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Bitcoin

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What is Bitcoin and how it works?

People who haven’t heard of Bitcoin may not be found. Naturally, there is no end to our speculations about Bitcoin. In this post we will learn the basics of Bitcoin.

What is Bitcoin?

Bitcoin is a cryptocurrency created by an unknown person (or a group of more than one person) named Satoshi Nakamoto in 2008. It started circulating in 2009. Simply put, Bitcoin is a digital currency that can be used for (peer-to-peer) transactions via the Internet.

Services like PayPal or Pioneer follow the traditional way to make money transactions using credit cards or debit cards / payment networks. Bitcoin, on the other hand, is a decentralized currency that can be exchanged by anyone from any part of the world without any hindrance.

Bitcoin

Every bitcoin transaction is written on a blockchain, which acts like a bank ledger. It is basically a record of all transactions made by Bitcoin.

Bitcoin blockchain information is spread across all networks worldwide. No organization, country or third party controls it, and anyone can be a part of it.

Bitcoin’s supply but specific. In all, there are only 21 million bitcoins. It is not possible to create or produce more Bitcoin than this amount. All Bitcoin users share this money. Although this whole amount of bitcoin has not been collected yet.

The value of Bitcoin

The value of Bitcoin is always fluctuating. The price of any cryptocurrency fluctuates in the same way. As a result, it is very difficult to answer the question of how much money is in one bitcoin, how much money is equal to one bitcoin, how much money is equal to one bitcoin.

According to the latest information, the value of one bitcoin is currently around 50 thousands dollars. We already know that the price of Bitcoin is not fixed, it always fluctuates. You can easily find out the current price of Bitcoin by typing BTC or Bitcoin and searching on Google.

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See also : How Blockchain Works?

Who made Bitcoin?

Before learning how Bitcoin works, it is important to know the history of its creation. Although much research has been done on the creator of Bitcoin, the identity of the creator of Bitcoin remains unknown.

The first mention of bitcoin technology was made in a white paper published online in 2008. One person or group named Satoshi Nakamoto posted this information online.

The white paper not only provided detailed information on cryptography and computer science, but also on how to exchange money or information while keeping digital identities secret.

Cryptocurrency and Bitcoin were a new chapter in computer science. It creates a new world of money transfer through the internet. Bitcoin technology eliminates the need for third parties, such as banks, to exchange money.

How Bitcoin Works?

Bitcoin does not work in the traditional way like payment networks like Visa or payment services like PayPal. Bitcoin is not controlled by any particular person or organization. Bitcoin is the world’s first free payment network, where anyone can participate. The main purpose behind creating Bitcoin was to create a decentralized payment system using the Internet.

One of the main components of Bitcoin is the blockchain which keeps track of its transactions. However, because Bitcoin is decentralized, anyone can see the transaction information and no one can control it.

Let’s take a closer look at how Bitcoin works.

A special computer known as a “mining rig” records and verifies the information of each transaction. In the beginning, bitcoin mining could be done using any ordinary computer. But now a lot of powerful computers are needed to mine bitcoin. According to 2019 data, Bitcoin mining now requires 12 trillion times more computing power than 2009 bitcoin.

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Bitcoin can be mined through mining using computing power. Bitcoin mining can be compared to lottery or race. Basically anyone can win the race or lottery prize by solving various mathematical problems. The prize here is Bitcoin. This reward of mining tends to change with every transaction.

These mining computers are used to assist in bitcoin transactions. Those who own these computers are called bitcoin miners. They receive Bitcoin as a reward for assisting in Bitcoin transactions. However, such bitcoin mining is no longer as profitable as it used to be.

At first, Bitcoin had no value. In 2018, a bitcoin was worth about 7,500. However, in the case of Bitcoin, you do not have to buy the entire Bitcoin. It is possible to own a small amount of Bitcoin.

The smallest part of Bitcoin is called Satoshi. One bitcoin is made up of 100 million satoshi. Satoshi Nakamoto set up the Bitcoin network in such a way that it would not be possible to mine more than 21 million bitcoins. There are currently about 3 million bitcoins left to be mined. The idea is that all bitcoins will be mined by 2140.

The disadvantage of Bitcoin

Since Bitcoin can be transacted under a pseudonym and without the knowledge of any central authority, it is not possible in many cases to detect any illegal transactions using it. But donors and recipients can be easily identified by transacting through normal banking channels. That is why Bitcoin is at risk.

The benefits of Bitcoin

Bitcoin can be used much like a conventional debit or credit card. However, instead of providing credit card info, in case of Bitcoin, only public key and payment amount has to be provided. Let’s take a look at some of the benefits of Bitcoin.

Bitcoin is a popular economy, making it possible to use Bitcoin at any time in any country in the world without any additional fees. As Bitcoin is decentralized, the exchange process takes place immediately. Bitcoin, like traditional credit cards, does not take long to record transaction data.Bitcoin is an open source technology that allows anyone to view transaction information, leaving no room for money manipulation.Bitcoin technology is extremely secure which is almost impossible to hack

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The difference between bitcoin and conventional money

There are many differences between Bitcoin and conventional money. Conventional money is usually issued by the government of a country. Bitcoin, on the other hand, is a network system powered by computers using open source code.

The government manages the money by fixing the value of the conventional money. On the other hand, the price of Bitcoin depends on its supply and demand.

In the conventional economy, only the government and the banks are connected. No one else knows about this meaning. However, the government or the bank authorities are able to take any action with this money at any time. On the other hand, all transactions made by Bitcoin circulate freely on the Internet, which can be viewed by anyone.

In the case of ordinary money, there is a physical coin or money, but in the case of Bitcoin, there is no physical coin. Although Bitcoin can be used for purchases in all countries of the world, the use of Bitcoin is not yet universally accepted.

Frequently Asked Questions About Bitcoin

What is BTC?

BTC is the short form of Bitcoin.

Is Bitcoin a Cryptocurrency?

Yes, Bitcoin is the most popular cryptocurrency.

Is it possible to earn from Bitcoin?

In countries where Bitcoin is legal, it is possible to earn money by buying Bitcoin at a lower price and selling it at a higher price like other assets.

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