Blender Wallet allows you to cancel a sent Bitcoin transaction and return funds to your address. The article describes how to use this feature to cancel a Bitcoin transactio
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Public interest in the cryptocurrencies is growing every day, and today it's difficult to find a person, who wouldn't hear the word “bitcoin”. Appearing ten years ago, Bitcoin laid the foundation for the great financial revolution, the attack of which the famous personalities of the crypto world predict in 10-15 years, but you need to prepare to this event now.
This guide will introduce you in simple words to the basics of the main cryptocurrency, tell you what bitcoin is, and how to take the first steps to buying and selling BTC, and also how to earn your first coins.
Bitcoin (BTC) is a digital payment system, which operates in a peer-to-peer network and allows parties to directly exchange cryptocurrency which on the Bitcoin network has the same name. Unlike conventional electronic systems (for example PayPal etc.) in which fiat money functions, such as euros, dollars, etc., bitcoin doesn't have a physical form.
The main difference between Bitcoin and traditional currencies is its decentralization, that is, no bank and no state controls the emission and conduct of transactions. Independent nodes are engaged in this – each user can launch his own node, buying the necessary equipment and download the Bitcoin blockchain.
History of Occurrence
The history of bitcoin originates from the date of publication on the Internet of a document in the middle of autumn 2008 entitled “Bitcoin: A Peer-to-Peer Electronic Cash System”, in which the creator described the principle of work and the purpose of the first cryptocurrency. This document is also considered as “White Paper” of a true public blockchain.
Bitcoin Properties
According to Satoshi Nakamoto's Vision, the “father” of the first cryptocurrency, a real blockchain, which is Bitcoin, must have the following properties:
Decentralization. Transactions are made directly from the sender to the recipient without involving intermediaries. Payments are verified using the computing power of billions of computers scattered throughout the globe.1 processing power = 1 network member (it is important that the node binds to the CPU, and not to IP), moreover, all participants are equal. A transaction is not verified until most nodes confirm it.This is one of the main advantages of bitcoin, because no one can freeze or decline a payment, as it happens with banks or with electronic payment services;
Anonymity. In order to get a Bitcoin wallet, you don't need to specify your personal data. Each participant receives a unique public key (address), and also a private key that gives access to funds management. All confirmed transactions are recorded on the blockchain and anyone can get information about the addresses of the sender and the recipient, the amount of payment and the date of sending. Previously, this data did not allow to associate a transaction with a real person, however special tools have already been developed to identify the sender and recipient and whole companies do it (such as ChainAnalysis). Therefore, at the moment Bitcoin is considered a pseudo-anonymous cryptocurrency;
Transparency. Bitcoin is a transparent network, that is, everyone can get information about any of the transactions. Аccordingly, the recipient can easily check whether the payment was made by the sender, because every transaction is recorded in the blockchain “journal”;
Security. Because of the algorithm, which is the basis of the blockchain, data in a transaction cannot be changed, delete or edit. All blocks are inextricably linked and to change the information of one, you need to change the information of the previous one, etc. that is, you need to make changes to the information of all blocks ever created, to edit the data of the last one, and this is technically impossible. Theoretically, it is possible to change transaction data in a still open block, but for this you need to have more than 51% of the world's computing power, and this is also very difficult.
Bitcoin has one more feature, which is not typical for all modern cryptocurrencies – limited emission. In total, 21 million BTC is laid in the genesis block the last of which will be produced in about 2140. Because of this feature, Bitcoin has been given the nickname of Digital Gold.
Another similarity between bitcoin and gold. If a few years ago, due to the high volatility, Bitcoin was mainly used for trading speculations on exchanges, now the first cryptocurrency is beginning to be seen by an increasing number of people as an asset to preserve value. Bitcoin and the dollar are often compared, however, despite the fact that today you can buy some goods and services for bitcoin, it is not well suited for this due to low scalability.
Bitcoin Creator – Satoshi Nakamoto
The history of bitcoin would be incomplete without mentioning its creator – Satoshi Nakamoto. Who is Satoshi is still one of the biggest secrets of the blockchain world. Assume that this is one person or group of people.
Very few facts are known about the creator of Bitcoin: he was fluent in English and made no typos in his texts; he knew the C ++ programming language, on which the Bitcoin code is written; he was a top class professional in the field of cryptography, that is why he managed so successfully to “cover up” his tracks. It is noteworthy that despite the fact that Satoshi Nakamoto is the richest of all Bitcoin billionaires, none of BTC was transferred from his wallet.
