Jostpay's Bitcoin Education

What is Bitcoin?

Bitcoin is a kind of money or peer-to-peer payment system that is digitally created and handled through encryption techniques with transactions taking place without any intermediary. 

Transactions are confirmed though, by network nodes, documented in a public ledger which is called the Blockchain.

Bitcoin is also a digital or virtual type of money. Digital in the sense that, it is not printed like your Naira or Dollar. Virtual in the sense that, it is not physically felt or produced like other commodities that can serve as a medium of exchange, store of value and unit of account.

What Makes Bitcoin, Money?

The same things that make your money, money; are the exact same things that make bitcoin, money. We must understand that 'money' is not limited to our fiat currencies alone. Money can be anything. Anything that can perform the main functions of money can be used as 'money'.

Bitcoin can used as a ‘Medium of Exchange’, as a ‘Store of value’ and as a ‘Unit of account’. These are the three main functions of money, according to modern economics.

What is the Blockchain?

Blockchain is the technology behind the Bitcoin phenomenon. It is a public ledger where Bitcoin transactions are confirmed and documented by Bitcoin miners.

Who Created Bitcoin?

The inventor of the bitcoin is still largely unverified. The name used as alias by the person who invented the Bitcoin is Satoshi Nakamoto. “Satoshi Nakamoto” published a paper on a The Cryptography Mailing list, describing the digital currency.

When was Bitcoin Invented?

Satoshi, in October 2008 published the paper detailing the Bitcoin currency. January 2009, he released the first Bitcoin software that started the network.

How Is Bitcoin created?

Bitcoin is created through an activity called mining. Mining is when new bitcoins are generated by a competitive and decentralized process. Individuals who engaged in this activity are rewarded by the network for their services. Bitcoin miners are managing transactions and securing the network using specialized hardware and are rewarded with new bitcoins in exchange.

Who can use Bitcoin?

You. Anyone can.

How can I own Bitcoin?

You can choose to become a miner to own Bitcoin or you could exchange your local fiat currency to Bitcoin through an Exchange company. E.g. InstantExchangers

Where do I keep my Bitcoin?

Like you do with your physical cash, you keep your Bitcoin in a digital wallet; a Bitcoin wallet. E.g. Jostpay

How do you create a wallet?

You create a wallet by creating an account with a Bitcoin Wallet Platform. Your newly created account will come with a Bitcoin address.

What is a Bitcoin Address?

A bitcoin address is like your bank account number. A typical Bitcoin address include 26-35 alphanumeric characters, beginning with the number 1 or 3. 

How do you fund your wallet?

You fund your wallet with Bitcoin by providing your Bitcoin address to the funding merchant (Exchange Company) or anyone who wants to deposit Bitcoin into your account.

Where do you spend Bitcoin?

Bitcoin can be spent both online and offline. It can be spent on computers, pizza, event tickets, on anything.

How do you sell or exchange your Bitcoin to local currency cash?

You sell your Bitcoin for local cash through a direct contact, an online exchange service, withdrawing local currency equivalent through a wallet service and through many other ways. Jostpay is an example of an online bitcoin wallet service in Nigeria where you can sell your Bitcoin, receiving local currency cash at the end of the process.

What is Bitcoin Confirmations?

What happens during the Bitcoin mining process is, a new block is produced and added to the Blockchain. Based on the already set bitcoin protocol, the creation and addition of a block takes roughly ten (10) minutes.

What that tells us is, when you send Bitcoin to any wallet, the transaction will remain 'unconfirmed' until the next block is created. Your transaction is included and verified as that block is created.

Therefore, your transaction will have one confirmation. When another block is created, your transaction is reconfirmed by the Bitcoin network.

The miner fee attached to a transaction usually determines the speed of confirmation. There is a recommended miner fee on every Bitcoin transaction. A lower than the recommended fee will make the transaction speed slow.  

What is Unspent Output?

An unspent output, as the term implies, is an output of a bitcoin transaction that is yet to become an input in another bitcoin transaction. 
Output is when someone sends you bitcoin. When this output remains in your account, without reflecting as an input in another bitcoin account, this is referred to as an 'Unspent Output'.   

For example, you receive Bitcoin 10 times into the address XXX. That means you have 10 different transaction input in your account XXX.  Each of that 10 different transaction will have its own different miner fee. The moment you send out bitcoin into another address, the input will be queued as an unspent output until its confirmed into Blockchain. 

It is important to know that high number of output affects miner charges. If you have high number of unspent output, your transaction size will be big and this will make miner charges high.

Can you accept Bitcoin payment on Your E-commerce store?

Yes. You can accept Bitcoin Payment in your E-commerce store by integrating a Bitcoin Payment Gateway. Jostpay offers a Bitcoin payment gateway services to e-commerce sites.  

This article will be updated as we learn of new developments in the digital currency sphere.