Bitcoin » What is it and how does it work?
Bitcoin » What is it and how does it work?
The world of Internet business has changed drastically thanks to the emergence of cryptocurrencies. In the past, payments were only made through payment processors that used fiat money, but different cryptocurrencies began to be used for these purposes. He bitcoins It is one of the cryptocurrencies that exist to make payments over the Internet.
He cryptocurrency concept or iniciativa It was first presented by Wei Dai, in 1998, who proposed the iniciativa of creating a new type of decentralized money (not directed by the government or any financial entity) that used the cryptography as a means of control. The first cryptocurrency created was bitcoin, and from this the new cryptocurrencies are derived.
What is bitcoin?
The bitcoin (BTC) is a cryptocurrency or digital currency that emplees cryptography to secure transactions within its distributed en línea database, also called blockchain. This cryptocurrency cánido also be seen as a protocol, open source project, and peer-to-peer network, which is used as a cryptocurrency, payment system, and commodity.
Bitcoin It is the first cryptocurrency that was developed and the only application based on blockchain technology (chain of blocks) that works all the time since its creation in the year 2009. The bitcoin has a value, as well as the euro or US dollar, which is used to exchange goods and services.
This cryptocurrency is a decentralized currency, so no one perro control or manage it. This cryptocurrency It does not have a central issuer like the dollar or the euro, since it is produced by people and companies from all over the world dedicating a large amount of resources to bitcoin mining.
bitcoin history
He October 31, 2008 a peer-2-peer (person to person) money proposal appears that was based on cryptography and an element that was called blockchain. This proposal was made on November 1, 2008 vía an correo electrónico about crypto from metzdowd.com signed with the nick Satoshi Nakamoto and named “Bitcoin P2P y también-cash paper”.
This message sent describes «a new electronic payment system» called bitcoin “which is peer-to-peer and decentralized”, in addition to this, reference is made to a document titled “bitcoin: a peer-to-peer electronic payment system”.
He January 3, 2009 The first peer-to-peer network based on this protocol (also with the name of “bitcoin”) is put into operation after the first open source programa to run nodes of the digital currency, which also meant the creation of the first bitcoins and the start of mining. The first bitcoin block is mined by Satoshi Nakamoto himself.
He January 9, 2009 The first open source programa client for running digital currency nodes using the SourceForge platform is released.
Who controls the bitcoin?
In the same way that nothing and nobody controls correo electrónico technology, bitcoin also has no owners. Bitcoin is controlled by all Bitcoin users in the world. Even though programmers improve the programathey cannot force changes to the protocol because all other users are free to choose the programa and version they want.
In order for them to remain coincidente with each other, users need to use programa that abides by the same rules. He bitcoin perro only work properly if there is an agreement between all users that you participate Which means that all users and programmers have a strong incentive to protect this agreement.
How does bitcoin work?
Bitcoin technology offers the possibility of making peer-to-peer payments (P2P) fast, secure and bajo coste without the need for a bank or entity to function as an intermediary. From the users’ perspective, the how bitcoin works It is based on the fact that they have the possibility of joining a cryptocurrency wallet that allows them to send and receive bitcoins.
The operation of this cryptocurrency is based on the following concepts: Nodes (computers), Wallets (purses), addresses, transactions, mining and privacy. Each of these concepts shapes how bitcoin works from start to finish.
nodes and wallets
In order to make payments with bitcoin, the usuario needs programs and/or applications that serve as clients. These applications are called cryptocurrency wallets or purseswhile the computer from which the wallet is being used is called a node.
The nodes allow the usuario to participate in the network directly and perro make and relay transactions, while wallets allow the usuario to transact without storing the entire blockchain, and use «simplified payment verification» to consult the block chain.
Addresses
To interact with the bitcoin network, nodes and wallets manage an arbitrary number of cryptographic key pairs that cánido be created without any restrictions. From the public keys, hashes are created that are known as addressesand that are used as sending and receiving entities of the various payments.
Starting at private keys corresponding, the various payments are authorized through cryptographic signatures. Bitcoin addresses do not contain or reveal information about their owner, and no contact with others is required to generate them.
