Bitcoin Basics and Getting Started with CryptoCurrencies

Over the years, it has become easier to become involved with Bitcoin and CryptoCurrency in general. The beauty of the ecosystem is that you can “buy in” without spending any money at all.

In recent weeks, I’ve been spending a lot of time in forums and chatrooms on all things crypto with people I know and don’t know. One thing that keeps coming up is - people new to crypto wanting to know more.

Needless to say, most of these questions are from those that want a get rich quick outlet. There are too many scams (hello! startminer) out there today – ponzi schemes, pyramid schemes, cloud mining – you name it. To make matters worse, early investors don’t mind sending others down this whirlpool to financial doom.

Many people have lost life savings to these scams and more continue to fall in their traps - there are many that would benefit from the right knowledge.

Whether you are looking to invest, grow your money or even dabble your feet in the shallow end of the pool - my (humble) advice is

MAKE SURE TO DO YOUR OWN RESEARCH

That said, here are the common questions I wish someone would have answered for me back when I started. (in future posts, I hope to elaborate more on these)

What is Bitcoin?
Bitcoin is a distributed ledger built on a framework of… Don’t worry. I’m not gonna give you the technoshpiel that will send you tumbling through the interwebs and pulling your hair out.

For us common folk, Bitcoin is a form of Digital Currency, which can be used to buy, sell or trade for an increasing number of products and services – much in the manner one uses currency today.
It is created through computational algorithms that maintain a record of each and every transaction EVER made using bitcoin within a digital ledger called the Blockchain.

If you’re looking for a deeper understanding, check out this video by CuriousInventor on Youtube. He presents the concept is a very detailed, yet in an easy to understand manner.

What is the Blockchain?
Think of it is as a sequential (oldest to latest) list of transactions** carried out using Bitcoin. A bunch of transactions are encapsulated together – making a block. This sequence of blocks makes up the Blockchain – with each block containing a link to the previous block.

The Blockchain is publicly accessible and copies of the same are distributed across nodes/miners/computers etc – thus making it decentralized and immutable (without the collusion of all those possessing the Blockchain).

How can I get Bitcoin?
There are many ways to get your hands on your first coin. What’s great about bitcoin is that you can get fractions of the currency to match your appetite. Bitcoin makes this easier by allowing transactions as little as 0.00000001 bitcoins – called a satoshi (transaction fees make this no longer possible – but more on that later) - which are stored in your wallet.

1. Faucets
   Faucets are websites that allow you to earn anywhere from 1-100 satoshis (typically) every few minutes – for FREE.
   Yup, I said FREE, though with a little work – a user needs to complete a couple or captchas or anti-bots and click to claim. It you're thinking SCAM, worry not, legitimate faucets will not ask you for investments. Faucet owners earn money by ad placements on their websites (hoping that ad revenue>faucet payouts)

Claiming small amounts is easier with platforms like Faucethub that make it possible to receive micro amounts - without loosing out to transaction fees.

Feel free to check out some of the ones I use daily
*BitLucky
*BitUniverse
*HueFaucet
*BitGolden
*MultiCoinFaucet

Reply below if you want a list of more legit faucets to claim from

1. Buy BTC
   Maybe funds are not tight or you’re feeling adventurous, established platforms such as CoinBase and Bittrex etc offer a great user experience and solid support.
   If you are in India, make sure to checkout UnoCoin and Zebpay (use code REF65746938 to gett Bitcoins worth Rs.100 free)

If you are looking to buy directly – you can find sellers on Localbitcoins – a peer-peer platform

1. Mining
   Definitely not for the faint hearted, but doesn’t need a degree in programming either. You may have heard of miners generating btc with just their CPUs, but today, you need a sizeable investment to generate meaningful returns.

   When it comes to mining, there are 2 choices
   a. Self/Solo Mining
   Invest in computing hardware – GPUs, ASICs to mine solo or on a pool
   If you are looking for a quick start or want to test out your existing hardware, it doesn't get much easier than MinerGate
   b. Cloud Mining
   Cloud based companies that rent out hardware to mine – all you have to do is subscribe and choose which coin to
   mine. I have known GenesisMining and Hashflare to be legitimate - profitability is relative to your goals
   Feel free to use try out GenesisMining with my referral code: y4lN1z - which will save you 3%
   on your order

Before deciding to mine, make sure to do your homework. CoinWarz offers calculators where you can assess your ROI - pl note that difficulty will rise with time. Please choose carefully as there are many scams out there.

Some will argue that mining isn’t as profitable as it used to be, others will swear by it. Regardless of which side you support, Bitcoin cannot exist without mining (more on this in a later post).

What is a Wallet? How do I get one?
A wallet is the cryptocurrency equivalent of a Bank Account. It is typically a software (hardware wallets also available) which is capable of accessing the Blockchain and thereafter sending or receiving Bitcoins/Altcoins. Coinomi is a great multi-cryptocurrency wallet to start with.

What are these Altcoins?
Building on the learnings from Bitcoin, many developers have plucked the advantages of the Blockchain, and created various Alternative Cryptocurrencies.

While many altcoins have been created for instant income generations by their developers, those such as Ethereum with its smart contract are causing disruptions across industries while generating great returns for those that hold them.

CoinMarketCap is a great source for a list of the popular cryptocurrencies.

As an investment, most altcoins hold little value. For the most part, miners mine these in the hope that their value shoots up or exchange them for Bitcoin on platforms such as Poloniex

What can I do with Crypto as Currencies?
Inspite of ballooning recognition and adoption, their real-world use is still limited. Today, there are over 200,000 business that accept Bitcoin as a form of payment.

As such, most cryptocurrencies are currently

1. Being held in the hope of appreciation in value
2. Exchanged for other cryptocurrencies

Recently a Change.org petition for Amazon to start accepting Bitcoins as a mode of payment received over 5,000 signatures. That said, major retailers like Overstock, TigerDirect and Dell (now retracted) have paved the way for real world transactions.

While there are limited use cases, adoption and acceptance continues to grow and your Bitcoins will find more and more acceptance from retailers and as a legitimate form of payment.

In the coming days, I share more info for newcomers to crypto on how you can earn more crypto and scams to avoid.