These days we are hearing words Bitcoin and Bitcoin Mining. What is this bitcoin about? So in this article I’m going to explain about this new digital currency Bitcoin and how Bitcoin Mining works?
Ever since the evolution of human civilization the way we transact has changed in many ways. At first we used to transact goods or services to goods or services. Later we transacted good or services to gold or gems. After that we started transacting with money.
Money or currency has different value in different nations. Currency is regulated by governments and financial institutions like banks. Because of all these regulating bodies there is a friction in international transactions. Transaction fee, conversion fee and other fee are frustrating things to go through.
What is Bitcoin?
To handle all those issues Satoshi Nakamoto has come with a new of digital currency called Bitcoin. Bitcoin a digital or cryptocurrency, you can’t feel or touch it. It uses Hash function and SHA-256 algorithms which are developed United States’ National Security Team. Thus it’s a highly secure system.
Bitcoin is a decentralized network and is not regulated by any government or financial institutions. Everyone with high-end gpu pc can maintain a bitcoin system. Everyone on the bitcoin network can see entire transactions. Bitcoin system maintains high level of anonymity, you won’t know account holder details.
How Bitcoin Mining Works?
Every Bitcoin account holder will have 2 keys, public key and private key. Public key will have account number and transaction details and private key will have unique signature to authorize the transaction.
Everytime you initiate a transaction, along with public key private key goes to a pool of transactions called Blockchain. A blockchain is a digital ledger which will have all the bitcoin transactions details since the beginning.
Every bitcoin transaction is assigned with a puzzle using hash function. You need to solve the puzzle to complete the transaction. These puzzles are a bit complicated and only experts with high GPU computer can solve these puzzles.
Once the puzzle is solved your transaction gets completed. This entire process of solving bitcoin transaction puzzle is called Bitcoin Mining. Those who use high GPU powered PC to solve the bitcoin puzzles are called Bitcoin Miner. Everytime bitcoin puzzle gets solved a new bitcoin gets generated and goes as reward to the bitcoin miner.
As I said Bitcoin system is decentralized with no regulating body, is there control over the total number of bitcoins? Yes, bitcoin system can only handle 21 million bitcoins and is expected to reach by 2140.
Because there is no regulating body, bitcoin is highly inflationary in nature. The value of bitcoin may go up or down at anytime. Bitcoin is still not adapted fully, I mean not many websites, services or companies accepting bitcoins. Few countries already blocked bitcoin.
You can easily buy or sell bitcoins. There are many websites and apps online which provide bitcoin services. But before investing make sure you know in and outs of bitcoin.
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