Due to the recent interest in cryptocurrencies, in cryptoforlife.gr we examine what Bitcoin is, how the technology on which it is based works, how its price is affected and other useful details… More will follow..!
Bitcoin, which was created in 2009 by a user with the pseudonym Satoshi Nakamoto, is one of the cryptocurrencies that function as a decentralized payment system made up of peer users that is not based on any central authority, such as the state bank of a country .
Instead, it relies on the so-called blockchain, an immutable digital ledger or otherwise distributed database, a recent copy of which exists on thousands of computers around the world that can be owned by ordinary people to specialized software engineers called miners.
Miners, through a process called bitcoin mining, use their computers to solve computationally difficult puzzles, and as a reward, whichever miner succeeds first receives new bitcoins, which enter circulation. The reward, which decreases every 4 years, was 50 new bitcoins in 2009.
As more and more bitcoins are created, the difficulty of mining will constantly increase and while initially ordinary users could mine coins through their home computers, now specialized and very expensive equipment is required.
Another purpose of miners is to maintain and ensure the integrity of the blockchain, as they record all transactions made through bitcoin, using the processing power of the computers they own.
It is worth noting that bitcoins do not exist in physical form, like the euro and the dollar, but only exist as records on the blockchain. Balances and transactions between users are recorded using public and private keys.
More specifically, the public key is unique for each user and is distributed to the other users to identify the identity of the sender as well as to check the integrity of the transaction (through the concept of digital signatures). The private must be kept secret (like the PIN of a card) and is used so that each user can create a valid digital signature.
The price of bitcoin depends on supply and demand, just like a company’s stock, but there is disagreement about what it represents.
Although it belongs to the category of digital currencies or cryptocurrencies and, at least in theory, the value of bitcoin represents investors’ confidence in it as a technology, in reality the majority of investors treat it as a commodity with limited supply and as a means of speculation since it expects a large increase in its value in the future.
According to Nakamoto’s plan, the total supply of bitcoin will never exceed 21 million coins.
Mining is a specialized and competitive market where fees are divided according to how much calculation is done. Not all users do Bitcoin mining and it is not an easy way to make money. Instead they prefer cloud minting.
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