ads displayed are not monitored and could very well hide malware, adware or ads that are difficult to remove even after closing the browser.
This method is not recommended for those who want to obtain Bitcoins in large quantities (perhaps by opening the site several times during the day), since the amount of Bitcoin that “drips” from the tap is very small , without considering the risks associated with advertisements.
MMOCG games
The funniest way to earn Bitcoins without spending a penny involves starting some blockchain-based games , i.e. games that reward the best players with dedicated cryptocurrency, so that they can later change it into Bitcoin (with low exchange rates, but however interesting). Often these games belong to the category of MMORPGs, i.e. massive online role-playing games, which are renamed for the occasion in MMOCG (acronym for Massively Multiplayer Online Cryptocoin Game).
In these games we will compete with other online opponents and, if we win, we will get tokens as a reward: the latter can be used in the same app to get cryptocurrency or sold in exchange for Bitcoin on some dedicated sites. If you don’t know where to start to start putting aside some cryptocurrency, MMOCG games could be the ideal solution, although obviously don’t expect huge gains .
Bitcoin Cashback
Do we have no time to waste with the methods seen so far? If we want to get Bitcoin quickly, the only sensible method is to purchase goods and services from sites that offer Bitcoin cashback . Some sites such as StormX allow you to buy products from famous sites such as eBay, rewarding users with a cashback based on cryptocurrencies (including Bitcoin) but only upon reaching a minimum spending threshold.
If we are users who buy a lot online and want to get an interesting cashback, they could consider this method, so as to fill the wallet with the virtual currency already in circulation.
Are there any apps to earn Bitcoins in 2021?
If we want to earn Bitcoins directly from a smartphone or tablet, it is possible to bet both on the game apps and on the apps that reward players who perform certain actions (such as walking or running) with tokens freely exchangeable with Bitcoin or other cryptocurrencies. Among the most interesting apps to earn Bitcoins we find:
Sweatcoin : this app allows you to convert your steps (running or walking) into a dedicated cryptocurrency, to be spent directly in the store to buy gadgets and various items. Available for Android and for iPhone .
Worldopo : an augmented reality (AR) game in which it is possible to build virtual factories to generate resources and cryptocurrencies, expanding the territory or attacking the territories of the enemies. Earnings can be used to buy gadgets or converted into real currency. Available for Android and for iPhone / iPad .
Alien Run : another game app in which we have to run with an alien on a bumpy path, accumulating fractions of Bitcoins that we can collect once the minimum withdrawal threshold is reached. Available for Android and for iPhone / iPad .
StormX : online store where you can buy various products, being rewarded with a special cash back in cryptocurrency (we can choose between Bitcoin, Ethereum, StormX and Litecoin). Available for Android .
By installing these apps on your phone or tablet, you can earn Bitcoins while having fun or doing other activities such as running or buying through dedicated links.
How much can you earn with bitcoins?
All the methods described above allow you to earn (at best) thousandths of Bitcoin , which is a very small fraction of the most famous cryptocurrency in the world. This means that we can never really get rich with any of the methods described but it is still possible to set aside a certain amount of Bitcoin, to be kept in your virtual wallet while waiting for the value of the coin to increase.
The methods that allow you to earn more Bitcoins are the mining pool (especially if the pool chosen is very large) and sites with Bitcoin Cashback .
Beware of scams
When we talk about Bitcoin we must pay particular attention to online scams : there are in fact many sites that promise to get Bitcoin without effort or in exchange for something easy to share (such as an email, a user code or a discount code).
In particular, we recommend that you pay close attention to spam emails received on your inbox and to links hidden within banners or advertising pages, which often hide malware or identity theft.
Bitcoin faucets tend to be dangerous and should be avoided, while apps and sites that use Bitcoin as a bargaining chip can be used with due precautions.
Conclusions
We have reached the end of our journey and we are sure that now you understand what bitcoins are for. In fact, the uses of this digital currency can be multiple and not only linked to the speculation that is made on it.
Above all, the blockchain method is particularly interesting also for its future developments, which could be linked to every aspect of our view. Now that you know how bitcoin works, nothing can stop you from discovering cryptocurrency.
Just follow our advice to deepen your skills and find out how to best manage your virtual portfolio.
If your curiosity is only related to theory, however, no problem. Keep following our insights on bitcoin and other cryptocurrencies to learn more and better understand what bitcoins are for.
