Bitcoin is best described as cryptocurrency, a virtual currency, and a digital currency. It is a type of currency that is entirely virtual. Bitcoin is an online version of cash, which means no use of hard cash.
What is Bitcoin?
Bitcoin, a digital currency was created in January 2009. It was created by an unknown person, Satoshi Nakamoto. But the identity of the person or group of person who created Bitcoin is still a mystery.
Therefore the transactions made through Bitcoin with no middle man, which means no banks. Bitcoin is a new kind of asset. It is a devolved form of digital currency. It eliminates the requirement for traditional intermediaries such as banks and the government to make a financial transaction.
It is open-source, Bitcoin’s design is public, nobody owns or controls it but everyone can take part in Bitcoin. No physical Bitcoin is available; balances were kept on a public ledger that everyone has equal access. The Bitcoin transaction is verified through computing power.
The Bitcoin charts are highly popular and triggered the launch of hundreds of other virtual currencies. Regardless Bitcoin is not a legal tender or legal digital currency.
Let’s understand the Bitcoin
Bitcoin is a collection of nodes that all run as Bitcoin’s code and stored as a blockchain. A blockchain is a collection of blocks, and each block is a collection of transactions. Computers operating the blockchain contain the same list of blocks and transactions.
Therefore, no one can cheat or tamper with the system as it is transparent to see all new blocks being filled with new Bitcoin transactions. Bitcoin has approximately 47,000 nodes in May 2020 and this number is growing day by day.
How does Bitcoin work?
The trading symbol of Bitcoin is “BTC”, and “XBT” is also used. To know how the cryptocurrency or Bitcoin work, let’s first understand some terms:
Blockchain: Bitcoin is power-driven as an open-source code called a blockchain. Every transaction is known as “Block” which is linked to code that generates a permanent record of each transaction.
Private and Public Keys: Bitcoin wallet contains both private and public keys. Both keys work together to allow the owner to initiate and digitally sign the transactions. This provides proof of consent.
Bitcoin Miners: Miners, the members of the peer-to-peer platform, independently confirms the transactions using high-speed computers. Transactions within 10 to 20 minutes. Bitcoin miners will get payment with Bitcoin for their work.
How to Mine Bitcoin?
The mining performed through high-powered computers to solve complex algorithmic math problems. The computational problems are so complex and complicated that can’t be solved with manual work.
Actually, Bitcoin mining is the process of creating a new bitcoin by solving the computational problem. It is important to maintain the ledger of transactions. Bitcoin mining is dual.
The first phase of mining is when computers solve complex math problems and produce new Bitcoin. In the second phase, after solving the computational math problem, it makes the bitcoin payment network more trustworthy and secure with the help of transactional information.
The transaction is when someone sends or transfer bitcoin from one device to another. These transactions are documented by banks, point of sale system, and in the form of a physical receipt.
Bitcoin miners get the same thing by bundle the transactions all together in the form of blocks and then adding them for a public record is called “Blockchain”. Nodes are helpful to maintain the records of blocks and verified in the future.
The Bitcoin miner’s main job is to make sure that the transactions are accurate while adding a new block of the transaction to the blockchain. In brief Bitcoin, miners make sure that bitcoin is genuine and not being duplicated, as a new trait of virtual currency is called “Double –spending”.
How people get Bitcoin?
To get Bitcoin, there are three ways:
- Buy or exchange Bitcoins.
- Sell things and in return get Bitcoins from people.
- Third way is to generate bitcoin on your own.
Is Bitcoin is secure?
There are three reasons why Bitcoin is secure:
- Bitcoin is encrypted and backed up with a special system called Blockchain.
- As every single transaction is recorded and published publically so it makes it very difficult to copy or duplicate Bitcoin.
- Bitcoins have servers and more than ten thousand nodes all over the world to keep track of all transactions.