What is and How does Bitcoin Work?
Bitcoin Work
Bitcoin works like money. And in essence, that is what it is: a new type of digital money. A digital money that allows you to make payments safely, cheaply, quickly and freely around the entire planet.
Also read: 10 Google Translate Features you Should know About
Table of Contents
Bitcoin is Both a Protocol, a payment network, and a currency.
It was originally propose as a concept in 2008, in January 2009 by Satoshi Nakamoto.
At the end of 2019 there are at least 45 million active Bitcoin wallets. Of these, about 34% (one 15 million) are active users.
The number of merchants now accepting Bitcoin has increased exponentially. In the United States, about 36% of small businesses accept Bitcoin, and 56% use it in some way for their benefit.
Currently, each month, more than a million new users arrive on Bitcoin.
The Bitcoin network is the most secure network in the world and at the end of 2019 it was already processing more than 400,000 daily transactions.
Bitcoin works like money. And in essence, that is what it is: a new type of digital money. A digital money that allows you to make payments safely, cheaply, quickly and freely around the entire planet.
Revolutionary Money
And it is that its design is so revolutionary that, in just a few years, it is turning the financial system we all know upside down, completely displacing banks, credit cards, SEPA, SWIFT and even figures such as central banks. .
It is open, but above all it is decentralized and takes care of your privacy. It is not skillful by any bank, government or company. They depends on a network made up of people’s computers. A decentralized network managed by its users. Or put another way: there is no central bank that happily issues money.
Bitcoin is not anonymous , yet, but it allows great privacy in times of Big Data and constant leaks of people’s private information. In the same way that e-mail was an incredible advance when it comes to communicating, Bitcoin represents a giant step in terms of payment systems. The analogy that best illustrates the nature and potential of Bitcoin is that “Bitcoin is to money what the Internet is to information . ” Bitcoin democratizes money, makes it from the people, takes it from power.
What Determine the Price of Bitcoin
The price of Bitcoin is gritty by supply and demand (see How the price of Bitcoin is determined ). In addition, bitcoins work through programs called wallets (see How bitcoins are stored ).
What makes Bitcoin special is not that it is a digital currency. The euro, dollar or other currencies are also, to a large extent, digital and it is a digital money that has been around for decades. Almost all the money that exists is digital. Nor does it make it special that it has low transaction costs, or that it performs fast transactions.
The main difference, what really makes Bitcoin magical, is that it is a P2P network: nobody issues the money. Separate politics and money. And this, by understanding how money and central banks work, makes you understand how Bitcoin sets humanity free.
Understanding some Basic Concepts
Your bitcoins are not files, there is no concrete reference to a bitcoin. The approach to how bitcoin works is different. Bitcoin is the unit of explanation for the balances managed by the blockchain. What each user has is a key (a password) that manages an address (or account number) on the blockchain (the core of Bitcoin, its distributed ledger) .
- Bitcoin – refers to the transaction network; used for applications of all kinds; bitcoins are sent in transactions; all transactions are pseudonymously stored in a ledger called blockchain.
- Bitcoin – (BTC) unit of account of the Bitcoin network; there will never be more than 21 million and they will be created during the next 100 years; each bitcoin is divisible into 100 million units; its price fluctuates by supply and demand.
- Blockchain – public and distribute ledger where all bitcoin transactions (and their balances) are permanently stored. Thanks to “mining”, blockchain is known as the most secure and truthful database that exists.
- Mining – process by which transactions on the Bitcoin network are verified; For this, advanced cryptography techniques and specialized hardware (“miners”) are used: a fixed amount of bitcoins are created (“mined”) during the process (See What is mining bitcoins ).
A Radical change to Benefit Everyone
As you will begin to understand, Bitcoin is also a cultural change. Bitcoin is the clear example of how, in a coordinated way, humanity can solve problems on a global scale without depending on third parties.
Bitcoin removes barriers. As in other cases, building walls is useless, neither in Melilla, nor in Mexico… You have to build bridges. Also in money. Bitcoin is not hiding money or avoiding paying taxes that improve society. Bitcoin breaks boundaries, builds bridges, brings people together. All the same on this planet.
But, to understand what Bitcoin is in detail and determine why it is the best money around, it is not enough to stay here. There is much more that you should know and we have separated it into different chapters so that, in an entertaining way, you can become an expert.
Throughout Bit2Me Academy you will see in detail everything mentioned above and you will discover the advantages of Bitcoin.
Continue in your training to understand the most important revolution since the invention of the Internet and what is happening right now.
