Lately, I’ve been getting frequent questions about Bitcoin and cryptocurrencies. I’m not sure why people are asking me about it, maybe because I talk about crypto sixty percent of the time. So what is Bitcoin? How does it work? And how do you get some Bitcoin or other cryptocurrencies if you live in Lebanon?

What is Bitcoin?

Thanks to the invention of Bitcoin for the very first time in the entire history of the world any human being can now send and receive any amount of money to any other human being anywhere on the planet, instantly and somewhat for free. You do not need to get permission from a government, a bank, a corporation, or any central body to do that transaction. Not only do you not have to get permission it is impossible for anyone to stop you.

Even though you haven’t used Bitcoin and if you live in Lebanon that’s more likely the case, it seems very mind-boggling and hard to understand at first, it’s not. Think of it as email, if I have to explain email to you and what SMTP is you’d probably be very confused as well, but once you type in someone’s address, type in your message and press send it all seems very straightforward. Same with Bitcoin except your address looks like this:

Once you download a wallet you would notice it’s not that hard at all. There are a number of recommended wallets like the Bitcoin Core Wallet or the Bitcoin.com wallet or the Blockchain.info wallet, all offer a good and seamless user experience.

Yes, But What Actually is It?

So all traditional payment networks like VISA, MasterCard or regular banks keep a ledger that registers all your transactions and keeps track of your account balance. But because each of these entities are in charge of there own ledgers, at any point they can reverse your transactions, be ordered by governments to freeze your account or empty all the money in it. Even though we would like to think of the money in our bank accounts as our money we’re actually trusting the bank, MasterCard or Visa with that money.

With Bitcoin, instead of having one ledger that keeps track of how many Bitcoins are in your account and transactions of that account, there is a copy of the Bitcoin ledger that is on hundreds of thousands of computers that are running the Bitcoin full node software as they sync with one another. Say you’re paying in Bitcoins for something that the government or, as in our case in Lebanon, your local politician doesn’t like; there is no Bitcoin company they can call, there is no server they can unplug, all they could do is arrest you but they can’t touch your Bitcoins or stop the Bitcoin network as a whole, it would keep right on going. So, the real powerful invention in Bitcoin is this ledger that is not in any one place and distributed around the entire planet. The beauty of this is that it makes Bitcoin unstoppable. The only way to stop it would be to shut off the internet completely and in 2017 that doesn’t sound like a very likely proposition.

The ledger that is spread all over the world stays in sync with every other copy on other computers. So this ledger is updated on an average of once every 10 minutes but it’s not fully updated, it updates in pieces or blocks that are chained together mathematically. This is called a Blockchain, and it’s coming up at around a million blocks now.

What is Mining?

Being a distributed ledger a problem comes across of who gets to update this ledger. And the way that problem was solved is by having computers who are part of the Bitcoin network solve ‘complicated math problems’. The only way these math problems can be solved is by guessing. And so while these computers are guessing millions of times per second, whichever machine solves the problem first is the one that is designated to make the next update. The benefit of finding this solution is that, at the moment, your computer gets 12.5 Bitcoins, which is worth about 215,000 USD now.

How many Bitcoins are there?

There will never ever be more than 21 million Bitcoins. If one of these computers that are guessing the math problem decided to give itself more than the amount allocated all the other computers will reject this since it’s not part of the Bitcoin software code.

So right from day one, it was programmed into the software that there will never be more than 21 million Bitcoins. But those are released over time; half of all the Bitcoins were released in the first 4 years and the 4 years that followed half of that were released and the 4 years that will follow half of what was released 4 years ago — It drops by half every 4 years.

When will all the Bitcoins be released?

We have more than 100 years until the last of the Bitcoins are released out to the public.

How is it Secure?

A more accurate description of all the mining done by computers and machines is actually securing and verifying transactions on the Bitcoin network. The Bitcoin network is several thousands of times more powerful now than the world’s top 500 supercomputers combined. It’s an incredible feat of engineering.

What about other Cryptocurrencies?

Bitcoin is the very first and most well know brand of cryptocurrencies, but as the technology became well known, more innovations like Ethereum, Litecoin, Monero, and Zcash and a lot more surfaced under the same decentralized concept. I won’t go deep into every currency but it’s worth your time to spend a few hours understanding how these currencies work since the technology is being adopted to create other solutions in all kinds of sectors.

What Makes Cryptocurrencies Valuable?

As with Fiat currencies (USD, EUR..), anything has value as long as there is demand for it and it is backed by a credible system of accounting or ledger. The only difference is that regular currencies have a physical note and are regulated by central banks oppose to decentralized ledgers.

What Are These Then?

Casascius Physical Bitcoins

These are called Casascius Bitcoins that were used by Bitcoin users to get people to buy currency in 2013. There used to be a label on the coins with a code underneath it that you could use to redeem your bitcoins. Now even after being claimed, these coins are quite the collector’s item.

If I Live in Lebanon, How Do I Buy Bitcoins?

The Lebanese Central Bank doesn’t classify cryptocurrencies as dependable currency because of their volatile and decentralized nature. This is very debatable, but there is some truth to their decision since the Lebanese currency is not very strong and cannot withhold a wave of alternative currencies with massive technological infrastructure being transacted openly in the small Lebanese market.

So Lebanese banks are banned from transacting with the big crypto exchanges. But, there are some crypto exchanges and ‘marketplaces’ like Local Bitcoins and Paxful that accept transactions from Lebanese bank accounts. Keep in mind that it is a Bitcoin marketplaces, as in you exchange with real people and make your transactions separately to their bank accounts in exchange they send Bitcoin to your Bitcoin wallet. I would recommend extreme caution as you make the transaction and to check the asking price since some of the sellers have extremely high rates. The best solution is if you know someone nice enough to sell you some crypto in person, the mobile wallets named above have super easy QR code scan enabled transactions, so it’s no harm giving it a try.

Should I Buy Things With Bitcoin?

When it comes to Bitcoin Core, it would be the same as buying something with gold or stocks. Bitcoin does have the attributes of a currency, it’s easily transactional, it’s recognizable, and divisible but when it comes to small payments you would lose a lot of money if the value of what you buy does not go up relatively. It is better to exchange Bitcoin Cash as a micro-transaction method because of the lower fees and bigger block size.