You’ve probably heard the term bitcoin at some point in recent years, whether on the internet, TV, radio or even through acquaintances and friends.
However, it is normal that many people do not know how it works. Or how it was created. Or what is its market value. Among other doubts that we will explain throughout this article.
So, would you like to learn about bitcoin and understand how this cryptocurrency could be your child’s money in the future? So stay with us until the end and we will explain everything about the coin.
But what is bitcoin?
Bitcoin is a decentralized cryptocurrency , which means that there are no banks or government bodies that act as intermediaries to carry out the transactions.
That is, it is money that only exists in digital . Without a physical version like the real or dollar, for example.
Created in 2009 by a group of developers known by the pseudonym Satoshi Sakamoto, bitcoin hit the market in the same year and helped to popularize other cryptocurrencies around the world.
The Sakamoto team also developed the first Blockchain technology database . A decentralized ledger of data that is securely shared.
And with Blockchain cloud services , transactional data from multiple sources is easily collected , integrated and shared .
How does bitcoin work?
The bitcoin network is based on peer-to-peer technology and encryption. And what is your purpose?
The main reason for the existence of cryptocurrency is to help people carry out their transactions on the internet in a safe and confidential way .
The digital currency is intended to provide an alternative payment system that would operate free of central control but can be used like traditional currencies.
Also, bitcoin owners are anonymous. That is, instead of using names, IDs or social security numbers, bitcoin connects buyers and sellers through encryption keys .
Bitcoin mining is also an important process in the world of cryptocurrencies.
And how does the mining process work?
Basically , a person, group or company mines bitcoin by doing a combination of advanced math and record keeping through a computer program.
When someone sends a bitcoin to another person, the network records that transaction and all other transactions made within a certain period of time in a block .
The computers run special software – and the “miners” enter these transactions into a gigantic digital ledger, which is the Blockchain.
Using specialized software and increasingly powerful, energy-intensive hardware, miners convert these blocks into strings of code known as a hash .
This is more complex than it sounds, as producing a hash requires a lot of computational power. Where thousands of miners compete simultaneously to do so.
What can I buy with the coin?
When we talk about buying with bitcoin, many think of an image of a gray market full of shady deals, unregistered sales and illegal products. In fact, the list of products and services that you can buy with the coin keeps growing by the day.
To get an idea of the dimension, it is estimated that more than 390,000 bitcoin transactions are made daily around the world .
Therefore , there are now numerous businesses and companies that accept bitcoins as a payment method.
Not only in Pak, but also in several countries around the world, it is possible to buy real estate , cars , clothes , works of art , cinema and concert tickets , pay for dinner at a restaurant , make donations , travel , among others.
Is Bitcoin safe?
Bitcoin’s early days may have been marred by hacks and fraud, but the growth and popularization of the technology has helped with regulation and acceptance in global financial institutions. The coin is stepping out of the shadows and gaining a degree of legitimacy.
The volatile price of the cryptocurrency can make it riskier than stocks and other types of investments, but this volatility can also make it more profitable.
Furthermore, the nature of currency as an emerging technology requires knowledge necessary to buy and store your bitcoin securely.
What are the risks associated with cryptocurrency?
Bitcoins have three main risks associated with them.
- Bitcoin value may reduce after you buy it
- Someone can get access to your private key and take your bitcoins.
- The private key to access your bitcoins may be lost.
In short, the best way to keep bitcoins safe is to have the private key stored on a device or app that is not connected to the internet.
Therefore, a backup of the bitcoin wallet on different media such as CD , external HD or pen drive is recommended.