what is BItcoin : How Does Bitcoin Work?
What is Bitcoin?
Bitcoin is a digital currency created in January, 2009. It follows the ideas put in the White Paper by the mysterious and nickname Satoshi Nakamoto. The identity of the person or people who created the technology remains a mystery. Bitcoin promises lower transaction fees than traditional payment online payment mechanisms, and like currency issued by the government, it is governed by a decentralized authority.
Bitcoin is a type of cryptocurrency. There is no physical bitcoin, only balances are kept in a public account in which everyone has transparent access. All bitcoin transactions can be verified by enormous computing power. Bitcoin is not issued or endorsed by any bank or government, and individual bitcoin is not valued as a commodity. Although not a legal tender in most parts of the world, Bitcoin is very popular and has launched hundreds of other cryptocurrencies, collectively known as Velcoins. Bitcoin is commonly abbreviated as "BTC".
Understanding Bitcoin
The Bitcoin system is a collection of computers (also called "nodes" or "miners") that run Bitcoin's code and store its blockchain. Metaphorically, you can think of a blockchain as a collection of blocks. Each block contains a collection of transactions. Because all the computers running a blockchain have the same list of blocks and transactions, and in a transparent way, these new blocks can be seen filled with new bitcoin transactions, so that no one fools the system.
Anyone, whether they operate a Bitcoin "node" or not, can see that this transaction occurs in actual transactions. To perform a negative act, a bad actor will have to manage 51% of the computing power that bitcoin produces. In June 2021, Bitcoin had 10,000 nodes, and as their number increases, the probability of such an attack is low.
But if an attack were to occur, Bitcoin miners, those who participate in the Bitcoin network with their computers, would likely lead to a new blockchain, causing the wrong actor to continue the attack.
Bitcoin tokens are balanced using public and private "keys," which are long strings of numbers and letters created by a mathematical encryption algorithm used to create them. The public key (comparable to a bank account number) serves as a published address in the world to which Bitcoin can be sent.
The private key (comparable to an ATM PIN code) is a protected secret and is only used to authorize bitcoin transmissions. Bitcoin Keys are not to be confused with Bitcoin VetLet, a physical or digital device that simplifies Bitcoin trading and allows users to keep track of coin ownership. The term "let go" is a bit misleading, as the decentralized nature of Bitcoin means that it is never "stored" in the wallet, but rather decentralized on the blockchain.
Peer-to-peer technology
Bitcoin is one of the first digital visions to use peer-to-peer technology to facilitate instant payments. Individuals and independent companies who have the computing power in effect and participating in the bitcoin network - the bitcoin “miners” - are in charge of processing transactions on the blockchain and are motivated by the rewards (the release of new bitcoins) and farmer transaction fees in bitcoin.
These miners can be seen as the decentralized authority ensuring the credibility of the bitcoin network. New bitcoins are distributed by miners at a fixed rate, decreasing more periodically. There are only 21 million bitcoins that can be mined in total. As of June 2021, he and had over 18 million bitcoins and less than 3 million bitcoins to mine.3
In this way, bitcoin and other related cryptocurrencies differently from fiat money; in centralized banking systems, money is released at a rate corresponding to the growth of goods; This system is intended to maintain price stability. A decentralized system, like bitcoin, sets the release amount in advance and is an algorithm.
Bitcoin mining
Bitcoin mining is the process by which bitcoin is put into circulation. Mining usually requires solving difficult computer puzzles to discover a new block, which is added to the blockchain.
Bitcoin mining aggregates and verifies transaction logs on the network. Miners are rewarded with bitcoins; the reward is halved for every 210,000 blocks. The block reward was 50 new bitcoins in 2009. On May 11, 2020, the third halving took place, reducing the reward for each block discovery to 6.25 bitcoins.4
A variety of hardware can be used to mine bitcoins. However, some report higher rewards than others. Certain computer chips, called application-specific integrated circuits (ASICs), and more advanced processing units, such as graphics processing units (GPUs), can get more rewards. These elaborate mining processors are known as "mining rigs."
