What is Bitcoin in simple and understandable terms
What is Bitcoin in detail? Is Bitcoin a cryptocurrency? Is Bitcoin a system or a technology? You seem to have a lot of questions about what is Bitcoin. Here in this topic we will explain to you everything about Bitcoin in more detail, more scrutiny, and in an easy way and in simple and understandable terms.
As a simple and easy explanation, Bitcoin is an intangible encrypted digital currency whose system is the Internet and works on the Internet. Bitcoin can be traded over the Internet and electronic devices through a general, decentralized protocol called Blockchain technology.
When I decided to find out what bitcoin is, I searched for information a lot on the Internet for a long time, and every time I read, my questions about what bitcoin are. But all the explanations I found, however simple they were, created more confusion in my head. Then I did my own research on what bitcoin is, how it works, and how it created this hype in the financial world and the global economy.
If you are now, like me, wondering about what exactly is Bitcoin, and do not understand the essence of Bitcoin currencies Is it a scam currency only, is it a real currency and will change the world, is its real value Is it really a profitable currency, and whether it is possible to make money from it How does it work and how was it created and enforced, and what is its value based on? Take five minutes of your time to read this article. I promise you that after reading it you won't have any further questions about what bitcoin is.
Let's ask these questions first. Where does Bitcoin's aunt come from and what are they? What is its nature and who prints it? And if no party or government issued it, then why is Bitcoin called a currency?
In simple terms, what is Bitcoin?
Basically, Bitcoin is just a computer program. Only it is a program that is not present on a single computer or server as is the case with servers and servers that are controlled by large companies and that can get your data easily. As for the Bitcoin program, it is connected directly to millions of computers that communicate directly with each other from Throughout this program, this program is fully encrypted and decentralized, and there is no entity that can change its algorithms, and even if any entity in that program’s network, any Bitcoin program, wants to be dusted even a small bit of that program’s data must be approved by more than 51 % Of the participants in the network and this is impossible, because the participants are scattered across the world and no one knows the other, and also it is not in their interest to change anything.
This example of a computer program makes you frame all your understanding that Bitcoin is nothing but a program that works on the computer. Digital in Bitcoin.
Do not rush the explanation at the beginning!
This program we install on the computer in a distinctive or normal way, according to your experience in using the computer, and the same way someone else does. When we run that program, what it asks for you is to make your computer open and it will transfer files to each other directly, without any third party interference in the matter.
The Bitcoin system works in the same way. The only mission of this program is not to transfer files between users, but rather to transfer the value of any software file that has a value and cannot be copied, forged, or even changed, and it is impossible to forge.
Bitcoin is the world's first decentralized digital currency. The Bitcoin network appeared in 2009, and it works through digital mining, as a result of which BTC is mined via dedicated computers. Transactions on the BTC network are peer-to-peer or peer-to-peer, which means transferring funds directly from one user to another, without the participation of third parties such as regulatory authorities in the form of banks, regulators or the state.
The total number of Bitcoins is strictly limited to 21 million cryptocurrencies, while more than 18,538,124 BTCs have already been mined for 2020, that is, more than 85% of the total supply of all Bitcoins. This number does not take into account all of the lost wallets that have BTC and no one has access to them, and this happened a lot before. Users carelessly approached the correct storage of cryptocurrencies in bitcoin wallets , due to the fact that the value of cryptocurrencies at that time was not significant.
The best option for obtaining bitcoin in 2021 remains cloud mining - leasing computing power for BTC mining, where all work related to equipment setup and maintenance is performed by the service itself. We've prepared for you a ranking of the best cloud mining services, with current estimates for 2020 on the topic:
Bitcoin is a global payment system without any currency inflation due to its limited number in 21 million currencies, through which transactions can be made in this currency. The main difference between traditional payment systems is that the Bitcoin network does not have any control and processing center - all operations are done exclusively in a network of equal clients without the intermediaries of any peer-to-peer network. The decentralization of the Bitcoin network means that no one can cancel or reject a transaction or take or freeze your Bitcoins, and even steal them unless that person has your own token for your wallet.
With Bitcoin, you can buy online or use it as an approved currency in restaurants and stores that accept Bitcoin payments, and now the Bitcoin currency can be traded, and it can be chosen as a counterpart to the dealer with other digital assets, encrypted or real tangible.
What is Bitcoin and the difference between Bitcoin and the regular local currency? Bitcoin is decentralized, meaning there is no party that controls it, exports it, or can control its price. There is no financial center or services for Bitcoin anywhere around the world.
