Welcome to our complete beginners guide to Bitcoin. Maybe you already know a bit about Bitcoin, maybe you have heard all the “bad” things that mass media loves bring up; price volatility, used for illegal activities etc.

However, there is much more to Bitcoin than meets the eye, and with this article I hope to shine light of what Bitcoin actually is and how to get started with Bitcoin.

Welcome to the digital decentralized world!

Table of content

This article is divided in two parts – In the first part I will describe what Bitcoin is, why it was created, which problems it solves etc. The second part will focus on how to get started with Bitcoin, How to use it; How to buy it etc.

Part 1 – What is Bitcoin?

Bitcoin is one of the oldest virtual assets also known as Cryptocurrency. It’s based on the Distributed Ledger Technology, which is also known as the Blockchain. Bitcoin is a form digital money that is border less and easy to transfer, secure and resistant to censorship which means can’t be controlled, copied, manipulated or destroyed. No single entity or organization controls it, but more of that later on.

Bitcoin was created 2009 by an anonymous person (or group) under the pseudonym Satoshi Nakamoto. In his now famous white paper from 2008 he titled Bitcoin as –

Bitcoin: A Peer-to-Peer Electronic Cash System

With Bitcoin it is possible to send instant online payments anywhere without having to go through a third party financial institution / payment service or requiring an bank account. Goodbye to high transaction fees.

Bitcoin is decentralized digital money powered by a peer-to-peer network.

Does all this sounds like magic? Well it kinda is, let’s dive deeper into it by start with the decentralization aspect.

Decentralized digital money

Maybe you have heard the term decentralization before, it’s the opposite of centralization and it plays a very big role in Bitcoin (and almost all Cryptocurrencies).

Wikipedias definition of Decentralization is as follow –

Decentralization is the process by which the activities of an organization, particularly those regarding planning and decision making, are distributed or delegated away from a central, authoritative location or group.

With Bitcoin, there is no central authority or group that controls it, all transactions are peer-to-peer based and no single person can create new Bitcoins. Bitcoins are created collectively by the network miners after a strict set of rules by a process called mining.

This have multiple advantages such as –

  • It’s decentralised – No central person or organisation can control it, manipulate it or create new Bitcoins.
  • It’s trustless – Since it’s based on peer-to-peer, there is no need for trusting third parties to conduct transactions anymore.
  • It’s immutable – Transactions on the Bitcoin blockchain can never be changed or reversed.

But it’s a monetary system after all; it’s used as payment for goods and services and Bitcoin can be sent and traded all over the world, surely there must be something that controls the system, right?

It kinda is, but not maybe what you would expect, welcome to the Blockchain!

Image representing Blockchain

The Blockchain – removes the need of trust

The blockchain is a distributed digital ledger, it keeps the record of all wallet balances and transactions that occurs on the Bitcoin network.

For example, let’s say that I want to send you 10 Bitcoin, then this transaction would be timestamped and broadcasted to the network, then miners and nodes confirms that it’s valid and then saved to the Bitcoin ledger for all eternity.

In a perfect world this would be fine since we would trust each other, but what if someone counterfeit the ledger and manipulate the transaction, for instance removing you as the receiver and adding them instead and broadcast this manipulated transaction it to the network.

This would results in multiple versions of the transaction, which raises another issue – how could the network (miners and nodes) be able to decide which one that is correct?

This can surely not be a good thing for a digital money system. If it would be so easy to manipulate transactions, then it could never function as a usable monetary system, where trust is one of the most important factors.

Luckily, Satoshi had this scenario covered. As I mentioned above, the Blockchain is a distributed digital ledger, meaning that the ledger is downloaded by the network participants (nodes / miners, more about them later on) and everyone is keeping a local copy.

This is the reason why it’s really hard to change the ledger afterwards, since you would need to convince everyone (or at least for 51% of the network participants) that your copy of their ledger is correct and their is not.

Sounds easy, right? Well, continue reading..

If someone tried to manipulate the ledger it would be very easy for the network participants to spot that (thanks to the cryptographic methods that it used, hence the name cryptocurrency), and the network would reject that version of the ledger, making it a useless attempt.

Bitcoin is built to reward the miners, who are are responsible for creating new blocks and securing and validating transactions that occurs on the network, it’s usually not in their best (economic) interest to behave (or accept behavior) that can lead to the network getting hacked / manipulated. Because if that happens, their miners rewards could be worth less or worst case scenario worthless.

