You might be hearing a lot about bitcoin lately and wondering what exactly bitcoin is and how it works.
If you are thinking it, you are not alone because a lot of people have not even know what bitcoin is even after more than a decade of its invention. Also, if you have searched on the internet about bitcoin, you might have read many things that may have confused you.
If we talk in simple words, bitcoin is a person-to-person digital currency that allows its users to make payments instantly without requiring any middlemen and low transaction fees.
Looking interesting? Yes, bitcoin is not like a typical fiat currency with the government or banks’ involvement at every step. Instead, it is a digital currency that operates without any central authority or banks.
It provides complete control of managing transactions to its users. Also, bitcoins are digital coins that are not issued at banks but are mined using computing power. The world of bitcoin is quite tempting and thrilling at the same time. If you want to trade bitcoin, download the app from novinite.com.
Bitcoin is the first application that was built on blockchain technology. With bitcoin, blockchain terms came into existence, and as of now, blockchain is the technology on which all cryptocurrencies are based. Bitcoin currency is highly untraceable and fungible and is like gold in terms of inflation, i.e., inflation-proof.
History of Bitcoin
To understand bitcoin and its value, it is imperative to learn how and why it was created. Bitcoin first came into existence in 2009, and it became the first cryptocurrency established in the cryptocurrency world.
Bitcoin is a valuable asset or a digital asset that uses cryptographic principles to secure the bitcoin network and transactions. It is also made to provide people with a medium of exchange for goods and services. The individual who created bitcoin is an anonymous identity known under the name Satoshi Nakamoto.
Satoshi introduced the whitepaper of bitcoin. He mentioned “a peer-to-peer electronic cash system” that is decentralized in nature means without central authority involvement in the whitepaper. Bitcoin was introduced in 2008 at the time of the financial crisis when the general public suffered a lot because central authorities and banks had all control in their hands.
How are bitcoins mined?
Unlike traditional currencies, bitcoins aren’t printed, but instead, they are mined using powerful computing power that is required to solve complicated mathematical algorithms.
Bitcoin is a computer code, and it is not easy to create a computer code using computing power. Miners are the largest contributors to the bitcoin network because they put effort into solving mathematical algorithms that verify the bitcoin transactions. Currently, the block reward is 6.25 Bitcoins rewarded to the miner who solves the puzzles first.
How to obtain Bitcoins?
Bitcoins and other cryptocurrencies can be purchases from online marketplaces, also referred to as cryptocurrency exchanges.
These crypto exchanges allow users to easily buy and sell bitcoins and other cryptocurrencies in exchange for fiat currencies. All the exchanges have different fees and operate differently. Some reputable crypto exchanges also enable users to use exchanges to store their cryptocurrencies.
Still, it is advised only to buy or sell bitcoins but never store your bitcoins in exchanges as these aren’t safe. There are some top-notch exchanges that hackers have hacked and where people lost all their investments.
How to store bitcoins?
Before you invest in bitcoins or other cryptocurrencies, you must find a place to store your digital tokens. You can purchase bitcoins from cryptocurrency exchanges, but these must be stored in digital wallets.
A digital wallet is either software or cloud storage that stores addresses and keys used to access the funds. Also, in simple words, a digital wallet is similar to a bank account, and where each bank account number is different, wallet addresses are also different.
Like you use PIN or password in banks to protect your funds, private keys are used to safeguard your bitcoins in digital wallets. Through bitcoin wallets, users can easily pay and receive bitcoins for payments. There is a wide range of digital wallets available that differ in inaccessibility, price, and security.