The creator of Bitcoin is an entity, person, or organization under the name of Satoshi Nakamoto, the latter of which proposed Bitcoin in a study he conducted and explained the electronic currency based on mathematical equations, and the idea was to produce a currency independent of the influence of central banks, providing flexibility in dealing in addition to very low transaction fees. Or none.
What is Bitcoin in detail
A simple and easy explanation of what is Bitcoin, Bitcoin is not like the rest of the currencies printed by central banks, which is a currency that gained its value from people's trust in the governments that issue it. And it is not like the dollar, the most famous economic currency in the world, and it is not like the euro, which is controlled by central bodies such as banks and local and international economies.
Bitcoin is controlled by intelligent mathematical algorithms that encrypt all transactions in its system called the blockchain, transactions remain confidential and at the same time all transactions are public in its record since the first Bitcoin transfer between two wallets. Bitcoin wallets are mostly electronic, meaning a dedicated Bitcoin wallet on your phone or computer, or a separate wallet in the form of USD.
Bitcoin is digitally produced by the contract, that is, people around the world run the Bitcoin system on their computers, and anyone can participate in the Bitcoin production process. Bitcoin is produced through a process called Bitcoin mining by powerful computers connected to the Internet, this network is called the blockchain.
Bitcoin in simple words
In simple words, Bitcoin is one large information logging file for simulation, you can imagine it is an Exel file where information about all payments and receipts is recorded, while this file cannot be falsified or changed, and the value of the cryptocurrency is constantly increasing due to its limited amount and the absence of any party that can To issue more additional units.
Bitcoin, BTC, was the first cryptocurrency to appear in 2009. For the first time, the principle of operating a peer-to-peer Bitcoin network, which Satoshi Nakamoto worked on, could be known two years before the advent of the digital currency. Despite the fact that Nakamoto managed to attract the attention of thousands of programmers to his project, no one again believed in its success.
How Bitcoin Works
The cryptocurrency operates on blockchain technology, which basically distinguishes it from all pre-built electronic currencies and payment systems. The Bitcoin blockchain is not linked to any physical assets or "official" fiat currencies, and the price of the BTC digital currency is regulated only by supply and demand in the market, that is, there is the value that people put themselves in, such as gold.
The first bitcoin transaction was executed by an American called Hanech Laszlo, who offered 10,000 bitcoins for a pizza. It is difficult to imagine the feelings Laszlo experienced the moment the Bitcoin price began to rise.
Today, hundreds of millions of transactions are done using cryptocurrency. Therefore, we will answer the question “what is bitcoin” in simple words - money that has its own exchange rate in relation to another currency, but does not have a physical form.
The Bitcoin business system only allows the production of 21 million Bitcoin units around the world, but at the same time the protocol allows the production of hundreds of millions of hash units and these small units are called Satoshi.
According to the Bitcoin algorithms, there are two plans for producing or mining Bitcoin:
The short term: in which the algorithms will allow the production of large numbers of Bitcoin starting from the year 2009 and the production will gradually decrease every year until about 20 million Bitcoins are produced by the end of 2024.
Long term: Production will be done very slowly in order to complete the production process of 21 million units by the end of the year 2140.
This process is what helps Bitcoin to increase its value in the world against other currencies and also against gold, while preserving its value according to mathematical controls. In this way, Bitcoin avoids the financial collapse that occurs in the traditional currency of central banks.
The difference between Bitcoin and classic fiat money such as dollars and euros
Bitcoin is the first cryptocurrency that appeared in 2009. For the first time, the principle of operating a peer-to-peer Bitcoin network, which Satoshi Nakamoto worked on, could be known two years before the advent of the digital currency.
A decentralized currency, which no bank or exchange office controls, has long been a nightmare for the global financial system. The Bitcoin system is spread all over the world, and it works only via the Internet, and it is not rigged or tampered with, and every user in the world can mine Bitcoins by using a computer capable of participating in mining since now normal computers cannot match the duration of the strength of mining difficulty In the network and solving the block problem. At the same time, there are powerful computers dedicated to this, and there are many cloud mining companies that work to mine bitcoin and sell bitcoin mining contracts.
Electronic digital currencies have a number of striking differences from regular cash and other valuable financial assets.
Bitcoin has the following differences:
- Decentralization: There is no centralized network governing body, rather it is distributed to all computers that use computing resources. The decentralized system uses a special program code that organizes the work of network participants and a table of the number of currencies issued.
- Non-retrieval of transactions: After transferring the cryptocurrency from one person to another, the information can never be returned and no one can help in that because the system is decentralized and no one has it.
- Limited number of cryptocurrencies in the system: Mathematical algorithms are constructed in such a way that the creation of new Bitcoin cryptocurrencies is closed. Thus, the total number of bitcoins in the network will not change.
