Crypto Guide

What is Bitcoin? - What It Is and Why It Matters

Bitcoin, also known as BTC, was the first cryptocurrency created to offer people a digital financial asset independent of central ownership or control of a single entity or intermediary, such as governments or central banks.

It became available in 2009, created by an anonymous source the crypto world refers to as Satoshi Nakamoto. 

Today, Bitcoin’s success speaks for itself as it has become one of the fastest-growing financial assets of all time, outperforming almost all fiat currencies, stocks and commodities. On top of this, many financial experts believe it still has plenty of room for growth, with some predictions stating the Bitcoin value will reach, and possibly exceed, the $1m valuation mark.

How Bitcoin Works

One of the most confusing sides to Bitcoin that prevents people from adopting the crypto as part of their financial portfolio is not understanding how the world’s most widely owned digital asset works. However, it is actually an ingenious creation.

All transactions take place on the Bitcoin blockchain ecosystem, which uses a peer-to-peer network. Now, before you feel the term peer-to-peer is already too technical, we have a simple way to explain how this process works.

Peer-to-Peer Network Transfers

The term means you can transfer Bitcoin directly from one wallet to another wallet with no middleman. Simple, right? To make things easier, here is how to send and receive Bitcoin.

  • How to Transfer Bitcoin: All you need is the public address or 2D code for the wallet you want to send your Bitcoins.
  • How to Receive Bitcoin: You provide the sender with your public Bitcoin address or 2D code.

Private Vs. Public Keys

We have mentioned public keys for peer-to-peer transfers, but there is also something called a private key, which is the backbone of accessing your Bitcoin.

  • Public Keys: The good news is you can place your public key anywhere online, and there is zero security risk. It is purely there to let people know how to transfer BTC into your wallet.
  • Private Key: Your private key is a code that gives the holder access to your crypto wallet. You don’t always need a private key, especially if you are using an online crypto wallet. However, if you keep your crypto in a cold wallet (explained below), you will need a private key.

The key difference between a public key and a private key is in the names. You can share your public key with anyone. However, you must never share your private key, or someone can access your wallet and transfer all your Bitcoin to another wallet.

Bitcoin Mining: The Technology Behind It

For beginners, setting up a Bitcoin mining rig is a complex task. It requires specific hardware and software, plus plenty of processing power, which uses high volumes of electricity. However, if set up correctly, it can be a profitable venture.

Miners compete to solve a complex cryptographic puzzle using powerful computers (ASIC miners). The first miner to solve it gets to add a new block to the Bitcoin blockchain. As a reward, they receive newly minted Bitcoin + transaction fees.

Miners earn Bitcoin in two ways:

  • Block Rewards: Miners receive newly minted Bitcoin for successfully mining a block.
  • Transaction Fees: Fees paid by users for processing transactions.

Thanks to the centralized set-up of the Bitcoin blockchain ecosystem, anyone with knowledge of the tech and software required to earn block rewards and transaction fees can connect to the Bitcoin network and participate.

Blockchain and Decentralization: Who Controls Bitcoin?

The answer to who controls Bitcoin is ‘no one’ and ‘everyone’. No bank, single entity, or government controls it. Instead, think of the Bitcoin blockchain ecosystem as a network anyone can be a part of.

Its blockchain ecosystem is a network of high-powered computer systems, which we call nodes. These nodes are independently set up to validate/confirm/verify and relay transactions. Some nodes not only validate transactions, but they are also miners that help to solve hash problems that unlock more Bitcoin, which they then earn as a reward.

Overall, the owners of both types of nodes have no connection with one another in the real world. Instead, their only connection is to communicate with one another on the Bitcoin blockchain.

In short, the Bitcoin architecture is made of nodes. These nodes do not own the Bitcoin ecosystem. They can join and withdraw from the blockchain as they please. Overall, Bitcoin’s very existence relies on these nodes that operate independently of each other to create decentralisation of Bitcoin with no central authority owning or governing the ecosystem.

Bitcoin value

One point that scares or worries people when it comes to Bitcoin is the price fluctuation. Yet,  however, if you invested in a single Bitcoin when it was worth $1.00 in 2011, or even invested $10.00 in 10 Bitcoins, your investment would have outperformed the majority of financial assets on the stock market today. 

How does Bitcoin gain or lose value?

  1. Supply and Demand: Limited supply and varying demand can increase or decrease Bitcoin's price. 
  2. Market Sentiment: Positive news can boost prices, while negative news can lead to declines. 
  3. Regulatory Developments: New regulations or government actions can impact Bitcoin's value.
  4. Technological Changes: Upgrades or security issues can influence investor confidence and price.
  5. Macroeconomic Factors: Economic events, like inflation or market instability, can affect Bitcoin's appeal as an investment. 
  6. Market Liquidity: The ease of buying or selling Bitcoin affects its price stability. 
  7. Speculation: Investor speculation can lead to rapid price changes. 

Ways to Acquire Bitcoin

There are three ways to acquire Bitcoin—buying, earning, or setting up a system so you can mine crypto. In all cases you will need a custodial or non-custodial wallet, which we explain in simplified terms in the next section.

