Simply put, Bitcoin (Bitcoin) is a digital form of currency, but unlike traditional fiat currencies no central bank that controls it. Each bitcoin is unique, cannot be copied or destroyed, and operates on a decentralized, blockchain network supported by thousands of computers around the world.
What is Bitcoin?
Bitcoin is the first cryptocurrency ever created. It is a digital form of money that is highly fraud-proof and used within a decentralized financial system.
When it comes to bitcoin as money, it can also be described as a digital currency that operates in a peer-to-peer economic system. The symbol used to represent Bitcoin is BTC.
It is open source
Beacon is based on open source software that is regularly updated by a large community of developers. It was originally called Bitcoin, but to avoid misunderstandings, the project’s core software was rebranded to Bitcoin Core in 2014.
Bitcoin is not issued or controlled by a single body or organization, but is supported by many computers (nodes) scattered around the world. The Bitcoin network is based on a shared ledger called blockchain, which is responsible for maintaining an organized list of all transactions. The transactions are grouped into linked blocks, forming a chain of blocks (blockchain).
Because of their different qualities and functionalities, people are often confused about the differences between bitcoin and blockchain. They are closely related, though different concepts.
Distributed and secure
The technology behind Bitcoin is designed to preserve the integrity of data and transactions. First, each transaction is digitally signed and verified using cryptographic techniques that ensure that the funds cannot be spent more than once. If confirmed to be valid, the transaction is permanently recorded in a blockchain through a process known as mining. This may seem like a lot of extra effort, but it has a key effect on the security of the system. Modifying a blockchain requires the entire structure to be read on a write-by-write basis, which is practically impossible for even the most powerful computers.
The data is stored in a decentralized network of Nodes
Another important security layer is based on the fact that data is distributed through countless network nodes (nodes) around the world. Each of them holds a copy of the blockchain data. This means that even if the data were changed to a single node, other members of the network would easily recognize it as corrupted as it would not match any of the other copies. This process is governed by a consensus algorithm called Proof-of-work. Decoding tens, hundreds, or thousands of copies of the same data at the same time is much harder than doing it once, which is why the data is so secure. In addition, the decentralized network is much more resilient to errors and cyberattacks as it does not rely on a single data center, as traditional centralized systems do.
What is Bitcoin Mining?
Mining is a process of consuming computing power to execute bitcoin transactions and adding new bitcoins to the system.
Anyone with enough computing power to solve math problems can dig Bitcoin, thus securing the system against “double expiration”. For these efforts, he receives remuneration in the form of newly created bitcoins.
Who Creates Bitcoin?
The creator of Bitcoin is not yet known, but it goes by the nickname “Satoshi Nakamoto”, hence the name of the smallest unit in Bitcoin – “satoshi”.
How to Store Bitcoin?
You may be wondering if bitcoin only exists in digital form, what is needed to store it. You will need to obtain a crypto wallet for this purpose.
What is a crypto wallet?
Instead of physically owning bitcoin, the crypto wallet gives you a key (a combination of letters and numbers) that allows you to access your battle address.
Wallets can be on your computer, mobile device, special physical storage device, online or even on a piece of paper on which you have your private key recorded.
Hardware (cold) wallets
Hardware portfolios are small devices (flash drives) that you only connect to the network when you need to use your funds. They are extremely secure, usually offline and therefore cannot be hacked.
Software (hot) portfolios
The Hot Wallet keeps private keys on your computer or mobile phone. Most Bitcoin storage software are hot wallets.
Trustees’ portfolios are portfolios in which your broker, stock exchange or other third party holds your funds.