Bitcoin and cryptocurrencies for beginners – explained!
You may have heard of Bitcoin by now and the hype it had over the last few weeks reaching all-time highs that boom dropping over $1,000 within minutes and a few days later, hitting a new all-time high.
Seven years ago, 10,000 bitcoins were used to buy two pizzas. Now one is worth over $ 10,000, but what is Bitcoin really? Basically, it’s, a new form of currency, known as cryptocurrency or crypto. For short, it’s, not like everyday paper money that were used to, but a form of digital currency, invented by a mysterious person known as Satoshi Nakamoto.
The goal was to create a peer-to-peer system for online payments. P2P means that it’s, decentralized and works independent of any financial institution. Think of it like this, when you go into a coffee shop to buy a latte with your bank card, you don’t, actually give any money to the cafe owner.
The bank does, with digital currency there’s, no banks, no entities or governments that control it eliminating the need for a middleman. So where does Bitcoin come from? Well, it’s, mine, not with the traditional pickaxe, but with computing complex mathematical equations.
Once the equations are solved, new bitcoins are generated or mined. The term mining is commonly used because, like our mineral resources, there’s, a limited number of bitcoins out there in the case of Bitcoin.
That number is 21 million, but there’s more miners. Don’t only generate new bitcoins; they use their computers to verify transactions and prevent fraud 24 hours a day. This is done by collecting all transactions made during a set period into a list called the block.
It’s. The miners job to confirm those transactions and write them into a general ledger, which kind of resembles a huge giant, universally accessible spreadsheet. So, instead of one person controlling everything, there are thousands of computers around the world connected to a network which all come to an agreement.
On which transactions are valid, but how does it do all this by using something called blockchain? If bitcoin is email, then blockchain is the Internet. It’s, a whole ecosystem that we’ll cover in another video.
Another thing to mention mining Bitcoin is costly. There’s, the high cost of electricity and the hardware components wearing out an individual mining Bitcoin would find it really difficult to make any money that way.
That’s, why there are Bitcoin farms around the world, mining processing and verifying transactions. People can invest in them and get a small percentage of the returns. Alternatively, Bitcoin can be traded on many exchanges and exchanges, a marketplace where you may buy or sell your crypto in exchange for regular currencies.
There are many exchanges that any person can use coin based bid tracks and you can create a Free Blockkoin Exchange by clicking here. Do you think? Bitcoin is going to revolutionize how we use and think about money, or is it just hype?
Source : Youtube