So, How does Bitcoin work?
Looking at what a cryptocurrency is with its blockchain, we will dive into comparisons of bitcoin with the current financial system as we know it at the moment and we will try to explain how bitcoin work.
Bitcoin is a digital encrypted currency that eliminates the need for intermediaries in transactions, and its algorithm makes double-spending impossible. Every bitcoin user is free to buy, sell and store bitcoin as they wish.
On October 31, 2008, an unknown software developer, nicknamed Satoshi Nakamoto, proposed an electronic financial payment system based on mathematical evidence. The idea behind this creation was to create a means of payment that is cryptographically secure, verifiable, immutable, and usable without being dependent on central authorities and governments.
The bursting of the real estate bubble in the US market since 2007 is seen as one of the reasons for the emergence of financial innovation. As a result of the financial crisis, many people have lost their homes. Nakamoto aims to provide the world community with an integrated transaction system through which people regain full control over their own money.
Nakamoto, whose identity has not yet been clarified, launched the Genesis block in January 2009 and officially launched the Bitcoin blockchain. Since then, the network has operated as an open-source software protocol.
How does Bitcoin work?
Our current financial system, which includes bank transfers, credit card transactions, PayPal transfers, and many more, amounts to a whopping 500 billion transactions a year. the number of daily bitcoin network transactions since the beginning of 2021 amounts to about 400 thousand transactions. On an annual basis, this means nearly 150 million transactions. In relation to bitcoin transactions are only 0.03% of those of the current financial system.
You see, the road that bitcoin has to take to replace the financial system we are used to is a long one. But can we allow this to be possible? Let’s look at some of the advantages of bitcoin over fiat currencies:
Compared to traditional banking services, bitcoin has no storage costs. The cost of bitcoin transactions varies and is directly related to network congestion, but in any case, is lower than that of banks. In addition, there are no weekends – you can order transactions 24/7, 365 days a year.
At the time of writing, we are using the sample transaction item from the last few days, it was worth $ 162 million in bitcoins, and the fee paid for moving the money was $ 13.68 in bitcoins. Impressive, isn’t it?
Bitcoin transactions are possible in a minimum amount of one 100 millionths of a bitcoin. Thus, the transactions are equivalent to 0.00000001 bitcoins, and this number is known as 1 satoshi (in order to honor the creator).
Equal-value cross-border transactions are not achievable with fiat money. But in the case of bitcoin, this is quite possible. Fiat money is limited to the borders of the countries concerned and their currencies. Bitcoin, in turn, allows the movement of currency without any limits or restrictions.
Bitcoin cannot be controlled by any central government. The government cannot do this by buying and selling bitcoins. Every bitcoin user is free to buy, sell and store bitcoins as they wish. Under the current financial system of the central bank, the state has the power to decide on printing more money and storing the currency. Bitcoin has no inflation – the currency code has a fixed supply. This means that it is not possible to print more bitcoins than the previously planned 21 million. The dollar and the euro are printed when reviewing central banks, which on each side leads to a strong devaluation of currencies.
Fraudsters cannot make fake bitcoins. The reason is that it is digital, not a paper currency like fiat money. Bitcoin is powered by blockchain technology and records the details of each transaction.
Everything you buy will be immediately saved on blockchain technology. This is the reason why the blockchain is also known as the digital ledger of all transactions that take place. Transactions remain recorded there forever, and access to information about them is freely available to all.
We have listed above only a small part of the functionalities of the new financial technology. As the topic is quite general and exciting, you can focus your curiosity on physical readings. Today, there are a number of quality books on bitcoin and blockchain by experts in the field.
How does Bitcoin work?
Which are our favorites?
The Bitcoin Standard: The Decentralized Alternative to Central Banking – one of those crypto books you should read.
Do you want to join the technological revolution that is taking over the world of finance?
Bitcoin, the first successful decentralized digital currency, is still in its infancy and has already reached a market capitalization of $ 1 trillion. This economy is open to anyone who has the knowledge and passion to get involved. “Become a bitcoin expert” provides you with the necessary knowledge for this purpose.
The Only Bitcoin Investing Book You’ll Ever Need An Absolute Beginner’s Guide to the Cryptocurrency Which Is Changing the World and Your Finances in 2021 – the guide you need to invest in cryptocurrencies.
While the cryptocurrency market is known for its volatility – and this instability is often linked to the ever-changing regulatory environment of the industry – the market capitalization of all cryptocurrencies has reached $ 1.5 trillion. If you want to get involved in the financial revolution, the potential of which lies in cryptocurrencies, this book shows you how.
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