What Is Bitcoin?
Bitcoin is a type of cryptocurrency. That was first introduced in January of 2009. It is based on ideas presented in a whitepaper by Satoshi Nakamoto, a mysterious and pseudonymous figure. 1 The identity of the person or people behind the technology is still secret. Bitcoin promises lower transaction costs than conventional online payment methods, and it is run by a decentralized authority, unlike government-issued currencies.
There are no actual bitcoins; instead, balances are stored on a public ledger that anyone can see. A vast amount of computational power is used to verify all bitcoin transactions. Individual bitcoins are not valuable as commodities since they are not distributed or guaranteed by any banks or governments. Despite the fact that it is not legal tender, Bitcoin is extremely common and has sparked the development of hundreds of other cryptocurrencies known as altcoins. "BTC" is a common abbreviation for Bitcoin.
How to get bitcoins
Bitcoin is based on a blockchain, which is a distributed digital ledger. Blockchain is a connected body of data made up of units called blocks that contain information about each and every transaction, such as the date and time, total amount, buyer and seller, and a unique identifying code for each exchange, as the name implies. Entries are linked in chronological order to form a digital chain of blocks.
Blockchain is decentralized, meaning it is not regulated by a single entity. Buchi Okoro, CEO and co-founder of African cryptocurrency exchange Quidax, compares it to a Google Doc that everyone can edit. “It is not owned by anyone, but anyone with a connection may contribute to it. And as various people make changes to it, your copy is changed as well.”
How Does Bitcoin Mining Work?
Bitcoin mining is the process of adding and verifying transaction records through the Bitcoin network. Miners are rewarded with a few bitcoins for adding blocks to the blockchain; the reward is halved per 210,000 blocks. In 2009, the block incentive was 50 new bitcoins. The third halving occurred on May 11th, 2020, lowering the reward for each block discovery to 6.25 bitcoins. The method of introducing new transactions to the Bitcoin blockchain is known as bitcoin mining. It's a difficult career. Bitcoin miners use a method known as proof of work, in which computers compete to solve mathematical puzzles that validate transactions.
Bitcoin can be mined with a range of hardware. Others, on the other hand, pay off more than others. ASICs, or Application-Specific Integrated Circuits, and more sophisticated processing units, such as Graphic Processing Units (GPUs), will reap greater benefits. "Mining rigs" are the names given to these complex mining processors.
The smallest unit of bitcoin is called a Satoshi, and it is divisible to eight decimal places (100 millionths of a bitcoin). Bitcoin could eventually be made divisible to even more decimal places if required and if the participating miners support the shift.
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