What is Bitcoin? How it Works? – Bitcoin Mining Process

Bitcoin is the first decentralized digital currency. Bitcoins are digital coins which you can send through the internet. Compare to the other alternatives, Bitcoins have the number of advantages. Bitcoins are transferred directly from person to person via the net without going through the bank or a clearing house, this means the fees are much lower, you can use them in every country.

How Bitcoin Works

Lets look at how Bitcoin works:
Bitcoins are generated all over the internet by anybody, running a free application called Bitcoin Miner. Mining requires a certain amount of work for each block of coins. This amount is automatically adjusted by the network such the bitcoins are always created in predictable and limited rate.
Your Bitcoins are stored in your digital wallet which might looks familiar if you use online banking. When you transfer Bitcoins, an electronic signature is added, after a few minutes the transaction is verified by a Miner and permanently and unanimously stored in the Network.
The Bitcoin software is completely open source and anybody can review the code.
Lets look at some examples of how Bitcoins are already used today:

  • You can purchase video games
  • You can purchase gifts
  • You can purchase books  etc.,,,,
    Several Currency Exchange exists where you can exchange Bitcoins for Dollars, Euros and more …. Bitcoins are great way for small businesses and Freelancers to get noticed.
    It doesn’t cost anything in accepting them
  • There are no charge backs
  • There are no fees
    and you can get additional business from Bitcoin economy.

Now lets see some basic points to understand what is Bitcoin:

What is Bitcoin?

  • Bitcoin is a digital asset and a payment system. It is commonly called a decentralized digital currency.
  • Satoshi Nakamoto invented it in 2009.
  • It is an open-source software, which means, that no person, company or country owns this network just like no one owns the Internet.
  • The system is peer-to-peer, that is, users can transact directly without an intermediary like a bank, a credit card company or a clearing house.

Bitcoin Mining

  • It’s anyone can join the Internet, anyone can help to verify and record payments into the block chain. This process is called mining.
  • Users offer their computing power in the Mining Process
  • Miners rewarded by newly created bitcoins and transaction fees.
  • Currently, miners are getting nearly 12.5 bitcoins every 10 minutes. This halves every four years. The next halving will happen in mid-2020.

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