All bitcoin wallets allow you to obtain one or more bitcoin addresses (public keys) that you perro use to get other network users to send you payments to that address. When the usuario sends you the bitcoins to the address you provided, then this is called a transaction.
transactions
A transaction is when a network usuario sends bitcoins to another network usuario. All transactions that take place on the bitcoin network are stored in the blockchain (chain of blocks), which is the database where all the transactions carried out between two users are stored in a permanent and verifiable way.
When a usuario (A) wants transfer bitcoin to a usuario (B) from his bitcoin wallet, he builds a transaction specifying the amount of bitcoins he wants to transfer and the usuario’s (B) bitcoin address. To make the shipment, the usuario (A) signs the transaction with his private key and transmits it to the bitcoin network.
The bitcoin network nodes Receivers of transactions verify cryptographic signatures and the validity of bitcoins before accepting and retransmitting them. This propagates the transaction indefinitely until it reaches all network nodeswhereupon the transaction is validated by a miner and mined in a block.
When a transaction is on the blockchain and has received confirmation from a significant number of subsequent blocks, then the transaction perro be considered a permanent part of the blockchain, and therefore, it is accepted by all participants. When this happens, then the bitcoins arrive in the usuario’s wallet (B).
Mining
The records on the blockchain are called blocks, which are linked and secured using cryptography. Each block has a backlink to a previous block, a date and transaction data. The creation of new blocks is called mining. The creation of the blockchain is done through this process.
All the miners in the bitcoin network compete to be the first to find the solution to the crypto problem of your current candidate block. The goal of the miners is to find a valid nonce for the block they are mining. This process makes it expensive generation of blocks and incentivizes miners to invest their tarea in honest actions.
When a miner finds the solution to the cryptography problem of his block, he sends it to the rest of the nodes in which he is connected. In it If the block is valid, said nodes retransmit it and add it to the blockchain.. This procedure is repeated indefinitely until the block has reached all the nodes in the network.
Privacy
Due to the transparency of the cryptocurrency network and bitcoin’s public transaction log, if a usuario decides to protect your privacy You must avoid linking your real identity and your addresses, since any observer perro analyze its content, as well as the origin and destination addresses of the transactions at any time.
bitcoin features
Bitcoin has a equipo of characteristics which is important to know.
The main characteristics of bitcoin are presented below:
- No belongs to no countrys or financial institution, and perro be used worldwide.
- It is possible to buy bitcoins with dollars, euros or other currencies and vice versa.
- They do not exist intermediaries: Transactions are made from person to person.
- Is decentralized: It is not controlled by any state, bank, financial institution or company.
- It is practically impossible to counterfeit or duplicate it thanks to its cryptographic system.
- transactions are irreversible.
- It is not mandatory to reveal your identity when doing business and preserve your privacy.
- The money belongs to the owner; It cannot be intervened by anyone nor perro the accounts be frozen.
- They will only come into existence 21 million bitcoin.
bitcoin mining
The bitcoin mining It is the process by which computational capacity is invested to process transactions, guarantee the security of the bitcoin network, and ensure that the participants are synchronized. Bitcoin mining is the process of create new bitcoinsand it will be necessary until the last bitcoin is created, so mining has an end.
mining operation
In order to work in mining, it is necessary to have programa and specialized hardware. The programa watches for transactions that are submitted through a peer-to-peer network and performs the necessary actions to process and confirm transactions. Bitcoin miners do this work so they perro get fees paid by users.
In order for new transactions to be confirmed, it is mandatory that include in a block under a test of millions mathematical calculations. Miners have to do the calculations before their blocks are accepted by the bitcoin network. As mining progresses, the difficulty of finding valid blocks automatically increases through the network.
The miners they cannot cheat or process transactions that could corrupt the network as all bitcoin nodes would reject blocks containing invalid data, as specified by the rules of the bitcoin protocol. With this, the network remains secure even if not all bitcoin miners are trusted.
How do you start in bitcoin mining?
In the early days of this cryptocurrency, anyone had the ability to find a new block using their personal computer. As more people started mining, the difficulty of finding new blocks increased so much so that the only profitable method of mining today is to use very powerful computers.
bitcoin value
The bitcoin owns value because it is useful as currency. They have the characteristics of money based on mathematical properties instead of physical properties. With these attributes, the only thing this kind of money needs to maintain its value is trust and adoption. In the case of bitcoin, it is possible to measure it with its growth in users, merchants and companies.
