One of the most popular cryptocurrencies in the world is Bitcoin, the pioneer in this segment. And if you ever hear the term cryptocurrency, this digital currency will likely come to mind. That is why we cannot doubt its position in the market.
If you plan to invest in this currency, or buy them for the high capitalization they have, then you have come to the right place. Here we will tell you everything you should know about Bitcoin, its technology, how it works, how to obtain it, advantages, among other points that you should know.
✨What is Bitcoin? ✨
As we already anticipated, Bitcoin is one of the most popular and well-known virtual currencies in the world. It can be said that the origin of Bitcoin is the reason why it is so popular, this because it is the first cryptocurrency on the market.
This virtual currency has its value and operation based on an information chain known as Blockchain, which is a chain of nodes which handle data through chains. Users are in charge of managing transactions, giving them confidence or certainty and thus generating value.
Basically the process is as follows, a person sends money in the form of Bitcoin, the transaction reaches the network in the form of a block. After that block transmits its information to all parts of the network, then the parties are in charge of approving the transaction.
Upon approval of the transaction, this block is inserted into the chain as one more node, which leaves a clear and indelible record of the process. Once this process has passed, the money is sent or the transaction is carried out, whether it is the purchase, sale or exchange of Bitcoin.
✨Pros of Bitcoin✨
- Usage costs: Compared with traditional money and conventional banking, the cost of using Bitcoin is much lower. This is due to the fact that the process of sending and handling money is much simpler and more efficient, which reduces costs such as commissions for handling money.
- Universal: Being virtual, it is not limited by physical or political borders, so its use is universal. You can use it easily and with very fast transactions which are not subject to the borders and barriers of each country. They can also be used anywhere in the world.
- Anonymous: If you want to keep your information and your identity secret, Bitcoin is one of the best options. As there is no intermediary between the transactions, the information remains between two parties, the user who buys and the one who sells, the one who sends and the one who receives, etc. Your information is not shared between nodes or other users.
- Very high security: Another point in favor of Bitcoin is that the Blockchain is practically inviolable or very difficult to hack. This is because, being made up of a series of nodes, and being managed by users, it is very difficult to violate all nodes simultaneously. Each block has its information isolated, but in connection with the blockchain.
- Anyone can use them: It is practically universal so any user can use it, there are no restrictions. You can go, buy bitcoin and trade them.
- Goodbye inflation: Normal currencies such as the dollar, euro and other currencies are subject to the effects of inflation, a generalized rise in prices. Every year our money loses value due to inflation, instead, Bitcoin is not affected by the issue of inflation so it does not lose value.
- Scalability: Because the Blockchain technology of Bitcoin is one of the first that we can find in the market, it has certain limitations. One of them is the fact that Bitcoin's scalability in terms of operations is somewhat limited.
- Volatility: Another against that we can find is the fact that it is very volatile. This means that the value of this digital currency can go up or down dramatically. Yes OK Bitcoin has been stable, drastic declines and sudden downward or upward trends have been seen.
Let's say Javier wants to buy a mobile which has a price of 2 Bitcoin and Samara is going to sell it to him. Then Javier pays with his Wallet by sending a Bitcoin to the Samara Wallet, this intention to carry out said transaction is communicated to the Blockchain nodes.
Once the transaction is verified, a transaction block is generated which is validated by the miners, people who are in charge of validating that the information in the block is real. If everything is real, the block is approved and registered in the Blockchain. So Javier will have two less bitcoins and Samara 2 more in his Wallet.
✨The secret behind the Blockchain✨
The Blockchain is a kind of digital ledger which is an open source P2P database which records all operations carried out with Bitcoin.
These blocks are linked to the following, thus creating a chain of blocks, Blockchain, which records user information. To check the good intentions of the miner, who verifies the information of the block, as well as the information of the block and validates the opinion of the nodes, a Proof-of-Work mechanism is used.
The magic of Blockchain is in the construction of a chain with new blocks and information finding its value in the validation of the miners and the participation of the nodes in new registries. What's more, the value is supported by a series of mathematical problems and complex algorithms.
To obtain bitcoin you can buy them, although we also find the option to mine them by solving algorithms and mathematical puzzles. The mining process requires great power in computers with processors, cards and GPUs which are responsible for solving these operations and generating Bitcoin.