A Beginners Guide to Bitcoin

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A Beginners Guide to Bitcoin

Vivek Varyani
September 8th, 2017
news@challenge.org

‘Whoa! Bitcoin just rose to £3,000”, “I should’ve invested in Bitcoin”, “If I had bought Bitcoins a couple of years ago, I’d be super rich by now!” Chances are you’ve heard someone say something along these lines. You might have even said them yourself.

 

So what exactly is Bitcoin? How are people making money off it?

Well on the face of it, Bitcoin and its stock value is just a number. A number that determines the price of the Bitcoin. I’m not going to go through how the value of the Bitcoin is determined. It’s essentially the basic economics of demand and supply.

 

So why is there a demand for Bitcoin? Why is everyone talking about it?

Well firstly, Bitcoin is an encrypted digital currency that can be transferred and used for many transactions.

The advantages of Bitcoin are varied. One of them is that it cannot be back-tracked. Bitcoin ensures total anonymity through its transfers.

This is done by encrypting user data, into mathematical algorithms. Your account balance and your wallet details are stored and secured from prying eyes. Any transaction, works with a combination of a digital signature, making it all highly secure and anonymous.

 

 

How do you earn Bitcoins and what is Bitcoin mining?

Well, Bitcoin mining is a method of earning Bitcoins out of thin air (well it pretty much is).

The process of generating bitcoins requires a strong CPU that can solve mathematical problems. These problems go through a process of trial and error and demand a lot of electricity. Every problem solved gives you a share of Bitcoin and can turn into tens of thousands of profit over a year. This can only happen if the graphics card of a computer processor is strong enough. The entire process limits the amount of Bitcoins you can generate. Thus protecting the value of the currency. (Economics 101)

Data mining apps show you exactly how much you will earn or lose, by giving your computer details. Details such as your cost of electricity are also calculated through these apps, to give a better understanding of total profits.

In order to mine Bitcoins, you will need to have a Bitcoin wallet. Although called a wallet, it doesn’t actually store your Bitcoins, but rather stores all the keys that will help you access your blockchain. The Bitcoins are stored in a blockchain.

 

What is a blockchain?

Blockchains are groups, of Bitcoin holders. It is a digital ledger that publicly shows the details of the accounts in a blockchain. Transactions and transfers can only be made within a blockchain. A blockchain would look something like this, giving all your account details while encrypting your identity.

 

 

So is it too late to invest?

Maybe yes, maybe no. But there is a good chance your investment will pay good dividends. Valued at less than a pound 5 years ago, one Bitcoin at the time of writing this article is priced at £3,500. In economic’ terms, even a ‘Boom’ is an understatement of its value.

 

If you do, go ahead with plans to invest, we would suggest reading a little more about Bitcoins. For a better understanding, you can watch this video as well. Happy mining!

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