The world of digital finance turned upside down in 2008, as soon as a mysterious software engineer under the name of Satoshi Nakamoto introduced Bitcoin. Initially meant for purely transactional purposes and built with a philosophy of escaping intermediary banking oversight, BTC quickly became the golden standard and a significant store of value in the crypto world. Here’s a beginner-friendly introduction to Bitcoin with an explanation of its mechanics of work, the history of its emergence, and factors affecting its monetary value. 

What Is Bitcoin? 

Let’s start from the basics of cryptocurrency by looking at what Bitcoin actually is. According to its official definition, it’s a decentralized digital currency that enables peer-to-peer (P2P) transactions without the engagement of banking intermediaries. The most revolutionary aspect of BTC’s introduction was the technology powering it – blockchain is a distributed, public ledger system that guarantees transparency and security of all on-chain transactions along with their immutability. 

So, what was so fundamentally new about Bitcoin as a digital asset of exchange? The basics of crypto asset that revolutionized global finance are as follows: 

• Bitcoin doesn’t resemble any fiat currency because of the lack of governmental or banking control over it. Due to the use of public ledger technology, Satoshi Nakamoto has made Bitcoin truly decentralized and community-owned. 
• Bitcoin transactions are verified and completed with the help of a node network distributed worldwide. These nodes power the system and ensure its existence, with no single node having a decisive word in the operations. 
• Transactions with BTC are verified with the help of a Proof of Work (PoW) consensus mechanism rooted in the principle of network contribution via BTC mining. 

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A Brief History of Cryptocurrency 

Every person seeing the price of BTC reaching $100,000 wishes they could have embraced its value at least a decade ago. So, how did it all start, and what has brought BTC to the peak of the crypto market? Here is a bit of the history of Bitcoin’s creation, introduction to the world, and its gradual adoption. The 2008-2009 timeline of Bitcoin for beginners is as follows: 

• Satoshi Nakamoto (a person or a group of people) published a whitepaper about Bitcoin as the first-ever P2P electronic cash system online. The whitepaper laid out the main features of Bitcoin as the next-gen currency and stressed its ability to replace banking intermediaries. 
• The genesis block of Bitcoin (Block 0) was generated at the start of 2009, thus creating the first Bitcoin. 
• Soon afterwards, the first transaction for 10 BTC was sent by Satoshi Nakamoto to Hal Finney, thus marking the start of the BTC blockchain’s operations. 

The next year, 2010, was marked by another important event in Bitcoin’s existence – the first real-life purchase for Bitcoins. May 22, 2010, is currently celebrated as Bitcoin Pizza Day, as one of BTC’s early adopters, Laszlo Hanyecz, bought two pizzas for the unbelievable sum of 10,000 BTC. The sum of payment may seem unbelievable today, but in those days, BTC cost a bit more than a cent. 

The next couple of years witnessed a gradual increase in Bitcoin’s visibility and popularity as blockchain technology gained more traction. The BTC price hit $1 in 2011 and reached $1,000 in 2013, thus attracting the masses to BTC and ushering in the first crypto boom. The next BTC peaks included $20,000 in 2017, $69,000 in 2021, and a more recent $103,000+ after Trump’s return to the U.S. Presidency. 

How Does Bitcoin Work? 

It’s essential to understand how Bitcoin works for beginners; otherwise, entering this crypto niche may get too risky for the investor’s money. Here are the main technical aspects vital for the understanding of BTC mechanics: 

• Blockchain is a decentralized, public ledger technology powering all BTC transactions and BTC mining operations. All transactions happening with BTC assets, regardless of the sum and geographical location of the deal, are grouped into blocks and recorded on the ledger via cryptographic validation. This data can’t be changed, thus making the blockchain immutable. Besides, the data is open to everyone for audits and tracking, which guarantees ultimate transparency. 
• The PoW mechanism is closely related to BTC mining. All miners participating in the blockchain’s operations solve cryptographic puzzles to unlock new BTC blocks. Once this happens, the miner gets a reward for unlocking BTCs. This way, mining and transaction validation go hand in hand. 
• A decentralized, peer-to-peer network of nodes powering the BTC blockchain eliminates the risks of censorship and governmental control because there is no single point of failure. 
• BTC’s supply was initially capped at 21 million coins, thus guaranteeing the asset’s scarcity and shielding the asset from depreciation and hyperinflation.  