It’s truly a brilliant design!

Maybe it’s still hard to believe that this system could work in reality, but Bitcoin is a living proof of that, since it’s genesis block that was created over 10 years ago it have never been hacked, and to current date (19/05/04) it have had over 400 million transactions on it’s blockchain. Source

That sounds pretty secure to me at least.

With Bitcoin being a digital decentralized form of money, what problem does it actually solve, why is it better than regular money also known as fiat currency?

What problem does Bitcoin solve?

Bitcoin actually have a lot of advantages over regular fiat, for instance it’s border less, meaning that I can send money anywhere in the world for a fraction of the costs and times compared to sending regular payments via Swift or other international payment services.

Let’s say that you want to send money to a friend living on the other side of the world. Using traditional payment methods like Swift, you would need a bank account and your friend would need one as well.

Besides that, international money transfer usually takes several days and also have quite high transaction costs associated with it, which often is based as a percentage of the total amount.

It’s fair to say that the companies proving international money transfer services are not doing it for free.

With Bitcoin you can send instant money anywhere in the world basically free

With Bitcoin, all information you need for making an bitcoin transfer is the public key from the Bitcoin wallet to whom you want to make a transfer to.

Instead of having your friend to open a bank account to accept the money, he or she can just download and setup Bitcoin wallet on his / her computer (or create an online) and in minutes be ready to accept and send Bitcoin payments all over the world.

Besides that it’s very convenient to send bitcoin payments, it’s also very fast and very cheap. All transactions on the Bitcoin network pays a small transaction fee, however this fee is not dependent on how much money you send, but rather how much activity there is in the network.

In practice this means that it’s not more expensive to send 1 000 000 dollar in Bitcoin value than it is to send 1 dollar.

Bitcoin advantages

  • You don’t need a bankaccount to receive or send Bitcoin.
  • It’s borderless, you can send to anyone and anywhere in the world.
  • It’s very fast and cheap way to transfer money.
  • It’s trustless – There is no third-party that you need to trust, the Bitcoin software.
  • You own your money, not the bank or the government.

The price of Bitcoin

Maybe this is what Bitcoin is most famous for, it’s price, and for a good reason. When it was released over a decade ago, September 2009 to be exact, the price was a couple of cents. The first person to have Bitcoin was Satoshi Nakamoto himself, he mined the first block in the blockchain also known as the genesis block.

From that point it have had a parabolic movement in price and between 17th – 19th of December 2017 Bitcoin reached it’s current all time high, 20 000 dollar.

That event marked the local top for the 2017 bull market, and after that a new bear market started for Bitcoin, having it’s price steadily declined during 2018 and reaching a local bottom around 3 200 dollar one year later in December 2018.

From that point however, Bitcoins price have steadily risen and in May 2019 it hit 9 000 dollar, which according to many analysts marks the end of the bear market.

What will the future price of Bitcoin be?

It’s impossible to answer with certainty what Bitcoins future price will be, and anyone saying that or promising returns are most likely a con artist. However there are some known factors that will have an impact on price one way or another, which I discuss further down in the article which you can quick jump to by clicking here.

Before we discuss further the future of Bitcoin, let’s continue with part 2 of the guide – Getting started with Bitcoin.

Part 2 – Getting started with Bitcoin

In this section I will describe how to get started with Bitcoin. Before I dive into the details, I have composed a list of things that is good to know about Bitcoin before starting experimenting with it.

What you need to know about Bitcoin

There are some things that you should know before you are starting to experiment with Bitcoin, after all it’s revolutionary new digital money.

  • Keep your wallet safe
  • The price is highly volatile
  • Transactions can’t be reversed, only refundable
  • Taxes and local goverment

Keep your wallet safe – never give out your private key

Bitcoin (and other cryptocurrencies) are stored in digital wallets, that exists in different formats (Web, Desktop, Mobile and Hardware). The wallet consists of a private key and a public key. The public key is like a bank account, people will use that to send Bitcoin to you.

The private key is used to access your digital wallet and should be kept safe and never given out to anyone, ever. If someone is asking for your private key, then it’s a scammer, never give it out. The one that have the private key to the wallet will have full access to the wallet.