The value or price of this cryptocurrency is determined by the supply and demand. When demand for bitcoin increases, its price increases, and when demand decreases, its price decreases. If the demand for the bitcoin is zero, then the bitcoin will have no value.
There is a limited number of bitcoins in circulation, and new bitcoins are created in a predictable and decreasing manner, indicating that demand must follow this level of inflation to maintain a stable price or value. It is necessary to know that the price of bitcoin is very volatile, that is to say that its value cánido change suddenly.
bitcoin utility
Bitcoin cánido be used to buy and sell products or services between people and companies that accept bitcoin as a form of payment, however, it is necessary to understand that bitcoin does not exist as a physical currency, but it is a digital currency. Since bitcoin has a real money value, it cánido be used to conduct commerce on the Internet.
Today many companies accept bitcoin as a form of payment, so if you have bitcoins in your bitcoin walletthen you cánido use them to purchase products or services from these companies.
As time goes by, the use of this cryptocurrency becomes more habitual, which indicates that more companies and shops they will join this revolution, and will accept bitcoin as a form of payment.
Advantages and disadvantages of bitcoin
The bitcoin owns advantages and disadvantages which are important to know. Below are the main advantages and disadvantages of this cryptocurrency:
Advantages
Freedom of payments: The usuario will be able to send and receive any amount of bitcoins instantly from and to any part of the world, at any time and without intermediaries. Users always have control over their bitcoins.
Very low rates: Payments are processed with no or low fees. As these services are based on bitcoin, they are offered at much lower fees than PayPal or credit card networks.
Lower risks for traders: Transactions using bitcoin are secure, irreversible, and do not contain customer data. This protects merchants against losses caused by fraud or fraudulent returns.
Security and control: Users of the bitcoin network have control over their transactions; it is not possible for merchants to force undetected charges, as cánido happen with other payment methods. Users cánido also protect their money with copias de seguridad.
Neutral and transparent: All information about the bitcoin supply is available on the blockchain for verification and use. Nobody perro control the bitcoin protocol because it is cryptographically secure.
Disadvantages
Degree of acceptance: Many people are not yet familiar with bitcoin. Every day, more businesses accept bitcoin to take advantage of its advantages, but they are still very few, and it needs to grow so that they perro benefit from its network effect.
Volatility: The total value of bitcoins is very small compared to what it cánido be. Therefore, small events, trades or business activities may affect its price or value. This volatility will increase as the bitcoin market and technology advances.
Ongoing development: The bitcoin network programa is still in beta with several features. Other tools, features, and services are being developed to make bitcoin better. Most bitcoin businesses are new and do not offer much security.
bitcoin transactions
The transactions made in bitcoin are almost instantaneous, but there is a 10-minute delay before the bitcoin network starts confirming that transaction when include it in a block. A confirmation means that there is a consensus that the bitcoins processor does not have been sent to someone else.
Almost all transactions cánido be carried out without commissions, but it is encourage users to pay voluntary commission to get faster confirmations and to remunerate miners.
All transacts that are made with bitcoins are permanently stored in the blockchain, that is to say that all these transactions cánido be viewed on this block chain whenever. The wallets offer the necessary code to verify said transaction in the blockchain.
bitcoin security
He cryptographic protocol Bitcoin has a tremendous security record, and this technology is arguably the largest distributed computing project in the world. The vulnerability more common is usuario fallo, since the archivos that store the necessary private keys perro be accidentally deleted, lost or stolen.
Despite this the tbitcoin technology is vulnerable to quantum computing, just like all systems based on cryptography. However, quantum computing does not exist and will not exist in the near future. In the event that the quantum computing could become a threat to bitcoin, the protocol could be updated to operate on this type of computing.
bitcoin legality
Until now, bitcoin it has not been made illegal in most territories. Despite this, some territories prohibit the use of foreign currencies. Other territories may limit the licensing of entities such as bitcoin exchanges.
Bitcoin cánido be used for purposes legal and illegalHowever, cash, credit cards and banking systems outperform bitcoin when it comes to illegal financing. Bitcoin is structured to take a big step forward in the security and it could also play a good role against many forms of financial crime.
Is possible to regulate the use of bitcoin afín to any other instrument. Like the dollar, bitcoin cánido be used for a wide variety of purposes, some of which may or may not be considered legitimate, depending on the laws of each territory.