After Satoshi took Bitcoin out, he disappeared without a trace. Later, especially against the backdrop of the rapid development of cryptocurrencies, self-proclaimed Satoshi appeared. The most famous of them is scandalous Craig Wright, which in the crypto world was called "faketoshi."
Bitcoin Hard Forks – Attempts to Improve the Code
In the first years of the existence of bitcoin and increase interest in it, became clear that it is very far from perfect. As the Bitcoin code is open, then users interested in the development of cryptocurrencies started offering “improved versions” of bitcoin. Major improvements related to anonymity and interchangeability.
However, not every bitcoin hard fork was successful and often contradictions grew in society. As a result, a lot of cryptocurrencies split off into separate projects. Among the most successful are such coins as Bitcoin Cash, Bitcoin Diamond and Bitcoin Gold. But even more were unsuccessful.
Some developers went some other way – they took the bitcoin code and built a new cryptocurrency on its basis. However, among hundreds of projects,only few people offered really interesting ideas. Among the most successful forks of Bitcoin are Litecoin, Zcash and Dash.
The next major bitcoin problem with the growth of the network was the deterioration in scalability and the increase in commission. The first one was solved by implementing the SegWit protocol, which doubled block capacity, the second – through conducting transactions in the “superstructure” Lightning Network, which allowed for instant transactions with almost zero fees.
How Bitcoin Works
Bitcoin works by peer-to-peer system (a decentralized computer network in which all participants are equal). All transactions occur on the blockchain network.
Bitcoin transfer occurs directly from sender to recipient, moreover, the payment is irreversible, i.e it is impossible to withdraw or adjust. It is used computer computing power for payments, and the information is processed through the client program,launched on many computers, scattered throughout the world. For security, cryptographic methods of data transfer are used.
But alongside this all transaction information is publicly available. Any user can get the public addresses of the sender and recipient, аmount and date of transfer.
We can explain in simple words how bitcoin works by the example of a book. Each page of a book is a transaction. To understand the meaning of the composition, pages need to be read in a certain order – each next page is connected to the previous one by meaning, likewise transactions in the block are interconnected.
Just as you can't to take out or replace the pages, without distorting the meaning, transactions cannot be canceled or adjusted. A certain set of pages forms a book, and all transactions sent in the last 10 minutes form a block. If every book is a volume and together it is parts of composition, that all the blocks form a blockchain, and each subsequent block contains information about the previous one. This makes the blockchain network so reliable.
Buying and Selling Bitcoin
In the early years of Bitcoin it could be bought only on thematic forums buy "from hand to hand". Today there is a lot of ways how to buy bitcoin. For a one-time purchase for long-term investment, exchangers or peer-to-peer sites like Localbitcoins are best suited.
If the goal is trading – in this case Bitcoin exchanges should be preferred.
Especially popular are electronic payment systems such as Qiwi, however to use them you need to pass verification which automatically deprives the user of one of the basic advantages of the blockchain (according Satoshi Nakamoto's vision) – anonymity.
Bitcoin Rate
Аt the time of launching the first bitcoins it had no value. The first Bitcoin rate was fixed on the first exchange called New Liberty Standard in early October 2009: at that time you could buy more than 1300 BTC for $ 1.
The first serious interest in bitcoin and in cryptocurrencies in general, appeared in 2010, after the historic buying pizza for 10,000 BTC. Then Bitcoin pass through ups and downs. Big hit on the reputation of cryptocurrencies was hacking the Mt Gox exchange, when users lost thousands of bitcoins from their accounts. However, the first cryptocurrency pass through all attacks and 2017 brought real hype, and bitcoin showed its historical maximum of $ 20,000. However, after rapid growth followed by an equally rapid fall in 2018, which in the crypto community was nicknamed as “cryptowinter”.
At the moment, bitcoin exchange rate history ends with bull run with a BTC price over $11,000. What will happen next – let's see, but the most modest forecasts of people known in the crypto industry predict bitcoin growth until the end of 2019 at least to the level of historical maximum.
Earning bitcoin can be with investments and without it. But you need to understand, that you have to invest anyway – if not with money, that with time. One of the most popular ways to earn bitcoin without investments is bitcoin faucet. These are special sites, which charge satoshi (“bit” of bitcoin) for completing simple tasks. You can perform them almost around the clock (on average every 15-20 minutes). And some sites allow you just “collect” satoshi for watching ads. At first sight, it seems that “it's in the bag”, but don't hold your breath – it’s impossible to become a crypto millionaire on bitcoin faucet, because earning will merely comprise a few thousand rubles at full “working day”. But this way will be great as the first step to the crypto world for exploring cryptocurrency.