In contrast with having money on an bank account, where the bank can give you insurance on the money, with Bitcoin you are solely responsible for keeping you wallet safe.

I will further down in the guide discuss how to  secure store your Bitcoins. If you wanna jump to it now click here.

The price is highly volatile

This is most likely what the masses think of when they hear the word Bitcoin. Bitcoin and other cryptocurrencies are still very speculative assets, which can give great rewards but also comes with risks as well.

The crypto trading market is open for trading 24 / 7 and is more or less unregulated, which is the reason why it’s considered a high risk market.

The golden rule is to never use money that you are not comfortable with losing.

Transactions can’t be reversed, only refundable

As we have discussed earlier the blockchain is immutable, which means that once an transaction gets accepted by the network and recorded in the ledger, it’s non reversible.

This mean that if you send Bitcoin to the wrong address, chances are big that the Bitcoin will be lost. If you know who’s wallet you sent it to, chances are that they will send it back if you contact them, but since wallets are anonymously, it’s not easy to look up the owner of a wallet (some exchanges wallets are easier to track down altou).

I made this checklist below which I always use before sending a transaction.

Checklist before sending a Bitcoin transaction

  • Double check both one and two times so that the wallet adress where you intend to send the Bitcoin are correct. If you can scan the QR code this is recommended instead of typing the adress.
  • Test with a smaller amount first, if that works fine then you could send a larger amount. If your wallet supports saving adresses, then that is recommended to do.

Taxes and local government

Bitcoin and other cryptocurrencies is not considered a legal currency in most countries, but rather an asset. This means that selling and trading Bitcoin could be an taxable event. Check which rules that apply in your current jurisdiction.

With that in place, let’s continue with how to store Bitcoin.

How to store Bitcoin

Image representing a Digital Wallet for BitcoinBitcoin is stored on digital wallets which can be categorized into four groups, Web, Desktop, Mobile and Hardware.

In this section we will cover all the different types of wallets, their advantages and disadvantages and list the most popular wallets of each type.

Desktop wallets for Bitcoin

A desktop wallet is a program that is downloaded to your computer, where you can send/receive Bitcoin. Desktop wallets are among the safest way to store Bitcoin, especially since many of them allows you to sign an transaction without being online.


  • Safer than web wallets since the private key is on your computer, and they don’t need to be connected to the internet all the time.
  • Most of the biggest wallet software allows you to sign transactions offline, giving even more security when sending your funds.


  • Since the private key is stored on your computer, it’s not recommended to download a wallet to a shared / public computer.
  • If your computer gets infected by virus or hacked, then there is a chance that the hackers can get access to your private keys. Always use anti-virus software!!
  • It usually requires more setup to get started.

Web wallets for Bitcoin

Web wallets are digital wallets hosted on a website. For example if you are using an Bitcoin exchange like Coinbase, they provide web wallets where you can store your Bitcoin.

Web wallets are digital wallets hosted on a website. For example if you are using an Bitcoin exchange like Coinbase, they provide web wallets where you can store your Bitcoin.

Web wallets are easier to get started with, but is also less secure, especially if you don’t control the private key. There is an saying in Crypto –

Not your keys, not your Crypto

Simple and plain this means that the one who controls the private key controls the wallet.


  • Easier to get started with, most exchanges where you can buy Bitcoin also offers a web wallet to store them.


  • Usually you don’t have control of the private key, which means that you need to trust a third party to keep it safe.
  • Since web wallets live online there is always the risk of the wallet provider is getting hacked.

Web wallets are the least secure way to store your Bitcoin long term, they should only be used temporary or for Bitcoin that you intend to trade.

However, having them on a secure and respected exchange is much better than a less reputable exchange. Below is a list of exchanges where you can buy Bitcoin which have high security standards and provide a web wallet for storing Bitcoin.

  • Coinbase – An easy to use exchange for buying Bitcoin and other major cryptocurrencies. Beginner friendly.
  • Bitpanda – A competitor to Coinbase, exchange to buy Bitcoin and other cryptocurrencies. Beginner friendly.
  • Binance – Both an exchange for buying Bitcoin (and many other smaller cryptocurrencies), and also a advanced trading platform. A bit more advanced than Coinbase and Bitpanda.