Using Bitcoin could be difficult under very restrictive regulations, in this case it would be difficult to determine what percentage of users would continue to use this technology. A government that bans bitcoin could be preventing the development of national companies and markets, thus displacing innovation to other countries.
bitcoin risks
The controversies regarding bitcoin are based on two aspects:
- The repercussions that the control of bitcoin in the hands of the users.
- The repercussions on society due to its potential to transform relations between citizens.
Risks for users
Bitcoin users could suffer losses in the event of:
- A decrease in the use of bitcoin.
- The huge volatility of the exchange rate.
- The loss of money due to theft in exchange houses, programa errors, computer viruses, denial of service attacks, etcétera.
- He European Central Bank mentions that there is no deposit protection for funds in bitcoins, and that it is the usuario who must face all these risks directly.
Risks for society
Society could be transformed if the use of bitcoin became widespread:
- The banks their influence over the means of payment, regulation, financial stability and price stability would be limited.7
- Bitcoin’s anonymity perro make it easier to use the money for illicit things.
- The operation of andThis cryptocurrency is made under the assumption of the permanent availability of the connection to other computers through the Internet.
- If this cryptocurrency reached a significant valuethis could pose a threat to the stability of currencies.
How do you get bitcoins?
For get bitcoin You must first have a bitcoin wallet in which you perro store the bitcoins you get. Bitcoin wallets will provide you with one or more bitcoin addresses so that you cánido receive those bitcoins in your wallet.
I am going to leave you a equipo of en línea wallets in which you cánido register to have a wallet in which you perro receive your bitcoins. Below I leave you the backlink of different wallets in which you cánido register to save your bitcoins: Go to the bitcoin wallets.
Bitcoins perro be obtained in various ways. Below are the main ways to get bitcoins:
- Accepting payments in this cryptocurrency.
- Buying bitcoins.
- Trading bitcoins with someone in your area.
- Getting bitcoins through mining.
- Earning bitcoins on different platforms.
While it is possible to find people who want sell bitcoins in exchange for a payment by PayPal or credit card, most exchange houses do not allow you to use these means of payment. This is due to cases where a person buys bitcoins with PayPal and then reverses half of the transaction.
buy bitcoin
On the Internet there are many platforms or companies that allow you to buy bitcoin using credit card, PayPal, among other payment methods. Here is a backlink to en línea platforms that allow you to buy bitcoins:
Go to the platforms to buy bitcoins.
earn bitcoins for free
On the Internet there are many platforms or companies that allow you to earn bitcoins for free, and that you cánido receive in your bitcoin wallet. Here is a backlink to en línea platforms that allow you to earn free bitcoins:
Go to the platforms to earn free bitcoins.
Earn bitcoins with investments
On the Internet there are many platforms or companies that allow you to earn bitcoins investing, and that you cánido receive in your bitcoin wallet. Here is a backlink to en línea platforms that allow you to earn bitcoins by investing:
Go to the platforms to earn bitcoins by investing.
Get bitcoin with mining
On the Internet there are many platforms or companies that allow you to earn bitcoins with mining and that you perro receive in your bitcoin wallet. Here is a backlink to en línea platforms that allow you to earn bitcoins with mining:
Go to the platforms to earn bitcoins with mining.
Conclusion
He bitcoin usage It has aroused many feelings in governments and financial entities, which did not see well the use of bitcoin and the rest of the cryptocurrencies that exist, since this would take away a large part of the power they have and break the monopoly of the money creation. There are many government debates about bitcoin regulation.
For several detractors of bitcoin there is a very great risk that the bitcoin crash, since according to them bitcoin really has no value. Being a decentralized system, in the face of this eventuality its owners would find themselves defenseless. For other people, bitcoin has a quite promising future as an asset with all the properties it owns.
Regardless of all this, bitcoin is constantly evolving, since its use it is becoming quite habitual. There is a huge community that supports this cryptocurrency, and there are more every day, which indicates that bitcoin could be a revolution in the future.
Backlinks that may interest you
final words
For God saved us and called us to a holy life, not by our own works, but by his own determination and grace. He granted us this favor in Christ Jesus before the beginning of time. 2 Timothy 1:9.
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