Technology has developed a lot, and the wave of digitalisation has changed almost everything. Traditional currency has been replaced by digital currency, which allows people to make easy and quick payments. One of the most popular digital currencies is bitcoin, as it allows users to make peer-to-peer transactions at minimum cost. There are few crucial aspects of bitcoin mentioned below that you must know.
How bitcoin works?
The first thing that you need not understand before using bitcoins is its working. Bitcoin works on a peer-to-peer technology that allows you to make instant payments to any user in any part of the world on the same bitcoin network. The individuals and groups who are part of the bitcoin network are called miners or nodes. Bitcoin is a decentralised cryptocurrency that allows you to make easy transactions that are recorded in a public ledger known as Blockchain. All the transactions are put into groups termed blocks, and these blocks are solved by bitcoin miners using powerful computer systems. For more information you can visit the official website
The blocks are added to the blockchain ledger, and the miners receive a reward for each block they add to the ledger. Blockchain is the most important aspect of bitcoin as it records all the transactions and ensures that there is no risk of fraud. Once a transaction is recorded in the Blockchain, no changes can be made to it, which make it impossible to duplicate the transactions or commit any fraud.
Bitcoin is a decentralised digital currency which means there is no government authority that issues bitcoin. Bitcoins are created and issued through a complex process known as bitcoin mining. It involved solving complex mathematical problems known as blocks and compiling them into groups before adding to the Blockchain. The professionals who mine bitcoins are known as bitcoin miners, and they receive some bitcoins as a reward for solving a block. Bitcoin mining is not an easy task as it requires a lot of knowledge, skills and experience. You also need to have a highly powerful computer system which is a huge investment in itself.
The mathematical problems (blocks) are highly complex, which is why you cannot solve them on your own. However, nowadays, the rewards that you can earn from bitcoin mining is minimum, but bitcoin lovers are still working hard for it. They are doing it because it makes the bitcoin network secure and trustworthy, and bitcoin has a massive value in the market.
Bitcoin is based on blockchain technology, so if you want to use it properly, you need to understand the technology behind it. Blockchain is a public ledger that issued to record bitcoin transactions and share them with all the users on the same network. Bitcoin transactions are put in groups termed as ‘blocks, and these blocks are added to the public ledger, which is why it is termed as ‘blockchain’. Blocks stores three types of data and information;
They store transactions details such as; time, date, amount of your last purchase, etc.
They store information related to your name, but it uses ‘digital signature’ instead of using your real name with the transaction.
Blocks also have information that is used to differentiate every block from others. They have a code termed hash which allows you to distinguish blocks from each other.
Who is the creator of bitcoin?
One of the biggest confusions related to bitcoin is about its creator. Bitcoin users are unaware of the real creator of bitcoins as it is still a mystery. Satoshi Nakamoto is the name associated with the inventor of bitcoin, but no one has seen or met him. He launched bitcoin as open-source software in the year 2009. The first bitcoin transaction took place in the year 2010 when a miner bought two pizzas for around 10000 bitcoins.
Who controls the network of bitcoin?
You will be surprised to know that no one controls the bitcoin network. There is no particular owner of the bitcoin network as it is controlled by a vast network of bitcoin users. It is an open-source code which means anyone can make any changes to it, which is why there is no particular individual who owns or controls the bitcoin network.