Bitcoin is the most popular decentralized digital currency in the world. An electronic payment system which is based on mathematical calculations was created by a hidden developer under the nickname Satoshi Nakamoto. No one knows for sure what kind of person it really is.
An open source code was intentionally left in BTC, and it lets other developers learn and develop the whole idea of the cryptocurrency. Upper emission ceiling of bitcoin is 21 million coins. It will be reached in 2140. Nowadays there are about 14 million bitcoins in circulation. The coin can be divided into an infinite number of parts. For example, there exists 0.00000001 btc, which is called 1 satoshi (in honor of the cryptocurrency creator).
Bitcoin is an unsupported monetary unit, which is its main difference from dollars or euros. It is not bound to physically existing assets. The cost of cryptocurrency depends on the degree of trust that users have in this cryptocurrency. The payment system is not subject to a single management apparatus.
The basic mechanisms of how BlockChain and Bitcoin work
The ground breaking Bitcoin principle is decentralization. The registry does not have just one server, but it is divided among all participants of the system equally. All information from the databases is completely open. Any Bitcoin user can view the details of every transaction implemented. Information will never be deleted, changed or hidden. This guarantees the transparency of operations.
Due to the complicated matching algorithms, all records that appear in the database are quickly synchronized with the registry copies on the computers of the participants. To make a fraudulent scheme possible, you will need to change the data of more than a million users around the world. And it is technologically impossible to do that.
BlockChain is a chain of blocks, which store data about the previous “bricks”. They line up one by one, one above the other, and inextricably linked to each other. Every block is sealed with a digital signature, which is stored on the device that creates a chain. To fake even a minor transaction, you will need to make changes to the entire chain of blocks, having received keys to them. And this is extremely problematic. In addition, the database is constantly updated for all participants of the system that is why it is impossible to run a con without being noticed.
Bitcoin basic features
Bitcoin code is initially limited by the number of coins, so there can be no more than 21 million of them. Thus, the cryptocurrency is protected from depreciation. No one in the world is able to print an arbitrary amount of money and put it for sale. It is appropriate to compare it to precious metals: they can only be mined or bought, just like Bitcoin.
The production of Bitcoins is called mining. Its essence lies in solving mathematical problems by powerful computers. You need to select a single hash that will suit all implemented transactions since the previous block was issued.
A new bitcoin appears every 10 minutes, regardless of the number of miners in the system. The last who earns a unit of cryptocurrency, gets a reward of 12 coins. It is not possible to produce more than 3600 bitcoins a day.
The paradox is that the bitcoin does not exist. There are only records of transactions with it. The computers in the system support all operations and synchronize the information in the registries. Update takes place every 10 minutes.
Every system user has a cryptographic account (address) and a private key, which signs any transaction. Transfers of funds are made according to the usual scheme, but the commission for services is much lower than in banks.
How to become a Bitcoin owner?
It must be noted that it is impossible to get bitcoins for free. Just a couple of years ago you could mine the cryptocurrency with the help of your personal computer, but now it is impossible. To become a digital miner you will have to buy powerful computing equipment. The algorithm becomes more complicated every day that is why the computers require more and more resources.
Beware of the scam websites that sell cryptocurrency. There were cases where they sold fake coins to the users. It is possible to detect a fake only when you conduct a transaction with it. Study the portal reputation before you transfer your funds there.
The best ways to get ВTC:
Cloud mining. You rent the production capacity of a cloud farm, signing a contract for a year or two. The total amount of cryptocurrency that the “cloud” was able to mine is transferred to your personal wallet. Your profit is 200-400% for 12 months. A lot depends on the exchange rate waves and the development of calculation algorithm. The most reputable services are HashFlare and Genesis Mining. Do not trust young websites without the history and positive feedbacks.
Classic mining. You provide the system with the computing power of your computers. You are responsible for the costs of selecting, equipment maintenance and electricity. The combined computer system for mining is called a farm.
