Bitcoin. Funny Money. Digital Money. Blockchain.
What is Bitcoin?
Bitcoin is a peer-to-peer technology that allows individuals to send transactions without any central authority, bank, or 3rd party. Bitcoin has no CEO, no manager, and no leadership. Bitcoin is an open-source network; designed by anyone and everyone who wants to take part. No one owns the network. Due to these properties, Bitcoin is the greatest and most decentralized technology in the history of mankind.
How does Bitcoin work?
Bitcoin makes payments easy, and these payments are secured by mathematics and energy. Bitcoin is secure due to its proof of work (PoW) mechanism. Proof of work prevents transactions from being reversed while protecting the integrity and longevity of the network. The Bitcoin network works 24/7. All you need is a recipient’s address and you can transact anytime anywhere. Bitcoin is also global. Sending Bitcoin across the planet is as easy as sending it to a friend in the same room. Zero banks are required with no lags or delays or extra fees to transact internationally. There are zero fees to receive Bitcoin and you can choose what fees you pay when you send transactions. You can choose higher fees for faster transaction times, or a lower fee for a slower transaction time. Bitcoin also allows you to make a payment without having to reveal your identity, just like physical money.
Let’s go into more detail…
The Bitcoin blockchain is a public ledger and all transactions are visible on the blockchain. The blockchain allows all wallets to know each other’s balance so that transactions can be verified. This makes sure that all Bitcoin are actually owned by that individual. The blockchain is secured and protected by cryptography.
If you are a new Bitcoin user, you want to start by creating your own wallet. Once you have a wallet on your computer or mobile device you will have your own address. You can create new wallets/addresses anytime you like. You can share your addresses with anyone and they can send you Bitcoin.
When you create a wallet you will also create a private key or “seed phrase”. This is a very important piece of information you want to keep safe and secret. Never, ever share your private key/seed phrase with anyone. Anyone who has access to your private key/seed phrase has access to your Bitcoin on the blockchain. Your private key/seed phrase is used to sign transactions, which provides mathematical proof that the transaction came from you. Once a transaction is sent, there is a “signature” that prevents said transaction from being changed by anyone. Transactions will typically start confirming on the blockchain within 10 minutes to 1 hour through mining.
What is Bitcoin Mining?
Bitcoin mining plays a crucial role in the Bitcoin network. Mining is a decentralized and distributed consensus system that confirms transactions on the blockchain while securing the network. Mining keeps a record of the history and order of transactions on the blockchain. This mechanism keeps the network neutral. Bitcoin transactions are confirmed by fitting into “blocks”. The rules of the Bitcoin blockchain require all transactions to fit within a certain block to validate the transaction. Past blocks are not capable of being edited, changed, or modified in the future.
If you are brand new to Bitcoin, I would encourage you to check out these educational books and resources.