What Bitcoin (BTC) is and how it works

Spread the love

This article is about Bitcoin (BTC) as the most important cryptocurrency and discusses its advantages of it. It also briefly talks about how Bitcoin works. On the 3rd of January 2009 Bitcoin’s first block known as the Genesis Block was created. This was the beginning of Bitcoin, while at the same time being the pilot of the blockchain. In time, Bitcoin’s creation led to the start of the cryptocurrency market. To this day, Bitcoin is still the most important cryptocurrency with lots of advantages by far.
Satoshi Nakamoto’s work is to take out trusted third parties from transactions through a purely peer-to-peer version of electronic cash. This means that there’d be no banks or other institutions that you’d have to entrust your money to and you can freely transact with anyone globally. As the common motto goes, with Bitcoin, you can be your bank.
It is also designed not to be printed without reasonable aims like traditional money. A fixed maximum amount of Bitcoins can ever be created to prevent this. It is completely open-source, which means every single transaction can be publicly visible while maintaining anonymity for its users. Speaking of which, let’s take a closer look at how their transaction system works.
Proof of Work
Bitcoin (BTC) uses a system for verifying transactions which are called Proof of Work (PoW). Some miners try to solve complex cryptographic puzzles to create a Block for the blockchain. Each block contains the information of so many Bitcoin transactions. The miner who succeeds is given a small amount of BTC for the work they’ve done. In turn, all miners give their computing power to the Bitcoin network which gives it stability, security, and decentralization.
Even if one miner is acting in the wrong way or is compromised, all other participants in the network will still verify the correctness of the transactions. As such, there’s not a single point of failure in the network and there’s strength in numbers.

Advantages of Bitcoin (BTC):

There are many key features of Bitcoin that make it stand out against traditional money or cryptocurrencies in the way it works. Bitcoin’s unique combination of these factors makes it strong.

  • Decentralization

Bitcoin is the first system to use a fully peer-to-peer network properly. It does this through blockchain technology as invented by Satoshi Nakamoto. The decentralized nature of it has so many advantages.
First of all, it increases security. In a centralized environment, if a computer is hacked there is no chance to fix it. In a decentralized network like a blockchain, you have to attack so many different computers wherein its case it becomes a herculean task.
Additionally, within a decentralized network, there is not a central authority that can decide whatever happens on the network.
Moreover, there are many actors worldwide involved in the Bitcoin network. As such, the network functions fully 24/7. Anyone can join the network anywhere around the globe.

  • Transparency

Bitcoin is completely open-source so everyone can take a closer look at its coding and verify how it works. All transactions are also available on the blockchain, hence you can verify all data relating to your Bitcoin accounts and balances.
– Censorship-resistant & Full Ownership
Owning Bitcoin no central authority can tell you what you can and cannot do with your own money. Unlike with money you’ve left in the care of a financial institution, through Bitcoin you can be completely in charge of your funds while retaining complete ownership of your money. While there are options to leave it in someone else’s custody like cryptocurrency exchanges, there are equally secure options to have full ownership over your funds.

  • Against inflation

Unlike traditional money that can be printed infinitely, Bitcoin has an absolute maximum of 21 million Bitcoins to exist in 2140. New Bitcoins are still being made at the moment, but the amount created is cut in half every four years in an event known as the Bitcoin halving.

  •  Anonymity

While its transactions are viewable and public, one is still anonymous at the same time and that’s one of the most important advantages of Bitcoin(BTC). The addresses in Bitcoin are strings of data that on their own cannot point to a single individual.

  • Lightning-fast Global Transactions

Bitcoin transactions can be sent from anywhere to any country. It doesn’t consider country borders – a national or international transaction takes the same amount of time and fees. On average, a BTC transaction takes about 10 minutes.
Our last articles:

Are you planning to get a loan from Defi? Here are 3 threats that you need to know

What is Web 3.0?

Play and earn money; The best blockchain games

Leave a Reply

Your email address will not be published.