What is Bitcoin and how does it work?

With the craze of the bitcoin, everyone in the world might have heard about it. But if you have not then What is Bitcoin and how does it work? In this article, we are going to discuss each and every important aspect of the bitcoin.

Bitcoin

Bitcoin is a virtual currency that came to market in January 2009. It was designed in 2008 by an anonymous person who was later given the name of Satoshi Nakamoto. Bitcoin is a digital form of currency. It regulates and generates the units of currency using the rules of cryptography. Bitcoin is under the category of cryptocurrency and has come out to be the most valuable and successful in it. It is an intersection of banking regulations, privacy policy, and technical innovation. Although Bitcoin is not a fiat currency, it is has created a great impact on the market

The value and popularity of this currency rose drastically in the year 2017 and the value rose to approximately $13,000.  There are many currencies which are derived from its open source coding like Litecoin.

There is a limit to the bitcoin that is 21 million. Around 16 million of which are in the market. And it is expected that by the end of the next 12 year all the bitcoin will be mined and available for the use in the market.

How does it work?

There are different things to understand if you want to know the working of the Bitcoin.

Blockchain

Bitcoin uses the open ledger system. This means that the transactions done by the buyer will be available in the public. The blockchain is used to show the confirmation of transaction done by the user. This has a very complex algorithm which can be very difficult to decrypt.

The blockchain helps to keep the record of each and every transaction done by a single bitcoin. This can help you to track down the bitcoin history means from where it came. And where you are spending it or where it is going to end up.

Transactions

Transferring the bitcoin from one wallet to another is done by the blockchain method. While transferring there are two keys – one is a private key and another is a public key.

Private Key is controlled by the user only and he or she knows about it which is because of the security reasons. Whereas the public key is attached to the block which also has a unique number and decrypted by the miners by the process called mining.

Mining

Mining is one of the most important things for the sustenance of the bitcoin. Bitcoin is created by using the process called bitcoin mining. As well as to maintain the network of bitcoin blockchains.

In this, the first person to mine the bitcoin gets the reward. The first person to mine the bitcoin gets the reward of 50 bitcoins. But the rewards are decreasing at regular intervals and at present 12.5 bitcoins are given as the reward. This should not be considered as the bad thing because the price of the bitcoin has risen since then.

Conclusion

If you did not have the idea about the bitcoin. Then you had an overview about What is Bitcoin and how does it work? But if you want to learn more than you should know that you will be entering the rabbit hole. The more you learn the more topics emerged to learn about.

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