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“Bitcoin’s structure is very ingenious. The paper money disappears, and crypto-currencies are a much better way to transfer values than a piece of paper, that’s for sure.”
Elon Musk, CEO SpaceX and Tesla
After entering the Bitcoin world this is what Musk says. According to him, crypto is a far better way to transfer your values to showcase your trading talent in a much smart and probably in an ingenious way.
Though the concept came was introduced a few years ago, a common doubt that arises in most of our minds is "What is cryptocurrency"? Cryptocurrency is a type of digital asset, which is a medium of exchange in different types of transactions using cryptography. This medium of exchange also helps in controlling the creation of additional currency units. Though there has been a lot of talks and press releases about cryptocurrency, not many people and businesses are aware of this concept. It is important that more and more people become aware of the impact of cryptocurrency and its uses.
Bitcoin, an electronic coin, was the first cryptocurrency, which was introduced in the year 2009. Since then, several different cryptocurrencies have sprung up and are making rounds in the market. Bitcoin is a part of a decentralized and distributed digital cash system, which is measured using the digital ledger known as the blockchain transaction database. So, if your next questions are "why use cryptocurrencies" or "why use Bitcoin", then read on to get the answers for these queries.
How Bitcoin Works
How exactly to categorize Bitcoin is a matter of controversy. Is it a type of currency, a store of value, a payment network, or an asset class?
Fortunately, it's easier to define what Bitcoin actually is. It's software. Don't be fooled by stock images of shiny coins emblazoned with modified Thai baht symbols. Bitcoin is a purely digital phenomenon, a set of protocols and processes.
It is also the most successful of hundreds of attempts to create virtual money through the use of cryptography, the science of making and breaking codes. Bitcoin has inspired hundreds of imitators, but it remains the largest cryptocurrency by market capitalization, a distinction it has held throughout its decade-plus history.
KEY TAKEAWAYS
Bitcoin is a digital currency, a decentralized system that records transactions in a distributed ledger called a blockchain.
Bitcoin miners run complex computer rigs to solve complicated puzzles in an effort to confirm groups of transactions called blocks; upon success, these blocks are added to the blockchain record and the miners are rewarded with a small number of bitcoins.
Other participants in the Bitcoin market can buy or sell tokens through cryptocurrency exchanges or peer-to-peer.
The Bitcoin ledger is protected against fraud via a trustless system; Bitcoin exchanges also work to defend themselves against potential theft, though high-profile thefts have occurred.
What is Bitcoin Mining?
Bitcoin mining is the process of creating new bitcoins by solving extremely complicated math problems that verify transactions in the currency. When a bitcoin is successfully mined, the miner receives a predetermined amount of bitcoin.
How Bitcoin mining works
In order to successfully add a block, Bitcoin miners compete to solve extremely complex math problems that require the use of expensive computers and enormous amounts of electricity. The computer hardware required is known as application-specific integrated circuits, or ASICs, and can cost up to $10,000. ASICs consume huge amounts of electricity, which has drawn criticism from environmental groups and limits the profitability of miners.
If a miner is able to successfully add a block to the blockchain, they will receive 6.25 bitcoins as a reward. The reward amount is cut in half roughly every four years or every 210,000 blocks. As of August 2021, bitcoin traded at around $48,000, making 6.25 bitcoins worth about $300,000.
But the price of bitcoin has been highly volatile, which makes it difficult or impossible for miners to know what their payment might be worth whenever they receive it.
Not sure about investing in Bitcoin? Read more at: https://economictimes.indiatimes.com/markets/cryptocurrency/not-sure-about-investing-in-bitcoin-heres-what-can-help-you-understand-better/articleshow/84013329.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst