Mastering Bitcoin for Starters: Bitcoin Investment Basics - Tips for Success

Introduction

Congratulations on downloading "Mastering Bitcoin for Starters: Bitcoin Investment Basics - Tips for Success" and thank you for doing so. Bitcoin and blockchain, the underlying technology that makes it possible, are literally game changing technologies that are already having a major effect on everything from the financial industry to the way that supply chain infrastructure works. While that is all well and good, if you are like most investors then what matters most to you is that it is also making plenty of speculators extraordinarily rich in the interim.

While there is certainly money to be made in Bitcoin, there is more to the process than simply trading your cash for Bitcoins and wishing really hard, which is why the following chapters will discuss everything you need to know in order to strike while the cryptocurrency iron is hot. First, you will learn all about what Bitcoin is exactly, its history, and why you should care about it. Next, you will learn all about the ways in which Bitcoin, and other cryptocurrencies, attain their price on the open market. You will then learn about the main competitors to Bitcoin’s dominance of the cryptocurrency market.

From there you will learn all about how to get started with Bitcoin, including finding a bitcoin wallet and choosing an exchange. You will then learn all about investing in bitcoins, both by investing in them directly in a traditional fashion and also by investing in a cloud mining service. With that out of the way you will then learn about many of the types of fraud that you will be facing when dealing with cryptocurrency, as well as tips to ensure you don’t become a victim. Finally, you will learn some tips for success to ensure that your time investing in bitcoins is as profitable as possible.

There are plenty of books on this subject on the market, thanks again for choosing this one! Every effort was made to ensure it is full of as much useful information as possible, please enjoy!

Chapter 1: Bitcoin Basics

These days, you don’t need to be deeply tuned into the comings and goings of the investment markets, or the tech sector, to feel as though you are constantly hearing about Bitcoin everywhere you go. If everything you have heard up to this point has only served to make you more confused, rather than less, the good news is you aren’t alone. Despite their seeming pervasiveness, only about 50 percent of the population can accurately describe what a bitcoin is, and only about 12 percent regularly interact with it on any sort of consistent basis. The short answer is that Bitcoin can be thought of as a digital platform to trade bitcoins (with a lowercase b) to other people in exchange for anything that a traditional currency could be traded for. Broadly speaking, it is similar to PayPal except it is using its own currency rather than the currency of a given country.

Bitcoin is what is known as a cryptocurrency, which means that unlike traditional, fiat, currencies, its price is purely based on what the market says that it is worth. Each transaction is then verified by a third party, known as a bitcoin miner, before then being added to the Bitcoin blockchain, a sort of digital ledger and database all in one, that makes Bitcoin possible. To understand blockchain technology, it is helpful to understand exactly how bitcoins function.

In addition to storing unique and group data, each block in a blockchain also contains a timestamp as well as other organizational information that lets the chain determine its overall place in the whole. Each blockchain network is also notable due to the fact that it contains no centralized server or authority in charge of making sure things work the way they should. Instead, these processes are spread among everyone using a blockchain which means a single blockchain could easily be spread across thousands of independent data nodes.

When a new transaction occurs, it is checked for authenticity and accuracy by a private individual known as a bitcoin miner. This individual then makes use of the bitcoin blockchain and verifies the new information that is stored in a specific block to ensure it aligns with all of the previous blocks. For their effort, the miner then receives a fraction of a total bitcoin to compensate them for their work. This process of unbiased, third-party verification is a key component of what makes a decentralized database possible.

Despite the fact that the database information is spread around the world with no central authority, and the fact that sections of it are inspected by third parties on a regular basis, the data that is stored in a blockchain remains incredibly secure. This level of security doesn’t come from an active offense against fraud, it comes from the defensive capabilities of the way in which the blockchain is constructed.

As such, if someone wanted to utilize fraud on a blockchain network, say by using the same bitcoins to make two different transactions, they would need to generate enough false transactions that showed that the coins were not used the first time to ensure that 51 percent of the total transactions showed the false details as opposed to the true ones. This type of endeavor would be extremely cost prohibitive and require obscene amounts of energy, essentially making it more trouble than it is worth.

Inauspicious start

First appearing in 2008, the original vision for the original cryptocurrency was a way for people to send payments to one another without getting any financial institutions involved. This idea came from a paper written by a person or group of persons using the alias Satoshi Nakamoto and was titled bitcoin: A Peer-to Peer Electronic Cash System. This was followed in early 2009 by the original proof of concept and code which was also distributed via the Nakamoto pseudonym. The code was released in