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What is Bitcoin And How Does It Work?

What is Bitcoin?

Bitcoin is the first cryptocurrency in the world; it was created at the beginning of 2009 by someone with the pseudonym of Satoshi Nakamoto, but the identity of the creator has been kept a mystery.

Bitcoin is also called a digital or virtual currency because it doesn’t have a physical form in the real world. Unlike traditional currencies, bitcoins are not issued by a central authority and are completely immune to government manipulation. Bitcoin is therefore independent of any system and relies only on the power of the blockchain.

What is the blockchain?

Blockchain is a type of database where the collected information is stored electronically in blocks that are chained together. When the first block is filled with data, a second block is then created to be used for the storage of the new data, and so on.

This technology makes the timeline of data irreversible and allows everyone to know the exact time of addition of every block in the chain.

Bitcoin is based on blockchain technology, and it uses this type of database to store information about all the Bitcoin transactions.

How are bitcoins gained?

The blockchain used by Bitcoin to store the information about transactions is not based on computers owned by Bitcoin. Instead, Bitcoin’s blockchain relies on the computers of independent people who participate in the Bitcoin network. These individuals, also called “miners”, participate in the network with the computing power of their devices to process the transactions on the blockchain.

So every time a transaction is made, miners try to solve difficult mathematical problems using their computers in order to validate the transactions and add a new block to the blockchain. In exchange for the energy they consumed, and for their contribution to the network, miners receive a number of bitcoins as a reward from the system.

Many Bitcoin holders choose to trade their money, making purchasing bitcoins easy: read guidance on buying and selling bitcoin.

Should you invest in Bitcoin?

Bitcoin is considered by many to be the biggest financial innovation of the fourth industrial revolution. We can all agree that it changed the way we think about money and how we deal with it, but should we take a step further and start an investment in Bitcoin?

People who criticize Bitcoin are more often than not skeptical about its volatile nature. But if we take a look at the performance of the price of Bitcoin in the previous years, we can see that it has made many impressive gains since its creation, despite the unexpected ups and downs.

Moreover, the Bitcoin price has steadily climbed since September 2020 after PayPal announced that US customers will be allowed to buy and sell the digital currency starting from 2021. So, it wasn’t a big surprise when, on January the 8th, Bitcoin’s price smashed past $41,000, breaking all the records.

In conclusion, investing in Bitcoin is risky, but so is every other investment. Before stepping in, research must be done so that the decisions are taken wisely.

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What is Bitcoin And How Does It Work?

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