Bitcoin

ALL YOU NEED TO KNOW

bitcoin bit,koin/ noun

a type of digital currency in which encryption
techniques are used to regulate the generation of units
of currency and verify the transfer of funds, operating
independently of a central bank.

What is Bitcoin?

Bitcoin is a currency that only exists electronically, meaning it is not

printed in paper form like we typically imagine money to be. Instead, they
are produced all over the world by computers that are equipped with
special software designed to solve complex mathematical problems.
These computers are owned by individuals and companies, and together
they form a totally decentralized network. The Bitcoin currency is not
held or regulated by any single entity.

Who Invented It?

The original idea and much of Bitcoins foundation is attributed to an

elusive software developer named Satoshi Nakamoto. There are many
theories about his identity, or if it is really just one individual, but there is
no certainty on that issue to this day.

Why is Bitcoin Unique?

Bitcoin is a digital currency that allows purchases to be made

electronically. But its not like using a credit card or PayPal. Bitcoin
allows you to make totally anonymous purchases without transaction
fees or transaction delays. When you swipe your credit card, your bank
can spend as many as two to three days processing that money and can
decide not to approve payments that they dont want to. One of the most
important aspects of the currency is the freedom it provides for people to
use their money without oversight. It is your money, you should be
allowed to spend it where and when you want to.

What are the most important

aspects of Bitcoin?

These are a few of the things that make Bitcoin different than standard
regulated currencies:
1- It's decentralized
2- It's easy to set up
3- It's anonymous
4- It's completely transparent

5- Transaction fees are small

6- Bitcoin is rapid
7- No take-backs

1st Aspect:
It's Decentralized

Unlike normal currencies, there is no sole agency regulating Bitcoin. That means that
there are no mints that produce units of the currency or financial institutions that
hold it. There are no regulating bodies that make rules about how it can be used,
where it can be spent, and how much of it you are allowed to have.
This is important because governments do occasionally tamper with peoples
finances without their permission. Without warning, governments and international
monetary organizations have the power to reach into your regular bank account and
rob you, like the Central European Bank did in Cyprus just a couple of years ago.

2nd Aspect:
It's Easy to Set Up

The normal banking system is fraught with obstacles, including fees just to keep
your money there. They also want to know everything about you and try to get you to
sign up for their various mutual funds all the time.
Bitcoin is different. You simply go to the app store, find a Bitcoin wallet that you like,
and download it. You are now able to send and receive Bitcoins to anyone else in the
world.

3rd Aspect:
It's Anonymous

You dont need to provide your Social Security number, fingerprint, or pay stub to
open your Bitcoin account. And any transactions you make are totally anonymous.
For the most part...

4th Aspect:
It's Completely Transparent

Your information is private, but Bitcoin operates on a ledger called the Blockchain,
which is a publicly accessible record of every wallet and every Bitcoin in existence.
So all of your transactions will cross the network, but they will be encrypted and no
one will know that it is you.
You can cover your tracks on the network if you want a really high degree of
anonymity. For example, you can use multiple Bitcoin addresses and avoid sending
large sums of money to any single account.

5th Aspect:
Transaction Fees are Small

Sending conventional money can be expensive, especially internationally. Your

bank can charge huge percentages just so you can access your money overseas.
Transaction fees with Bitcoin are exponentially smaller.

6th Aspect:
Bitcoin is Rapid

Money doesnt take weeks to make its way from one account to another. Typically
you only have to wait a few minutes for money to show up anywhere in the world.

7th Aspect:
No Take-Backs

If someone sends you Bitcoin (as payment or because they owed you), they cant
change their mind and reverse the transaction. Likewise, once youve sent Bitcoin,
it is gone unless the recipient agrees to return it.
All of this is the concept of how Bitcoin is supposed to operate, but how does it
really work? Read more to find out how bitcoins are mined, what happens when a
bitcoin transaction occurs, and how the network keeps track of everything.

HOW DOES BITCOIN WORK?

An Intro for New Users
Bitcoin is not just a pastime for individuals who thoroughly understand the
technology. In fact, it is remarkably easy to use. To get started, just
download a wallet from any number of the options in your app store. This
wallet will come with a unique Bitcoin address that you can share with your
friends or business associates. Whenever someone needs to send you
money they will use this address.

HOW DOES BITCOIN WORK?

Ledger - Blockchain
The block chain is crucial to Bitcoin. It verifies that money was sent, your
spendable balance, and that Bitcoins are actually owned by the spender.
These are important for verifying the integrity of the network.

HOW DOES BITCOIN WORK?

Transactions - Private Keys
Any exchange of Bitcoins between wallets is a transaction that will appear
on the blockchain. Your wallet will come with a private key that only you
know and you will use it to sign transactions. This is to prove that you, the
owner of the Bitcoin, authorizes them to be sent to another wallet. Without
those keys, your Bitcoins cannot leave your wallet or be tampered with
during a transaction.
Transactions are processed by miners who validate each one and post it to
the ledger.

HOW DOES BITCOIN WORK?

Processing - Mining
Mining is a distributed consensus system confirms waiting transactions by
including them in the block chain. It also establishes a chronological order in
the block chain, prevents bias on the network, and unifies different
computers to agree on the state of the system. Transactions must be packed
in a block that is designed following specific cryptographic rules and will be
posted to the network. These rules prevent previous blocks from being
modified because doing so would invalidate all following blocks. Mining also
creates the equivalent of a competitive lottery that prevents any individual
from easily adding new blocks consecutively in the block chain. This way, no
individuals can control what is included in the block chain or replace parts of
the block chain to roll back their own spends.

If you want to dig further

This is only cursory description of the system. If you
want to get into the details, you can read the original
paper that describes the system's design, read the
developer documentation, and explore the Bitcoin wiki.

Bitcoin
ALL YOU NEED TO KNOW

www.genesis-mining.com
www.lifeinsideabitcoinmine.com

Thank you.