What is Bitcoin?
cryptocurrencies are becoming the new way of life
Bitcoin has made the headlines often in the past few years, making it the most popular cryptocurrency. Bitcoin is the first of its kind, and that has contributed to its popularity.
It has gotten the attention of the masses and celebrities.
Elon Musk, the richest man in the world, supports what bitcoin and other cryptocurrencies can do for the world.
What is Bitcoin?
Bitcoin is a digital currency that allows parties to transact with each other without the interference of a third party.
A third party can be either the bank or the government.
Bitcoin is a decentralized currency, which means the currency holders govern it. No single entity controls Bitcoin.
Satoshi Nakamoto created Bitcoin in 2009. The identity of this creator is still unknown.
Bitcoin is a digital currency — it has no physical parts.
It makes use of cryptography, which keeps the currency secure. It is also fueled by a technology called blockchain.
Why was Bitcoin created?
In traditional finance, there are a lot of restrictions imposed by central authorities(governments, banks, etc.).
Satoshi introduced a currency governed by its holders to eradicate these restrictions.
Its creation was after the United States of America had its worst financial crisis in 2008.
It serves as an alternative to our traditional way of making transactions.
It facilitates making peer-to-peer transactions without having our money go through third parties.
What is Blockchain?
A blockchain is a ledger that holds the record of transactions made by cryptocurrency users.
Blockchain is transparent. Everyone and anyone can see what is happening on the blockchain.
The blockchain is also responsible for the security of the records.
How does the blockchain work?
A blockchain, as you can guess from the name, is a series of blocks containing data linked together like a chain. Each block contains information about a transaction: value, date, time, buyer, and seller.
Once a block is added to the blockchain, it becomes accessible to the public, which gives users the power to view the information it holds.
Fraudulent activities on the bitcoin network are almost impossible because before a block is added to the blockchain, bitcoin miners verify it.
These miners use high computational power to perform complex mathematical calculations for verification.
What is Bitcoin Mining?
This kind of mining is not like the regular mining we all know about, but it still has an end goal — reward.
Bitcoin mining is the process of creating new bitcoins.
The people who are involved in creating new bitcoins are called miners.
These miners’ jobs are to confirm transactions and tighten the security around the bitcoin network.
Miners do their job by solving complex mathematical problems which are in the form of puzzles. This makes any fraudulent activity nearly impossible to carry out.
These miners get bitcoins as rewards after each successful attempt at solving the puzzle.
How to buy bitcoins?
Transactions can be made now using Bitcoins; you can buy and sell goods, etc. Part of the world is already adapting to the use of cryptocurrencies.
There are several ways to get your hands on bitcoins. The easiest and best way to get bitcoin is to buy it using cash. You can buy from someone, an exchange, or a peer-to-peer (P2P) marketplace.
Before you can buy bitcoins, you have to get a wallet to store your bitcoins.
A wallet is a necessity to store your Bitcoins. It is the same way you need a bank account to keep your fiat currency.
Buying from someone or a merchant is risky unless you trust the person. Buying from exchanges and the P2P marketplace is a lot safer.
Exchanges and P2P marketplaces are websites where you can perform several transactions with bitcoin or other cryptocurrencies. You can either buy or sell your bitcoins there. If you choose, you can swap your bitcoin for other cryptocurrencies.
Some exchanges also serve as wallets. Examples are Coinbase, Kraken, etc.
What are Altcoins?
There are so many other cryptocurrencies apart from bitcoin, and they are all called Altcoins (alternative coins).
Examples of Altcoin are Ethereum, Tron, Bitcoin Cash, Cardano, Litecoin, Doge, etc.
Conclusion
Bitcoin is also regarded as digital gold. This shows that the power that Bitcoin holds is unfathomable.
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