Bitcoins (An introduction for beginners)

Are you curious to know what a bitcoin is? what are its uses? how it works? and how you can invest and earn through bitcoins? This is the right place to get all your answers.
Let us start by understanding the meaning of bitcoin.


In very simple words, Bitcoins are digital tokens which can be traded electronically anywhere around the world.
Bitcoin is also referred to as digital currency but here it is to be noted that it is not the same as our normal currency (e.g.: rupee, euro, etc.). Our normal currency is backed by something and monitored by someone (e.g.: the amount of rupees in the Indian economy is monitored by the RBI and is backed by gold and government securities to some extent.). However, Bitcoin transactions are monitored by a decentralized group of computers. It is similar to a decentralized network of servers that make internetwork.
Since Bitcoins are not run by a central authority, people can trade in Bitcoins anonymously thus safeguarding every individual’s identity.


Bitcoin works on demand-supply principle (as I call it). Hence, its price keeps fluctuating (a new blog will be up on how bitcoins work). So, you can buy bitcoins when its price falls and sell them when the price rises and earn a profit. But it is essential for you to be patient and invest wisely.
As stated earlier, Bitcoins are also a form of a currency, and hence they can be used to buy commodities online. Some businesses accept Bitcoins as payment. In fact, there are a few businesses which only accept Bitcoins as payments.
When trading in Bitcoins, a lot of jargons (technical terms or terminologies) are used which are important to understanding well before investing.
Following are some important terminologies used in bitcoins.

  1. Block
  2. Blockchain
  3. Block height
  4. Change
  5. Confirmation
  6. Difficulty
  7. Double spend
  8. Halving
  9. Mining
  10. Private key
  11. Hash
  12. Address
  13. Bit
  14. BTC
  15. Cryptography
  16. Hash rate
  17. P2P
  18. Signature
  19. Wallet
  20. Encryption algorithm
  21. Public key cryptography
  22. Transaction
  23. Bitcoin network
  24. Genesis block
  25. Unconfirmed transaction
  26. Miner
  27. Mining pool
  28. 51% attack
  29. Exchange
  30. Ask price bid price as-bid spread
  31. The volume of an exchange
  32. Market Depth
  33. Speculator
  34. Bubble
  35. Margin trading
  36. Satoshi
  37. Bitcoin laundry
  38. Escrow service
  39. Script
  40. Fiat currency

(A new blog will be up explaining each of the above jargons.)



  1. Bitcoin is transparent (Transactions are available for verification by anyone and anytime.)
  2. Inflation is unlikely because there are a finite number of those currencies in circulation.
  3. Large amounts of bitcoins can be transported in a memory drive easily without detection.
  4. You control your money without revealing your identity.


  1. Several people don’t understand it and so, are mistrustful of it.
  2. A bitcoin once lost cannot be recovered.
  3. Transactions made with bitcoins cannot be traced easily.
  4. It is subject to market fluctuations.

By Ria Vaghela (Market Analyst intern at Qrius and FYBMS student at Narsee Monjee College of Commerce and Economics)

MSc Finance graduate from the London School of Economics and Political Science (LSE)
Avatar for Ria Vaghela

Ria V Vaghela is an M&A Executive at RSM UK and an MSc Finance graduate from the London School of Economics and Political Science (LSE). She has worked at Jefferies, Dial Partners and 7i Capital prior to RSM UK gaining an experience of about 1.5 years. She has also worked as an Editor and Content Writer for The Representative Media. Apart from finance, she is interested in reading books on psychology and economics and also likes to paint and play lawn tennis


  1. Very educating and useful. Keep posting such useful innovating information.

  2. Thank you. I look forward for your support.

  3. […] This is a continuation of my previous blog Bitcoins (An introduction for beginners)  […]

  4. Good work. Easier to understand. Do update more often.

  5. […] and currencies (cryptocurrencies) have fascinated investors to invest in the area. The boom of Bitcoin and listing of Coinbase are classic examples that have interested investors to explore other […]

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