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What is Bitcoin? – Work, Function, and More

Bitcoin is a cryptocurrency that can be use to buy any good or service wherever it is accept. It is a free and decentralized digital currency that allows transactions without the need for intermediaries. It uses peer-to-peer technology, which reduces the transaction to the parties involved who send and receive the Bitcoins through a digital wallet or wallet with a Bitcoin address, similar to a bank account but free of all kinds of control or bureaucracy. The miners are responsible for confirming these operations through the “Proof of Work”.

How does Bitcoin Work?

Although it does not physically exist, it works like any fiat currency such as the dollar or euro. They do not have a serial number or mechanism to be able to track those who use this coin. It is in the sense that they do not request data to be able to operate with them. Although it should be note that the blockchain contains all this information within the large accounting book where, if required, the transaction can be tracked. Which rules out the myth that it’s anonymous.

What is the Function of the Blockchain?

The blockchain is like a giant ledger where all operations are record and approved. It is achieve with what we mentioned before, the “Work Test”. A transaction cannot be falsified, as all existing copies must be the same.

It is the consensus mechanism miners use to validate transactions. A mathematical calculation is presented, which must be solve. The first miner to solve it becomes the reward in Bitcoin, as long as the entire community confirms it.

The transactions are handle with an open code and also, do not require any intermediary for their operation.

Characteristics of Bitcoin

Its characteristics are what makes Bitcoin a unique currency, and its model has been replicate by other existing cryptocurrencies, although with some differences from those of this cryptocurrency:

  • The money supply is limited to 21 million tokens, which are reduce to 50% in the halving’s every four years, reducing the miners’ reward.
  • Transactions that have been validating cannot be banned or censure
  • Create with an open-source
  • It is accessible to all users around the world
  • This is not necessary to identify yourself to use them
  • It can be Exchange with any fiat currency or other cryptocurrency

What is Bitcoin Mining?

Mining is the method that maintains the bitcoin net and also, how new coins are create. All transactions are publicly broadcast on the web, and miners bundle extensive collections of transactions into blocks by completing a cryptographic calculation.

The first miner to solve the next tablet transmits it to the network, and also, if it is found to be correct, it is add to the blockchain. That miner is then reward with an amount of newly creat bitcoin.

What can I use Bitcoins For?

Bitcoin has three functionalities:

  • accounting unit
  • Exchange medium
  • Preservation of value

Bitcoin was a break in electronic commerce by being able to channel transactions without the need for a bank as we were use to. We were eliminating fees or commissions for the service provided.

How to Buy Bitcoins?

To buy Bitcoins, you need a digital wallet or wallet to be able to transfer them from the Exchange to it using the public and also, private keys that it gives you:

  • You open a user in an Exchange that allows cryptocurrency transactions
  • You connect your wallet to it
  • Compras Bitcoins
  • You transfer them to your wallet or leave them inside the Exchange user

The Price of Bitcoin: What are the Influences?

The volatility of bitcoin depends on many factors, for example:

Forks

If the computer programs of different miners become misaligned, then a “fork” can occur in the blockchain. It causes the existence of two other blockchains. So the network of miners must agree on which version it will continue to use. The forks have led to variants, such as bitcoin cash and bitcoin gold.

Regulation

Currently, bitcoin is not regulate by governments or central banks. There are doubts about how this situation can change over the next few years and also, what effect it could have on the value of bitcoin.

Supply

There may be a finite number of bitcoins (21 million), and also, they are expect to be mine by 2040. Also, availability fluctuates depending on the exchange rate they enter the market.

Acceptance

Businesses and consumers have not widely adopted currency as a payment method. However, some see potential in blockchain technology and believe its adoption could become more widespread in the future.

Conclusion

Bitcoin remains a decentralize digital currency, without a central bank or single administrator, that can  sent from user to user on the peer-to-peer bitcoin network without intermediaries.

Also Read: How to Motivate and Encourage Employees?

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