Usually it’s fine to keep your Bitcoin on any of the above exchanges temporarily, but I recommend to look into another wallet type if you plan to store your Bitcoin for a longer time.

My recommendation is a hardware wallet, which I will discuss next!

Hardware wallets for Bitcoin

Hardware wallets are the most secure way to access and store your Bitcoin. They are about the same size of an USB memory with the addition of a display and buttons, and can be connected to your Mac, Windows or Linux computer via USB cable.

The beauty of hardware wallets is that the private key never leaves the device, which makes it more or less impossible to lose the private key due to an hack or infected computer, since all transactions must be signed on the device as well.


  • The safest way to store Bitcoin and other Cryptocurrencies, since the private key never leaves your hardware wallet.
  • Offers the option to easily restore and backup your wallets on a new device.


  • Requires a little more setup than for example a web wallet.
  • You need the USB device to be able to access your funds. It’s advised to keep at least one hardware wallet as backup in case one get lost / broken.
  • They are not free like most other wallets, and cost around 60-80$
  • Ledger Nano S – Ledger Nano S is an secure USB wallet from a company named Ledger and supports over 1100 cryptocurrencies such as Bitcoin, Ethereum, Ripple etc
  • Trezor One – Trezor One is an secure USB wallet from the company SatoshiLabs s.r.o. It supports more or less the same cryptocurrencies as Ledger does.

My recommendation is to invest in a hardware wallet, it’s a very cheap price to pay to get the highest security for your Bitcoin.

Mobile wallets for Bitcoin

Last but not least, there is also the possibility to store Bitcoin on your mobile phone. There are a variety of different apps that you can download and store Bitcoin (and other cryptocurrencies) on.

A mobile wallet is also the most accessible way to interact and use your Bitcoin, but should not be used to store all your Bitcoins for long term, but rather small amounts that you intend to spend in the near future.


  • Easy to access and spend your Bitcoins.
  • Provide higher security than for example a web wallet.
  • The private key is on your phone, making it harder for hackers to access it.


  • Since a mobile phone is usually connected to internet, they do also possess the risk of getting hacked.
  • Most wallets are protected by a pin-code that you decide yourself, but if your phone get lost or stolen, a hacker might be able to get access to your funds.

Are you still reading..?

Great, then you know everything (or hopefully a bit more 🙂 ) about digital wallets for Bitcoin.

I do believe that an hardware wallet is the best way to store your Bitcoin, both for short term but also long term. In the coming days I will provide a super easy guide on how to get started with Ledger Nano S.

Next up – How to get some Bitcoin (so you have something to put in your wallet)

How to get Bitcoin

Image for How to get BitcoinOne common misconception I hear a lot is that it’s very difficult to get Bitcoin. This was probably true 10 years ago when Bitcoin was launched, but these days it’s super easy to get Bitcoin.

Basically there are two ways to get Bitcoin –

  • Buying – The easiest way is to buy Bitcoin from an online exchange.
  • Mining – If you don’t wanna buy Bitcoin from an exchange you can mine it, however this is usually not cost effective anymore with a regular computer and requires more setup to get started.

Buying Bitcoin

The easiest way to get Bitcoin is to buy it from an online exchange with a Visa / Mastercard Credit/Debit card. Most exchanges also offers a web wallet where you can store it until you decide which wallet type you want to use.

Within minutes you can have your first Bitcoin (or maybe part of Bitcoin).

You don’t need to buy a whole Bitcoin, it’s perfectly fine to buy 0.01 BTC (Bitcoin is dividable).

Below is a list of exchanges that I use to buy Bitcoin, since they offer high security and reasonable fees.

Always do your own research on any exchange before making a decision to buy.

Image representing Bitcoin Exchanges

  • Coinbase – One of the biggest and most secure exchange to buy Bitcoin, Ethereum and other cryptocurrencies. Very easy and user friendly.
  • Bitpanda – Another very secure and easy to use exchange. Have a bit higher fee’s than Coinbase. Beginner friendly.
  • Binance – One of the biggest and most famous crypto exchanges & trading plattform. Supports Bitcoin and tons of other cryptocurrencies.
  • Kucoin – An easy to use and secure trading platform, but are smaller than Binance considering trading volume. Supports Bitcoin, Ethereum and many other cryptocurrencies, often smaller ones than have not yet been listed on Binance.

