Bitcoin. Features and Benefits

What is Bitcoin?

The high demand around various cryptocurrencies is due to the popularity of Bitcoin. Bitcoin is a new generation of digital currency (cryptocurrency), the creator of which, according to the official version, is Satoshi Nakamoto.

Bitcoin is a global payment system that allows transactions to be carried out with very low fees compared to other global payment systems and without intermediaries such as banks.

This currency is fundamentally different from all previously created electronic currencies and payment systems before Bitcoin, since its main task is the decentralization of the system: transactions take place exclusively in a network of equal clients, and the price of the coin is formed by market demand and supply.

Main features of the Bitcoin system

1) Anyone can become a member of the network.

2) There are no controlling organizations of the network.

3) The price is formed only by market demand and supply, there is no link to real assets.

4) There is no link to the user's identity, and there is no "registration".

5) There are no intermediaries in transactions: funds can be sent directly between network users.

6) It is impossible to block a transfer, or to cancel transactions already confirmed in the network (including even those transactions that were mistakenly sent to someone else's or a non-existent account).

7) You can store bitcoins in your online wallet or on an exchange, as well as on a computer, smartphone or hardware storage.

8) Limited supply of Bitcoins, which will not exceed 21 million.

9) Openness of the system and publicity of transactions: Bitcoin is a non-anonymous currency, information about completed transactions can be viewed freely on the network using various blockchain explorers (for example, Blockchair.com, Blockchain.com and others).

How to get started with Bitcoin?

The first thing you need to do is register an online wallet where you plan to store your bitcoins, and write down and securely store a 12-word randomly generated secret phrase, which is the recovery key.

There are several ways to get Bitcoins. The easiest way is to buy them through an exchanger or stock exchange by exchanging another currency.

The second way is to start mining them, or, as they say, "mining". Bitcoin mining occurs by using the computing power of a computer. In this case, it is worth considering the economic feasibility, comparing the costs of equipment and electricity with the profit received. However, mining alone is no longer profitable, since there are many pools of miners with high power.

Transaction Costs

Bitcoin network fees are among the highest among cryptocurrencies due to its popularity. At the time of writing, the average transaction fee for the last quarter was $0.05 - $1.43. At the peak of load and price in December 2017, the transaction fee could exceed $60!

The commission for sending transactions is set voluntarily by the sender, their size affects the priority when confirming the transaction and is measured in satoshi per byte. You can read about how transactions are confirmed in the Bitcoin network in our article. Usually, wallets suggest the optimal commission size at the time of sending the transaction.

If you want to set the commission manually and your wallet has this option, you can focus on the optimal commission indicators, which are presented on the site with commission monitoring.

Bitcoin Address Formats

There are 3 types of addresses:

P2PKH or Legacy address is the first version of Bitcoin address, which starts with the number "1" and has 26 to 36 characters.

P2SH is a new address type structured similarly to P2PKH, but starts with "3" instead of "1".

P2WPKH or Bech32 is an advanced address type. The addresses start with "bc1" and are longer than P2PKH and P2SH.

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