What is Bitcoin and How does it work?
What is Bitcoin and How does it work? Bitcoin is the first cryptocurrency launched in 2009, enable user-to-user transactions without a bank or administrator. Bitcoin is the godfather of cryptocurrencies launched by Satoshi Nakamoto, who has been a mystery to date.
Bitcoin is not controlled by any central authority, and transactions and bitcoin cash flows are handled through a blockchain network. Although bitcoin is the first cryptocurrency to launch, hundreds of other digital currencies have sprung since its inception. The cryptos that have surged are often called “altcoins” and are meant to be employed as an alternative domain registry.
Bitcoin is the godfather of digital currencies since it was the first digital currency to launch. It is an open-source code, which means that anyone can download it. Every 10 minutes, there are 6.25 new bitcoins mines and circulated, and there are 21 million bitcoins that can be mines no more can be issued. The available bitcoins include the 17 million currently in circulation, and based bitcoin halving the last will be mined in 2140.
Most importantly, bitcoin is a decentralized currency, which means there is no central authority that controls its. Transactions can occur between users without the need for intermediaries, and the transactions will be recorded and confirmed by computers. Verification of the transactions is through bitcoin mi(computers).
Interestingly Bitcoin can be used as a commodity and a currency. Bitcoin has grown in popularity, and there are Bitcoin ATMs nowadays across the globe, and there are almost 2000 ATMs in the US. Equally, there are more than 23,000 bitcoin wallet address that holds over one million dollars' worth of bitcoin.
Traditional money system vs Bitcoin network
The traditional money system operates under the control of a centralized system, which means that a central bank or government will be responsible for its administration. When you need to send or receive money such as EUR or USD, you will need intermediaries like payment institutions and banks to complete the transaction and manage them. Mostly it is the central bank that vouches for the value of the fiat currency and trust in the conventional money system is vested on currency supply issued by the central bank.
The bitcoin network is decentralized, which implies that there is no central authority that controls the digital currency. Sending and receiving bitcoin doesn't require intermediaries, and transactions are confirmed by computers and recorded in blockchains. The process of confirmation of bitcoin transactions by computers is known as bitcoin mining.
Banks are not involved, and since there are no intermediaries, it is faster to send money on the bitcoin network than the conventional system. Typically it will take one minute to an hour to transact on bitcoin network compared to the three to seven days required to confirm banking transactions.
Check TOP 3 best and trusted exchanges to trade and buy Bitcoin
Binance boasts around 12 million daily users and 26 million active monthly visits
Its trading fees range from 0.1%-0.2%
There is a Binance OTC trading option that allows trading of large crypto block trades.
The exchange processes between 10 billion and 12 billion trades each day.
Supports over 190 cryptocurrencies
It is supported in more than 180 countries
Interestingly when traders use the Binance native token (BNB), they enjoy a 25% discount on trading fees.
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Cryptocurrencies Are Highly Volatile
Cyber Thieves Target Crypto Exchange And Users’ Wallets
Some Providers Charge Unrealistic Fees
Cryptocurrency prices tend to fluctuate considerably depending on market conditions. The reason behind the volatility of crypto is that it is the market participants that determine the asset's value through transactions. It means that the price can rise or drop suddenly, which implies that when investor sentiment is low, the trading activity might plunge, resulting in an abrupt collapse of price. Bitcoin has previously seen the price drop by more than $1000 in an hour.
Since the bitcoin network is based on the internet, the industry has become a target for cyber thieves who target exchanges and users' wallets. There have been a series of hacks in recent times where billions of crypto have been lost. Therefore, it is essential to use 2-nd authentications like Google authentication, email, and SMS to keep private and account access keys safe. The best way of enhancing safety of the keys is having a second device that is always offline where the keys can be stored.
When buying cryptocurrency, it is important to be wary of small providers that might be charging exorbitant fees to buy bitcoin. Some rogue traders want to take advantage of new customers by selling bitcoin to 50% high compared to the average market price. Therefore it is essential to be on the lookout for such elements and always check on the fees that a provider charges before purchasing bitcoin.