As I have already mentioned, temporary it’s usually fine to store your Bitcoin on any of the exchanges above, but you should definitely look into getting an hardware wallet if you plan to store your Bitcoin for a longer time.

My personal recommendation is Ledger Nano S (it was the first I used), but Trezor are equally good.

Bitcoin Mining

The other way to get Bitcoin is to mine it. But how do you mine a currency that is purely digital? With computers, of course!

Basically, the Bitcoin mining process serves two very important purposes

  • Confirms transactions in a trustful way and secures the network.
  • Creates (issues) new Bitcoins for each produced block.

Mining for Bitcoin is by design a very resource intensive task, it requires a lot of computing power and gets more time and energy consuming for each new block created.

The Blockchain is basically a long list of blocks which contains transactions on the network. These blocks are created in the mining process.

The process of mining is what makes Bitcoin secure and tamper free (since a majority of the miners must confirm all new blocks) but it’s also the only way issuing new coins into circulation.

This inflationary model gives all miners have an economic incentive to behave well (according to the Bitcoin protocol rules) and act in a way that secures the system. If the system fails their Bitcoin could get worthless.

Proof of Work

Bitcoin use a mining process called Proof of Work, or PoW for short. This is a method for blockchain systems to keep them safe and reach a consensus within the network of which transactions that have occurred.

A proof of work is a piece of data which is difficult / time consuming for a miner to produce (the miners computers needs to solve complex mathematical problems) but are very easy for other miners to confirm once the solution is found.

When a proof of work is found and it is accepted by a majority of the other miners, then a new block will be produced by the miner that found the solution, the miner becomes something called a block producer and gets rewarded.

New blocks in the Bitcoin network are created approximately every 10 minutes. Other cryptocurrencies have different block times.

There are other, newer methods for a blockchain system to reach consensus, for example Proof of Stake, where you instead of mining for a proof of work, staking a high number of coins to secure the network.

If you want to read more about Proof of Stake, please read our introduction to the blockchain article.

Block reward

When a miner discovers a new block they are rewarded with a pre determined amount of Bitcoin that is controlled by the Bitcoin protocol (programming code) and is agreed upon by the entire network.

When writing this article, the current reward is 12.5 Bitcoins for each new block, but this will be halved every 210,000 block, and the next block halving is estimated to occur in May 2020, and will reduce the block reward to 6.25 Bitcoin.

Besides the block reward, the block producer will also get all transactions fee’s in the block they created.

This halving process will continue until all 21 million Bitcoins are in circulation (based on current inflation rate this will happen in year 2140).

Will there ever be more than 21 million Bitcoins?

Bitcoin has a finite supply of 21 million Bitcoin, which was decided by the founder Satoshi Nakamoto when he created the Bitcoin software and written into the Bitcoin source code aka it’s protocol.

Nobody alone can change this, it would require the approval of a majority of the Bitcoin core developer to do so, and it’s safe to assume that they are not very fond of the idea to remove the part that makes Bitcoin unique compared to traditional fiat such as the US dollar, where governments can print new money whenever they want (inflation).

In my opinion it’s quite safe to assume that there will never be more than 21 million Bitcoins, at least not in the foreseeable future.

But technically it’s possible thou and since Bitcoin is open source, anyone could “fork” (copy) the Bitcoin code, make changes to it and run it as a new blockchain (this have happened to Bitcoin multiple times, example Bitcoin Cash is a fork of Bitcoin BTC), but it would be a complete new blockchain.

Under the years there have been many copies of Bitcoin, but none have even come close to “overtake” Bitcoin BTC, and in my opinion this is not likely to happen anytime soon.

Now when you know how to get Bitcoin, let’s continue with how you can use Bitcoin.

How to use Bitcoin

You are still with us? Awesome! Let’s discuss what Bitcoin can be used for.

There are multiple ways to use Bitcoin, for instance

  • Payment for goods and services – It’s easier than ever for merchants to accept Bitcoin as payment for goods and services.
  • Transfer of value – One of the main use cases for Bitcoin is to be a cheap and instant way to transfer value from one wallet to another.
  • Trading – Bitcoin is the main cryptocurrency used for trading other cryptocurrencies. Almost all cryptocurrencies use Bitcoin as base for trading.
  • Investing / Speculation – Bitcoin can also be treated as an investment / speculative asset, with the hope of that it will increase in value of over time.
  • Store of value – Since Bitcoin have a fixed amount of 21 millions, it could also be used as a store of value, often compared to digital gold.