Buying Bitcoin

Learning how to buy Bitcoin is perhaps one of the most straightforward topics to understand in this guide. There are plenty of options; it just depends on your current setup.

  • Card-to-Crypto: One of the most common ways to buy Bitcoins is to use cards like VISA or MasterCard. All you need to do is find a wallet that accepts fiat currency card payments that allow you to make the purchase.
  • E-wallets or Online Banking: Some e-wallets and online banking systems will allow you to exchange your fiat currency balance into Bitcoin. Paypal and Revolut are perhaps two of the best examples.
  • Crypto to Bitcoin: If you already own another cryptocurrency, you can use an exchange to swap your non-BTC crypto into Bitcoin.

Earning Bitcoin

Before we jump into the topic of earning Bitcoin, we want to avoid one area of confusion by separating ‘earning Bitcoin’ from the ‘rise in value of Bitcoin’. These two concepts are two entirely different things.

  • Crypto Value Increases: When the Bitcoin value rises, you do not earn more Bitcoin. All that happens is the value of the BTC you own increases.
  • Number of Bitcoins You Own Increases: When you earn crypto, you are increasing the number of Bitcoins you own.

Five Ways You Can Earn BTC

Now you understand exactly what we mean by earning Bitcoin, let’s look into ways to earn crypto. There are a number of ways you can earn Bitcoin.

  1. Find Work That Pays in Bitcoin: The most obvious way to earn Bitcoin is to invoice customers willing to pay in BTC. You could be a crypto journalist or work for a crypto company as a cryptographer. In fact, there are many jobs out there that pay their workers and freelancers in Bitcoin.
  2. Accept Crypto As a Payment Option: You could start an eComm or gaming site that accepts BTC as a payment option. There are high-street POS (Point-of-Sales) systems that are set up to accept crypto payments in some countries.
  3. Crypto Trading: Trading Bitcoin is one of the most popular ways to earn Bitcoin. When the price rises, traders have a ‘take profit’ limit to auto-sell their BTC. When the price drops, they can buy more BTC. There are day traders, swing traders, and long-term investors who use the buy-low and sell-high strategies.
  4. Bitcoin Staking: Arguably as popular as trading is staking Bitcoin. Some exchanges and wallets will allow you to stake your Bitcoins, and in return, you receive interest paid in Bitcoins.
  5. Mining Bitcoin: Setting up a mining rig that can solve Bitcoin blockchain cryptographic puzzles is another popular way of earning Bitcoin.

There are plenty of other ways to earn Bitcoin, such as rewards using loyalty points programs that pay in BTC. Plus, some projects may request your participation to test their game or product, and in return, you earn a small amount of Bitcoin or BTC airdrops. There is also another more complex way to earn Bitcoin, and that is mining.

How to Store and Secure Bitcoin: Wallets and Best Practices

Now you know how to buy Bitcoin and earn it, it is important to understand your storage options. On top of this, when using these storage options, you should take into account the pros and cons as well as best practices.

Custodial (Hot Wallets)

A custodial wallet, also referred to as a hot wallet, is always online. You essentially use a third-party wallet to store your Bitcoins. Some of the most well-known brands are Coinbase, Binance, and Crypto.com. We also have a guide to help crypto iGaming enthusiasts find the best crypto wallets for gambling here.

Opening an account with a custodial wallet provider is similar to opening an e-wallet in many respects. The main advantage of using hot wallets is that you do not need to remember your private key. All you need to do is set up an account, receive your public address and begin your peer-to-peer transactions.

Most wallets are safe, but there are some downsides to custodial wallets:

  • You will need to pass KYC checks, which some people find invasive.
  • Some require proof of earnings, which some people may consider invasive.
  • If the custodial files for insolvency, you may lose all your BTC investment.
  • Custodial wallets are always online and susceptible to hacks.

The key to safeguarding your crypto is to spread it across multiple custodial wallets and use non-custodial wallets for your long-term BTC holding.

Non-Custodial Wallets (Cold Wallets)

You, and only you, will own your non-custodial wallet(s). You do not need to sign up for a third-party platform. Instead, you can use devices like Trezor or Ledger or you can store crypto using web browser extensions, for example, Metamask. 

There are also third-party websites that offer non-custodial services, like the mobile-based Trust Wallet solution and Exodus, which works on desktop and mobile.

There are a few disadvantages to using cold wallets. 

  • If you lose your private key or recovery phrase, you will lose access to your wallet

  • There is no customer support in most cases.

  • Although less susceptible to cyber fraud, if hacked, unlike hot wallets, there is no one to hold accountable to recover your funds.

A Final Word

For both crypto casino players and investors, Bitcoin’s decentralized set-up is attractive. You can fund an online casino with a borderless financial asset, and you do not need to reveal your bank details or your name during the transaction. On top of this, no government or central organization owns the bitcoin blockchain network, which is also another point that appeals to those who have learned how to buy Bitcoin and use it for casino gaming, investment and purchases.

If you are a newbie or an experienced online casino player, and you like the idea of playing crypto casino games online, we hope this guide has helped. 

Now you understand more about Bitcoin and how to manage your BTC coins, why not try playing at our crypto casino?