More substantial money can be earned, if you have specialized knowledge and skills in the field of IT. Designers, copywriters, programmers and other professionals can find projects or even a full-time job on special freelance sites, on which the calculation is carried out in cryptocurrency. Besides, the most progressive blockchain companies on an ongoing basis offer their employees payment in cryptocurrency as well as fiat money.
In addition, you can earn bitcoins through monetization of your own content. This includes the launch of your own site or YouTube channel creation of courses at special venues (e.g. Udemy). With the growing popularity of cryptocurrencies with the monopolist in the field of monetization of Google AdSense advertising appeared crypto competitor Bit Media which makes payments in bitcoin for clicks on ads on the site.
The methods described above allow you to earn bitcoin without financial investments or with minimal investment (fee for domain and hosting on the site, purchase of a subscription on a freelance website), but they are time consuming.
Methods below give an opportunity not just earn a few hundred satoshi, but can also become a full-fledged business, however, cash finance is needed to launch them. But for example, you can start trading with $ 10. However, must be taken into account, that trading is not only one of the appropriate way to “hit the jackpot”, but can also cause the loss of all capital in a short time due to the high volatility.
In order to trade on the exchange, you need to have knowledge in the field of technical and fundamental analysis, and also be aware of current cryptocurrency news. But at first, newcomers can use the so-called copy-trading to gain experience, repeating transactions of more skilled traders, and also use signals from well-known experts in the field of crypto trading.
But before you start trading on the exchange, it is recommended to learn investing in cryptocurrencies, or, as they say in the crypto world, strategy “hodl”. This way of earning bitcoin involves buying a coin at a favorable rate and its retention for a certain time with intend to sell at a higher price in the future. But here it must be taken into account that in order to get a decent profit, you need an appropriate amount of investment, considering the low volatility of bitcoin compared to altcoins.
One of the most profitable ways is Bitcoin mining, of course. However, provided that you have the money to buy powerful equipment. In the days of Satoshi Nakamoto for mining Bitcoin, you could use an ordinary desktop computers processors, nevertheless, today the mining of the main cryptocurrency has turned from destiny of enthusiasts into a full-fledged business. The reason of everything – the growth of the complexity of the Bitcoin network, because of what, mining becomes profitable only when using ASIC farms. If you have the accumulation in BTC or funds for investment you can do microcredit, i.e issuing loans in bitcoin. This method allows you to earn up to 15% per year, but it would be appropriate to keep in mind that this method is one of the most risky, because the borrower can simply leave the site and not return the borrowed bitcoins.
How to Store Bitcoin
Previously, cryptocurrency storage was very inconvenient and required special knowledge from a user (for example, when sending BTC “change” had to be returned manually). Today with the development of the sphere various ways to store bitcoin have appeared:
Online Wallets – the simplest but at the same time the most insecure method due to possible hacks and phishing attacks. Suitable for storing a small amount of BTC and for regular microtransactions;
Mobile Wallets – similar to the first option they are convenient for making frequent payments, however, dangerous for storing large amounts of cryptocurrency (exception – if the wallet has a “cold” storage function and the device never connects to the Internet);
Desktop Wallets – their advantages are usability and various functional, but for secure storage of bitcoins you need to take care of a reliable antivirus, but it's even better to use it offline.;
Paper Wallets – one of the most reliable and cheap “cold” bitcoin wallets, but there is a risk to lose this sheet with a private key, besides, someone might see it, or paper can simply be damaged by mechanical action or “grow old” with time. Also worth considering that such wallet is suitable only for storage, but not for transactions;
Bitcoin Core – perhaps the most reliable wallet, because it's installation involves the launch of a full bitcoin node. However a simple user doesn't need it, because the software is intended for advanced users, and it also requires a large number of hard drive space (at the time of writing an article, more than 200 GB of data);
Hardware Wallets – non-alternative option, if you need to store large amounts in Bitcoin and make payments regularly. The only drawback is the price (average cost is about $ 30). Note, that in no case buy a used device, as well as wallets from unknown brands – preference should be given to the trustworthy Ledger, Trezor or KeepPay.
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Each user should know the basic rule for storing bitcoin and other cryptocurrencies – no one ever show the private key of your wallet! To send a transaction, another user needs to know only the address (public key).
This guide is a short instruction in simple terms, but of course, it doesn't answer absolutely all questions, which may arise from beginners. In order to get acquainted with the world of cryptocurrencies and bitcoin in particular, we recommend you regularly read the materials on our website, as well as becoming a regular at topical sites, for example Bitcoin Talk or Bitcoin Wiki.