Cryptocurrency cranes. This used to be a very simple and fast way to get a little amount of bitcoins earlier. You need to go through the links of the commercials and banners. And you get a tiny part of a coin for that. But nowadays this method is considered ineffective.
Exchange purchase. Everything is rather simple here: you exchange real money for digital at the existing rate.
Cryptocurrency: what is it?
Cryptocurrency is the monetary objects of the digital world, which do not have physical backing. “Coin” is accepted as a unit of all varieties of currencies. The term “electronic cash” was used to describe digital money. The concept of “cryptocurrency” took hold after the publication of a large article about Bitcoin in 2011. The basic principle of digital coins is decentralization. The system is not subject to a single command module. This causes concern among the reps of public financial systems.
- Open source code. All cryptocurrencies are developed in such a way that anyone can become an equitable part of the system. Mining is a technologically complex process of coin production, which is bound to the use of the computer processing power.
- Anonymity of transactions. The identity of the cryptocurrency owner remains hidden, despite the full transparency of transactions. You do not need to have the documents for the transfers and payments, because the accounts are opened without additional checks.
- No total control. State bodies cannot influence the cryptocurrency market in any way. Independent digital money is available to everyone, but is not subject to a single command center.
- Protection against inflation. Most of the existing cryptocurrencies have an organic emission amount. This protects the coins from depreciation.
- Security. The system excludes the possibility to fake up digital money. All manipulations are securely protected by encryption. Databases store information about any transaction.
All these advantages became possible thanks to the Blockchain technology. This is a consistent alignment of blocks that store information about all transactions with the cryptocurrency. It is extremely difficult to hack, fake or destroy the chain.
- No guarantees. The user is responsible for the safety of his savings himself. The system does not provide for general mechanisms that insure you against theft, deception or fraud.
- Variability. The cryptocurrency exchange rates are known for strong fluctuations. This is due to the fact that the coin stability directly depends on the level of users trust. The change in the legislative base, the appearance of new products and the drop in interest can provoke a collapse or a leap in growth.
- Disapproval of the state. The governments of many countries are wary of the popularization of cryptocurrencies. There are cases of prohibition of its circulation and imposition of fines on violators. Although the states of the European Union are seeking compromise solutions, and are trying to take control of the digital money market, thus allowing it to exist within the generally accepted system.
- Loss without the possibility of return. Your digital savings are sealed with a special “key”, which is generated in a single copy. If you lost or forgot the code, it would be impossible to get your funds back.
All operations with cryptocurrencies are irreversible. It is impossible to cancel, block, dispute or force the transaction without the private key of the user. By mutual consent of all operation participants it is possible to set bails or other terms of the transaction.
How to get cryptocurrency?
The cryptocurrency market is rapidly developing nowadays. 5 years ago the “garage mining” was really popular, it is when a PC was enough to produce the coins. Today the algorithm is so complicated that even well-developed mining farms are not always able to recoup the costs for the equipment and electricity. And although the large pools still confidently stay afloat, experts are sure that the future belongs to industrial corporations. They have unlimited resources and the funds to improve them.
The cloud mining became most promising in 2018. To become part of the system you do not need to buy computers and graphics cards. By registering on the portal, you sign a contract for 1 year. After that your account is replenished with coins. The investment pays for 200-400%. It is important to choose a powerful “cloud” with the authority in the world of digital technologies. HashFlare and Genesis Mining belong to such clouds.
You need to consider that the cloud mining is a fertile ground for all sorts of scammers. And also study the feedback on the resource thoroughly, and read the terms of the contract carefully. Safety never takes a holiday in the world of high technologies.
Bitcoin is digital gold
Bitcoin is the leader of the cryptocurrency market. It was presented on October 31, 2008 by a developer that goes by the nickname Satoshi Nakamoto. It is not known who is this person in real life. In 2011 he announced he was changing the scope of his work.
Bitcoin has an open source code that allowed creating a lot of forks and develop the idea of digital money. The emission threshold is 21 million coins.