what is bitcoin

What is Bitcoin: Understanding The Basics

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What is Bitcoin? Bitcoin is the first, most valuable, and most well-known cryptocurrency. Some would claim that Bitcoin is the only cryptocurrency and that all other tokens are ‘altcoins.’ Bitcoin is not so much an alternative currency, but rather a record of a transaction between two parties.

what is bitcoin

Who created Bitcoin?

The creator of Bitcoin is a programmer (or team of programmers) known as Satoshi Nakamoto. The true identity of Satoshi Nakamoto has never been discovered. There has been a lot of speculation as to who could be the founder, but no one has found the answer.

How does Bitcoin work?

Bitcoin uses blockchain technology, which is a digital ledger of transaction records. Individual transactions are stored in a block of data, which in turn forms a chain of blocks. Hence the name blockchain. The blockchain is a completely decentralized system governed by no single person or institution.

How do you store Bitcoin?

To store Bitcoin requires a Bitcoin wallet. Although it is called a wallet, it works very differently from a conventional wallet for your cash. Rather than storing the Bitcoin tokens themselves, the wallet stores what is called a private key. The private key allows accessing your Bitcoins, which are stored on the Bitcoin blockchain. You can receive Bitcoins to your wallet via a public key, which is also known as a Bitcoin wallet address.

How do you buy Bitcoin?

There are several ways in which you can acquire Bitcoin tokens. The most popular method is to purchase them via cryptocurrency exchanges. The exchanges allow you to trade fiat money (such as USD or EUR) and other cryptocurrencies in exchange for Bitcoin. Another option is to purchase directly with buyers and sellers on a peer-to-peer exchange platform such as LocalBitcoins. Larger cities will also have some Bitcoin ATMs that allow you to buy and sell Bitcoin. Finally, you can meet people in person and trade Bitcoin for cash.

How do you mine Bitcoin?

Bitcoin mining is the practice of verifying Bitcoin transactions using a powerful computer. Such a machine is referred to as a ‘node’ and is the driving force behind the Bitcoin network. Once a Bitcoin transaction is made, Bitcoin miners will compete to crunch the transaction data down into a ‘hash.’ A hash is a string of code that contains all the information relating to the transaction. Once a miner generates a hash, he or she is rewarded with Bitcoin for their efforts.

what is bitcoin

Advantages of Bitcoin

Bitcoin has been praised for how safe it is to store, and how cheap it is to transfer. The decentralized nature of the cryptocurrency makes it extremely difficult to hack. All transactions are verified using a consensus from the various nodes on the network. If one node is corrupted or manipulated, the mistake will be rectified by the rest of the system.

Disadvantages of Bitcoin

The single biggest issue facing the Bitcoin network is the lack of scalability. Although Bitcoin works fine for most users, there is a massive gap between Bitcoin and the likes of Visa and MasterCard. The Bitcoin network can handle seven transactions per second, compared to Visa’s 40,000 transactions per second. Scalability and decentralization are at odds with each other, which has led the community to scramble for a solution.

I’m a freelance writer and full-time curious person. My main interests are philosophy, politics, art, culture, science, and how they’re all interlinked. When I’m not writing, I’m fronting a band, producing records, and making videos. I’m also currently working on launching a YouTube channel that will focus on culture and politics. I think blockchain technology is fascinating because of the huge potential it has to revolutionise not only the financial sector, but society as a whole.