<aside> 💡 Bitcoin is a unique form of trustless, digital money that allows users to directly and securely transact with each other over the internet.
In essence, the Bitcoin Network maintains a decentralised ledger that keep track of the movement of bitcoin.
To understand why it is important to have a trustless, digital, and decentralised monetary system, please review ‘Why Bitcoin?’.
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An easy but most holistic way to describe "Bitcoin" starts by looking at two concepts that most people are familiar with
We can briefly look at how Bitcoin is comprised of the two above concepts, how they are similar, and how they can differ:
Bitcoin
Scarce
There is a known issuance schedule. Fixed supply of 21,000,000. - “Hard Money”
Divisible
Fractions of a bitcoin are called Satoshis. This is to 8 decimal places; eg. 0.00000001
Verifiable
Cannot be counterfeited.
Fiat Money
Not Scarce
There is an unknown supply of dollars. There is no maximum. - “Easy Money”
Divisible
Fractions of a Dollar are called Cents. This is to 2 Decimal Places; eg. $1.00 USD
Not Easily Verifiable
Can be counterfeited.
Bitcoin
Public Ledgers
Bitcoin's underpinning technology, referred to as "Blockchain", provides for a transparent monetary system - There is no fractional reserve banking on the Bitcoin Network.
Decentralised
The network is operated by volunteers and network participants. No permission is required, and you can not be excluded.
Portable
Fast and inexpensive settlements with everyone and anyone over a secure protocol.
Censorship Resistant
Can not be interfered with via a third party.
Fast Payment Finality
Transactions occur quickly and are easily verifiable. Can not be reversed.
Efficient
The Bitcoin Network results in payment finality in ~10 minutes, without the security and trust issues associated with third parties.
Fiat Money
Private Ledgers
Each bank maintains their own internal ledger of the funds they owe their members. There is no transparent account of how they lend out the money deposited with them.
Centralised
Managed by governments, bureaucracies, and companies. The rules they are always subject to change, and people can be excluded at will.
Not Easily Portable
Slow & expensive settlement between banks and merchants, and moved by secure trucks.
Not Censorship Resistant
Can be interfered with via a third party.
Delays in Payment Finality
Transactions are not easily verifiable. Transactions can be reversed without consent.
Inefficient
Each bank uses a lot of offices, datacenters, terminals, branches, people, and associated support services to maintain a complex internal ledger that still results in payment finality taking days.
So with Bitcoin and the Bitcoin Network being digital, let’s look at how to use Bitcoin.
When starting out it may be OKAY for some people to leave their Bitcoin on an Exchange or with a Brokerage, as the risk of loss with a reputable exchange or brokerage is overall very, very, very low.
<aside> 💡 It is best practice to not to trust third parties, or services facilitating the buying and selling of bitcoin - such as a Brokerage or an Exchange, to hold your Bitcoin for extended periods.
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Self-custody is something that should be done when you are comfortable buying and transacting with Bitcoin, and/or you are accumulating long term - Referred to as "Hodling".
Overall, there is a lot of information about Wallets, Seeds, and Keys. This guide will try to stick to being as practicable as possible, without going into the technical aspects.
<aside> 🌐 A bitcoin wallet is software that allows you to interact with the network.
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