Blockchain Talk: Let's Talk Bitcoin [
$BTC ]
What is Bitcoin?
Bitcoin is the pioneering cryptocurrency, utilizing blockchain technology for decentralized transactions without reliance on central authorities, offering a peer-to-peer network for direct fund transfers among users.
Who Created Bitcoin?
Bitcoin's creator, the mysterious Satoshi Nakamoto, proposed the concept of an electronic peer-to-peer cash system in a whitepaper. Despite ongoing speculation about Nakamoto's identity, it remains unverified. The first BTC genesis block was mined on January 9, 2009, marking the official beginning of cryptocurrencies.
How does Bitcoin Work?
Bitcoin, often misconceived as a physical coin, is a decentralized digital currency operating on a blockchain ledger. In contrast to centralized systems like commercial banks, where a central entity manages the ledger and verifies transactions, Bitcoin employs a distributed ledger across nodes. Nodes, downloadable software, ensure everyone has a copy of the ledger, eliminating disputes. Transactions, like sending and receiving bitcoin, are broadcasted on the network. Mining, a crucial process, verifies if one has sufficient bitcoin for the transaction to proceed.
What is Bitcoin Mining?
Bitcoin miners validate transactions by solving a random and complex puzzle, known as Proof of Work, using computer rigs. This process prevents arbitrary transaction additions. Miners, incurring costs for rigs and electricity, are rewarded with new bitcoins. Transaction fees, paid by individuals, sustain the monetary system. This system enhances the resilience of the Bitcoin ledger against fraud in a trustless manner. However, risks like the 51% attack, where miners control over 51% of computation power, and external security issues remain potential concerns.
I will talk about bitcoin halving in my next post.
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