What is Bitcoin, how does it work and what is its importance?

Designed by Satoshi Nakamoto (nickname of the creator or team of creators of Bitcoin) the Cryptocurrency works as virtual money. When you work, you receive money in banknotes that can be exchanged for products or services, in the same way Bitcoin is like a virtual banknote, made of codes and not paper.

On its website, the Cryptocurrency is defined as follows:

“It is a digital technology that allows us to reproduce in electronic payments the efficiency of payments with paper notes. Payments with bitcoins are fast, cheap and without intermediaries. In addition, they can be made for anyone who is anywhere on the planet, with no minimum or maximum value. ”

How Bitcoin works:

Bitcoin is an online currency with P2P payment traffic (peer to peer), that is, it does not need a central intermediate server. What is the advantage of this? Think about traditional financial transactions:

Pay by Ticket: You spend with transportation to the bank and in addition to the time spent on locomotion, the recipient only receives the money a few days later.

Shopping on the card: Charges at the time of purchase, or card maintenance fees.

Transfers: Rates for transfers and waiting times when they are between different institutions.

In the P2P system you do not have a financial institution, for example, mediating the purchase, so it is instantaneous and at a reduced cost.

Currently online transactions require the mediation of financial institutions, with Bitcoin, the process will be so simple when buying a product with a ballot in a physical store:

Imagine buying a shirt for $ 50 in a physical store: you deliver a ballot with this amount, you withdraw your product without the need for a bank to mediate the purchase.

In the same way it is the virtual transaction with the Cryptocurrency, therefore it has become popularized, it is cheap and fast for being P2P.

Bitcoin is a Cryptocurrency, but what is it?

Just as a Royal bankroll has protection technologies, virtual money also needs to have. The new Real banknotes have holographic bands, high relief, fluorescent elements, security wire, watermark, jigsaw, micro prints and a hidden number; Too much technology to avoid fakes is not it !?

Likewise, in order for virtual money not to be cloned, it is protected by a set of principles and techniques called encryption.

Cryptography: is a set of techniques that aim to encrypt information so that it can only be read by those who know the code, ensuring the security of the information.

Making a metaphor would be like sending a locked trunk to a friend by means of a messenger: he will take the trunk to the other person, but he will not be able to open it, only his friend who has the key can see what is inside.

Why does Bitcoin use the P2P system?

Simple: it’s fast, cheap and safe.

Because P2P:

A currency that does not have a mediating institution like governments or banks is totally free. With this, a government cannot stimulate its inflation, for example, “printing” more ballots. For this reason, the market itself with its supply and demand law will dictate the dynamics of Bitcoin.

The lack of mediation by a financial institution also reduces transaction values and speeds up paperwork.

In addition, transaction data is stored until it can be validated by so-called miners, and this process happens transparently: the code is free, so it is possible for anyone to access the information to check its validity.

Because it is safe:

The records of the transactions are public as we mentioned in the last topic and that is the advantage over the paper money financial policy. The banks keep the fourteen keys their records, so all information about finances may be real or not.

This is not to say that banks necessarily lie about their fortunes, but who can take proof of it but themselves?

Many companies are providing validation services, you can try cosmos crypto validator. Go and check for more details.

What are Bitcoins Miners and what do they earn?

Miners are computers available to “mine” data and validate transactions. Many companies are providing validation services, you can try cosmos crypto validator. Go and check for more details. However, it is not a central server that does this, but it is us. Anyone can mine, you just need to have a powerful computer capable of processing the information and letting it work.

With this, with each validation you get a tiny Bitcoin portion of that transaction as payment for the service, the more powerful your computer is, the more of those operations it will do and the more you can make a profit.

But you have to do the math ! If your machine (s) is not good enough, you could end up spending more on the Internet and power than you would be able to profit from.

 

 

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