A cryptocurrency commonly referred to as crypto is an online currency that you can use to pay for merchandise and services. The currency uses a digital receipt with strong cryptography to protect online businesses. In most cases, cryptocurrencies are used for a profit with investors sometimes placing very high prices on them.
Bitcoin is currently the most popular digital currency. This is an online currency made in January 2009 with the original person or people who came up with this idea remaining a mystery. However, it is believed that a mysterious Satoshi Nakamoto was the person who created Bitcoin’s crypto trading bot.
Compared to conventional digital payment methods, Bitcoins offer lower transaction charges and it is run by a designated authority. Nevertheless, we don’t have a physical Bitcoin, instead, we have balances stored on a transparent public account that everybody can access. Bitcoin is also not given or supported by any financial institution or government and neither is it a valuable commodity.
Even though Bitcoin is not a legal tender in several countries, it is so popular and it has prompted the invention of numerous other digital currencies. Popularly, Bitcoin goes by the abbreviation’ BTC’.
Important Aspects to Note
- Bitcoin was created in 2009 and it is currently the largest digital currency globally by market utilization.
- Unlike legal tender, Bitcoin is made, traded, distributed, and kept by a decentralized authority called a blockchain.
- Bitcoin is the earliest digital currency that has been widely used successfully in the process inspiring the creation of several other cryptocurrencies.
How Bitcoin Works
- Bitcoin’s system uses a set of computers called miners or nodes that operate bitcoin’s code and manage its blockchain. Symbolically, a blockchain can be viewed as a collection of blocks and each block has a set of transactions. Since all the computers operating the blockchain contain similar blocks and transactions, and they can clearly see the new blocks getting new Bitcoin transactions, the system cannot be corrupted.
- The transactions occurring in real-time are visible to anyone regardless of whether they run a Bitcoin mine or not. To corrupt the system, one would require to run 51% of bitcoin’s computing power. With biotin having about 10,000 nodes at present, and the number is increasing, it is impossible to make such an attack.
- In case an attack is launched, Bitcoin miners – those that play in the Bitcoin network using their computers – are most likely to make a new blockchain thwarting the efforts of the scammer.
- Bitcoin balances are stored using private and public keys. These are long chains of letters and numbers connected through the algorithm that was used in making them. The public key acts as the address displayed to the world and other people can send Bitcoins. (It is comparable to a bank account number.) You can use accumulate to get a human readable address.
- A private key compares with an ATM PIN and it should be kept secret to be used in authorizing Bitcoin transmissions. However, Bitcoin keys are not Bitcoin wallets. A Bitcoin wallet is a physical device that promotes Bitcoin trading and enables users to record the ownership of coins.
Also see: 5 Bitcoin investing tips
Bitcoin Mining
This can be described as the process where Bitcoin is let out for circulation. Normally, mining involves solving hard puzzles to launch a new block to add to the blockchain. The process adds and authenticates transaction history across the network. Participants are awarded some Bitcoin and at every 210,000 blocks, the reward is divided into two.
There is numerous hardware that we can use in mining Bitcoin. Nevertheless, some generate bigger rewards than others. Using certain computer accessories and modern processing units can enable one to achieve higher rewards. The advanced mining processors are referred to as “mining rigs”. The smallest unit of a bitcoin is known as a satoshi and it is achieved by dividing a bitcoin into eight decimal places.
Final Thoughts
Cryptocurrency is a fairly new venture in the world with very little information about its invention available to the public. However, it has been well embraced by various business entities with efforts being put in place to make bitcoin’s crypto trading bot legally acceptable. Going with its numerous positive reviews and the launching of more digital currencies, Bitcoin could be the future of money.