Bitcoin: What it Is and How It Works.

Bitcoin has become a popular subject in the media recently. The term Bitcoin is often used interchangeably with other terms like cryptocurrency and digital currency. But what is Bitcoin? How does it work, and why should you care?

Bitcoin is an emerging peer-to-peer electronic cash system that uses cryptography to generate money and validate transactions. This system works without requiring any central authority or centralized issuing authority. Bitcoin was conceptualized in 2008 by Satoshi Nakamoto (a pseudonym), who wanted to create a form of currency not tied to any country or economy.

Since its launch, Bitcoin has grown exponentially. It’s predicted that the total number of Bitcoins will reach 21 million by 2140, at which point no more Bitcoins will be generated. And while Bitcoin can be used to purchase goods online, many people are buying bitcoin for investment purposes, hoping that its value will increase over time. So how does Bitcoin work?

What is bitcoin?

Bitcoin is a decentralized digital currency that was created in 2009. Unlike traditional currencies, Bitcoin has no central bank or single administrator. Instead, it's underpinned by an open-source software system which relies on peer-to-peer networking.

Bitcoins are created through a process called mining, which involves solving complex cryptographic problems with the aid of computer hardware and software.

Mining is also how bitcoins are released into circulation, as miners receive transaction fees and newly minted bitcoins in return for mining this data into existence. As of April 2017, approximately 17 million bitcoins have been mined into existence.

How does bitcoin work?

Bitcoin is a cryptocurrency that allows users to buy goods and services from anyone, anywhere. It works by people using a digital wallet with their personal information to process transactions.

The system is entirely decentralized, meaning it isn't controlled by a government or any other central authority. This is largely because of the blockchain technology used to process transactions. The blockchain is a public ledger where all transactions are recorded publicly and permanently – they can't be erased or changed, which protects against fraud and double spending. In addition, as new blocks are completed, old blocks become more difficult to change as they're part of the permanent record of transactions.

In order for someone to make changes in the blockchain, they would need to control over half of the network's computing power. So it's nearly impossible for one person or group to control Bitcoin's blockchain system and alter transaction data on their own.

This form of currency has been gaining traction for its lack of fees and ability to process transactions faster than most traditional forms of payment. But there are downsides as well: Bitcoins have been stolen by hackers and lost due to user error (like sending bitcoins directly from an exchange). Plus, there’s no guarantee that bitcoin will retain its value over time – just

Why should you care about bitcoin?

Bitcoin is an innovative form of currency, created and held electronically. No one controls it. Bitcoins aren't printed, like dollars or euros – they're produced by people, and increasingly businesses, running computers all around the world, using software that solves mathematical problems. It's the first example of a growing category of money known as cryptocurrency.

Bitcoins are created through a process called mining which involves solving complex math problems with computer processors - this is how new bitcoins are made. Each bitcoin has its own unique fingerprint and is part of the public record forever.

As long as you have your "private key" (a personal password), you can access your bitcoins from anywhere in the world no matter what happens to your coins or to the internet itself.

Each bitcoin is divisible to eight decimal places so each bitcoin can be broken down into 100 million smaller units called satoshis. The smallest unit of one bitcoin is known as a "satoshi."

How are new bitcoins created?

Every 10 minutes, a new block of Bitcoin transactions is processed. Whenever a transaction is created, it's sent to all nodes (the computers that make up the Bitcoin network) for validation and permanent storage. This process involves solving a difficult math problem and once solved, it creates a new block of bitcoin and credits the miner (person or machine) with some bitcoin (currently 12.5 newly generated bitcoins).

Bitcoin miners are rewarded with bitcoins for each valid block they create. The difficulty of these math problems increases as more bitcoins are generated, which makes mining increasingly competitive as time goes on.

Bitcoin is designed to be an open, decentralized currency that can be used without government or corporate interference. Transactions are processed by the network and recorded in a public ledger called the blockchain. Unlike many currencies today, there is no central authority monitoring its production and usage cycle. Bitcoins can't be counterfeited because only coins that have actually been mined and authenticated can become part of the blockchain and these coins require real-world identities to create them.

These features make Bitcoin much less susceptible to seizure by law enforcement than regular money since there is no physical piece of paper involved with Bitcoin transactions.

How does bitcoin compare to other currencies?

Bitcoin is a digital currency, which means it does not exist as bills or coins. That said, this form of currency can be used to make purchases and trade with other currencies on the internet.

Bitcoin has the potential to transform the finance industry because it operates without any central authority or centralized issuing authority. This means that Bitcoin would not be subject to any manipulation by the government and banks, making it more stable than traditional forms of currency.

However, Bitcoin has yet to fully prove itself as a viable alternative form of financial transaction. It has been around for more than 10 years, but it is still relatively unknown and unused in major places like China and Japan.