Payment for goods and services

Believe it or not, Bitcoin is actually used by real merchants and companies as a way of payment for services and goods. One example or a large retailer is Overstock, and also Wikipedia is accepting Bitcoin and other cryptocurrencies.

There are a several companies like Square.com that helps merchants to easily integrate and accept Bitcoin payments in their business.

Transfer of value

Bitcoin was created for the purpose of moving value (assets) from one wallet to another. As I mentioned earlier, Bitcoin provides border less, near instant low cost transfers without the need of an bank account.

With just an Bitcoin wallet address you can in the blink of an eye transfer money anywhere in the world without the need of an bank account.


Bitcoin is also used to trade other cryptocurrencies, almost every cryptocurrency can be traded against Bitcoin. The entire crypto market is very dependent on Bitcoin, the price move of Bitcoin affects the entire cryptocurrency market.

Bitcoin importance in the crypto trading world can be compared to the US dollars importance to the world economy.

When Bitcoins price goes down all other Cryptocurrencies goes down as well.

Investing / Speculation

Bitcoin (and other cryptocurrencies) can be bought as an investment asset, where the hope is that it will increase in price over time. Historically this has worked out quite well for Bitcoin, giving that the price have risen from a couple of cents (2010) to 20 00o dollar at current all time high (Dec 2017).

However cryptocurrencies is still an emerging, high risk market, which is open 24/7 and is very much unregulated, which unfortunately leads to that manipulation and wash / insider trading occurs. A lot of initiatives are taken to regulate the market around cryptocurrencies, so expect it to be more regulated in the future.

However Bitcoin is considered to be the safest of all cryptocurrencies to invest in, since it have been around for so long without getting hacked and proved that it offers a working product that is being used by companies and consumers.

Smaller cryptocurrencies, also known as “Alt coins” have a higher degree of risk than Bitcoin, since they often are in the development mode or have just launched and not been battle-tested yet.

The future of Bitcoin

Despite the label mass media usually place on Bitcoin and other cryptocurrencies, Bitcoins future looks more bright and promising than ever.

More and more companies are building apps and services on top of Bitcoins blockchain, and more merchants (larger ones as well) are testing to accept Bitcoin as a way of payment.

Bitcoins low transaction fees (especially compared with Visa / Mastercard) makes it attractive for merchants.

List of companies accepting or building on Bitcoin

Below is a very brief list of companies accepting or building on Bitcoin.

Bitcoins future price

Finally, now we have reached to one of the most common asked questions, what will the future price of Bitcoin be?

Well the answer is that it’s impossible for anyone to say, and anyone who promises a certain price is most likely con artist.

However, there are some known factors that most likely will impact the price on way or another which I will present below.

Factors that might have an impact on Bitcoins future price

Below are some factors that most analysts and traders believe will affect Bitcoins future price.

  • Scarcity – There will only be max 21 million Bitcoin ever (this cap is expected to be reached around 2140) which means that there is not even enough Bitcoin if all of the world millionaires wanted to own 1 Bitcoin.
  • Halving in 2020 – The block reward will be halved around May 2020 to 6.25 Bitcoin / block (from todays 12.5). This event have historically lead to Bitcoins price rising.
  • Merchant adoption – More and more merchants are accepting Bitcoin as payment and many companies are building or providing services on Bitcoin.
  • Mainstream adoption – There is a lot of companies working to make Bitcoin more user friendly and accesible to mainstream end users. This could drive up the demand for buying and using Bitcoin.
  • Available for trading on respected traditional exchanges – Respected exchanges like Nasdaq, JP Morgan etc, are all investigating or have laucnhed trading with Bitcoin. Besides that there are multiple ETF proposals waiting to get green light from US regulators.


Thank you for reading, if you enjoyed the article feel free to share it on social media. If you have any questions, don’t hesitate to drop me an email on [email protected]

This article was originally published on GameofCrypto.io

Disclaimer – None of the information published on this website should be considered as financial investment advice or trading advice and using the information available here is at your own risk. Be aware of the high risk that is involved in buying and trading Cryptocurrencies. Don’t trade money you cannot afford to lose!