How Does Cryptocurrency Gain Value? 

Another common question among crypto beginners is, “How does cryptocurrency gain value?” The answer is not that simple, as every crypto asset has some underlying utility, mission, and value for the project’s founders and users. 

As crypto doesn’t resemble fiat currencies, its value isn’t pegged to governmental decisions or inflation. Something else is behind the dynamics of crypto asset value; the intricate interplay of supply and demand, the asset’s scarcity, along with community adoption and key stakeholder manipulation, come into play to shape the daily price of BTC and hundreds of other coins. 

Let’s take a look at the example of Bitcoin. What affects its price fluctuations? Throughout its almost two decades in existence, BTC has experienced ups and downs related to: 

• Community hype and adoption. 
• Institutional pressures (e.g., legal prosecutions by the SEC, regulations on AML/KYC for crypto). 
• Shocks in the crypto market (large-scale crypto exchange hacks, exploits, and collapses). 
• Political rhetorics (BTC adoption as a national reserve currency in El Salvador, Donald Trump’s recent support for BTC reserve setup). 

All of these factors, along with smaller-scale internal events and changes, shape the price and affect its dynamics. Yet, it’s also vital to keep the crowd effect in mind; as soon as BTC starts rising or falling due to objective external factors, masses of buyers and sellers push the trend further and often create price fluctuations disproportionate to real-life events that cause them. 

Is Bitcoin Safe for Beginners? 

Can BTC become a safe and reliable beginners crypto investment? Generally, yes, Bitcoin is the least volatile and the most trusted asset in the whole crypto world. Yet, BTC is also subject to volatility, and its price may vary widely depending on the dominant rhetoric in the political and regulatory arena. That’s why all users entering the crypto world and acquiring Bitcoins should be aware of this risk and match the percentage of BTC investment with their appetite for risk. 

Wallet safety is also a pressing concern for all Bitcoin and other cryptocurrency owners. As the Web3 world lacks comprehensive regulation, scammers and fraudsters are much more plentiful in the crypto space to fool novice users and steal their sensitive data, passwords, and funds. Cybersecurity is at the basics of crypto storage, trading, and exchange, as the absence of intermediaries makes users extremely vulnerable to hackers. Thus, the main principle of using Bitcoin for beginners is to educate themselves on the variety of digital risks, to store passwords in secure offline locations, and to double-check all counterparty data before sending crypto. 

How to Get Started in Cryptocurrency 

If you’re interested in how to get started in cryptocurrency, here is a handy step-by-step guide on getting Bitcoin for beginners. To become a crypto holder, you should:  

• Choose and create a wallet. As with fiat money, you first need to open an account where you can place it for storage or further use. In the same way, you should study the market for crypto wallets and choose the one that suits you the most. Some crypto exchanges offer on-site storage of funds, which is pretty convenient. Yet, if you want greater safety, you can open an external wallet like MetaMask or Trust Wallet and keep your funds there. 
• Pick an exchange. The next stage is choosing the crypto exchange where you will perform your purchases. There are a couple of platforms with global coverage, while others offer regional coverage for specific eligible populations. Thus, you will need to choose an exchange in relation to your jurisdiction and citizenship (e.g., Gemini, Kraken, Binance, or Coinbase). 
• Deposit money. Once you have opened an account on the crypto exchange, you will need to deposit money to your account or use the P2P trading section for a peer-to-peer transaction. Send your fiat money to the seller, give them your wallet’s ID on the exchange, and get the designated sum of BTC to your balance. Congrats, you’re now a BTC owner! 

Hopefully, you’re now more knowledgeable about how to get Bitcoin and store, trade, and send it safely in the crypto space. Despite all the risks and uncertainties still surrounding the crypto industry, BTC remains one of the most revolutionary innovations of the past few decades. It has unleashed the unlimited potential of decentralization, financial freedom, and transparency. Thus, by mastering BTC and crypto use, every user can tap into this vibrant, quickly evolving sphere of alternative finance. 

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*This article is for informational purposes only and does not constitute financial, investment, tax, or legal advice. Cryptocurrency involves risks and regulatory considerations, crypto investments are subject to risks and regulations vary by location.

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