- Low Transfer Fee: The advantage of Bitcoin is that there are no middlemen in the transaction, due to which there is no commission fee.
Does inflation affect the Bitcoin exchange rate?
Bitcoin advantages
Why is Bitcoin needed and how can it be used?
As an alternative method of payment
Some companies only accept BTC payments. why?
As an alternative to a debit and credit card
As a permanent record of transactions
“ The Times 03/Jan/2009 Chancellor on brink of second bailout for banks“ In the sense of a new era for the financial system, which is what we see now achieved.
This reference to modern banking reflects a key component of the Bitcoin system. The blockchain records all transactions of this cryptocurrency. Most importantly, due to the fact that third-party data can be entered into records, the Bitcoin network can be used to exchange information and values that are not self-associated. This mechanism is much better implemented using alternative currencies like the Ethereum blockchain that has a cryptocurrency called ETH, but Bitcoin was the first to suggest such a concept.
Independent: Bitcoin transactions are done via peer-to-peer, short for P2P, and there is no central bank that controls or monitors it, every computer that miners Bitcoin forms part of a global network that works together, there is simply no financial center that can freeze, control or He steals the money of anyone around the world.
Get an account in minutes: Conventional banks make you sign many papers when you open a bank account or make a financial transfer, and if you want to open an account for trade or money transfers, it's another thing where they make you go through many bureaucratic steps. As for Bitcoin, you can open your account in a few minutes from your computer, no questions and no fees.
An alternative to paper currency
Bitcoin is a complete solution for those who do not want or cannot use fiat currencies, who have lost confidence in central banks, and who live in a country with a deteriorating economy or in a region where there is no stable currency. Aside from the recent excessive volatility, the asset is currently a good investment and a healthy alternative to fiat currency.
Of course, no one knows what the future holds for BTC. However, the use cases described above are valid for the time being, and they will obviously be in place for some time.
Confidentiality: You can have many accounts and Bitcoin wallets without being connected to your name, address, or any information about you.
Transparency: Bitcoin stores any transaction that has been performed, and if you have a Bitcoin address (Bitcoin wallet), anyone can know how many Bitcoins you have in this address and the number of transactions that took place with this address and at the same time they will not know that you are the owner of the address (confidentiality and transparency).
Low fees: a conventional bank may cost you twenty dollars in an external transfer, while the transfer of the value in Bitcoin costs only a cents, and on the contrary, the higher the value transferred, the transaction expenses can decrease.
Speed: You can send and receive Bitcoin at the same moment at this speed due to the absence of a center monitoring the transfer operations.
The main technical characteristics and features of Bitcoin
Bitcoin is a unit of information, a specific part of computer code, expressed in mathematical calculations of computer power. The peculiarity of BTC is that it is an independent digital unit, not affected by other currencies and payment systems, and the economy of this network is completely independent.
Open source Bitcoin architecture
An open source cryptocurrency development and operation system. Yes, the Bitcoin system is open source, but the Bitcoin platform cannot be changed, this means that most users can make changes to the Bitcoin structure.
In addition, open source allows any PC user to begin mining electronic money. This approach to development instantly eliminates errors in the system, aiding the rapid development of the world's No. 1 cryptocurrency exchange and mining network.
Blockchain technology
A database that contains patterned and encrypted information is called a blockchain. This blockchain grows and performs the function of distribution and database classification. Required for transactions and exchanges with Bitcoin cryptocurrency.
The blocks are formed simultaneously by several "miners", and then they go to a special rule which is the blockchain. Which blocks and those blocks contain all the information related to the transactions and holders of cryptocurrencies. The number of coefficients does not affect the rate at which the bulk branches are formed.
Protecting transactions with electronic signatures
An electronic signature is what it is with simple, understandable words: a password for a new account. When registering for the Bitcoin network, all users are granted unique and private signature keys. Only by locking the keys and with their help can a transaction be made from your account.
In addition, there is the possibility to create a joint account for multiple people with a multiple signature. To convert currency from, you will need to enter personal identifiers for at least two-thirds of account holders.
This is all in this topic about Bitcoin, but there are many important information on our site about the encrypted economic system, and as a summary of this topic on Bitcoin:
Bitcoin is a decentralized currency, which means that it is not controlled by the government. It is formed and organized by the actions of the users themselves within the network, which ensures its reliability. All transactions are done from the network without the participation of intermediaries, so there are no additional costs for transferring funds.
Many things about the crypto economy you will know on this site. Just follow us. And ask your questions to be discussed and answered regarding Bitcoin, blockchain, alternative currencies, financial technology.
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