One bitcoin is divisible into eight decimal places (100 millionths of a bitcoin), and this smaller unit is called Satoshi.5 If necessary, and if the participating miners agree to the change, the bitcoin could potentially be divisible into decimal places even lower. .the places.
History of Bitcoin
August 18, 2008
The domain name bitcoin.org is registered. Today, at least, that domain is "WhoisGuard Protected", which means that the identity of the person who registered it is not public information.
October 31, 2008
A person or group using the name Satoshi Nakamoto announces on the crypto mailing list at metzdowd.com: “I have been working on a new completely peer-to-peer electronic payment system with no trusted third parties. -The famous white paper published on bitcoin.org, entitled "Bitcoin: A peer-to-peer electronic cash system", would become the Magna Carta of how bitcoin works today.
January 3, 2009
The first bitcoin block, block 0, is mined. It is also known as the "genesis block" and contains the text: "The Times 03 / Jan / 2009 Chancellor on the verge of second bailout for banks", possibly as proof that the block was extracted on that date, and possibly also as a relevant political comment.
January 8, 2009
The first version of the bitcoin software is advertised on the crypto mailing list.
January 9, 2009
Block 1 is mined and bitcoin mining begins in earnest.
Who is Satoshi Nakamoto?
No one knows who invented bitcoin, or at least not conclusively. Satoshi Nakamoto is the name associated with the person or group of people who published the original bitcoin white paper in 2008 and worked on the original bitcoin software that was released in 2009. In the years since, many people claimed to be or have been suggested as the actual people behind the pseudonym, but as of June 2021, the true identity (or identities) behind Satoshi remains unclear.
While it's tempting to believe that Satoshi Nakamoto is a lonely, chimerical genius who created bitcoin from scratch, such innovations usually don't happen in a vacuum. All major scientific discoveries, no matter how original, have been built on already existing research.
There are precursors of bitcoin: Adam Back's Hashcash, invented in 1997, then Wei Dai's b-money, Nick Szabo's bit gold and Hal Finney's reusable proof of work8. various other works covering several fields of research. Unsurprisingly, many of the people behind the other projects named above are said to have played a role in the creation of bitcoin as well.
There are a few possible motivations for the inventor of Bitcoin to decide to keep his identity a secret. One is privacy: as bitcoin has grown in popularity - becoming somewhat of a global phenomenon - Satoshi Nakamoto would likely gain a lot of media and government attention.
Another reason could be the potential for bitcoin to cause a major disruption to current banking and monetary systems. If bitcoin were adopted en masse, the system could surpass the sovereign fiat currencies of nations. This threat to the existing currency could prompt governments to want to take legal action against the creator of bitcoin.
The other reason is security. In 2009 alone, 32,489 blocks were mined; At the reward rate of 50 bitcoin per block, the total payout in 2009 was 1,624,500 bitcoin. It can be concluded that only Satoshi and maybe a few other people were mining until 2009 and that they own the majority of this bitcoin stash.
Someone in possession of that much bitcoin could become a target for criminals, especially since bitcoin looks less like stocks and more like cash, where the private keys needed to authorize spending could be printed. and literally kept under a mattress. While the inventor of bitcoin is likely to take precautions to make any extortion-induced transfers traceable, remaining anonymous is a good way for Satoshi to limit exposure.
Special considerations
Bitcoin as a method of payment
Bitcoin can be accepted as a means of payment for products sold or services provided. Physical stores may display a sign that says “Bitcoin Accepted Here”; transactions can be processed with the required hardware terminal or wallet address via QR codes and touch screen apps. An online business can easily accept bitcoin by adding this payment option to their other online payment options: credit cards, PayPal, etc.
El Salvador became the first country to officially adopt Bitcoin as legal tender in June 2021.9
Bitcoin job opportunities
Those who are self-employed can get paid for bitcoin related work. There are several ways to do this, such as setting up an internet service and adding your Bitcoin wallet address to the site as a payment method. There are also several websites and job sites dedicated to digital currencies:
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