Bitcoin: What is bitcoin? and How it works?
Bitcoin started trending once again after 2018 when it touched around $16,000 dollars, Then it crashed because of many reasons, now in 2021 it once again started trending and currently, its dollar price is at an all-time high at around $47,000. Because of this, many people are trying to invest in bitcoin.
now it’s again in the news because the world’s one of the richest people Elon musk’s tesla company invested in bitcoin for around $1.5 Billion. so everybody what to know how bitcoin and blockchain work, so here it is.
Current Bitcoin price shown below:
What is Bitcoin?
Bitcoin is normally described as a cryptocurrency or a virtual currency or a digital currency – completely virtual money. It’s like an online version of cash. You can use it to buy products and services, but currently, not all shops accept Bitcoin as legal exchange currency and some countries have banned it altogether. However, some companies are beginning to buy into its growing influence. In October 2020, the online payment service, PayPal, announced that it would be allowing its customers to buy and sell Bitcoin.
How Bitcoin Works?
Each bitcoin is a computer file stored in a digital wallet on a computer or smartphone. To understand how the cryptocurrency works, it helps to understand these terms and a little context:
- Blockchain: Bitcoin is powered by open-source code known as the blockchain, which creates a shared public ledger. Each transaction is a “block” that is “chained” to the code, creating a permanent record of each transaction. Blockchain technology is at the heart of more than 6,000 cryptocurrencies that have followed in Bitcoin’s wake.
- Private and public keys: A bitcoin wallet contains a public key and a private key, which work together to allow the owner to initiate and digitally sign transactions, providing proof of authorization.
- Bitcoin miners: Miners — or members of the peer-to-peer platform — then independently confirm the transaction using high-speed computers, typically within 10 to 20 minutes. Miners are paid in bitcoin for their efforts.
How to buy Bitcoins or How it is generated?
- you directly buy bitcoin from the seller
- you sell products for exchange of bitcoin
- or they can be created by the computer, The computers are made to work out incredibly difficult sums. Occasionally they are rewarded with a Bitcoin for the owner to keep. People set up powerful computers just to try and get Bitcoins. This is called mining. But the sums are becoming more and more difficult to stop too many Bitcoins from being generated.
Arjun is a Full-stack developer, who is fond of the web. Lives in Chikmagalur, Karnataka, India
