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16 Nov 2022

Business 101: Understanding How Cryptocurrency Works

Since its launch, Bitcoin has quickly and firmly gained a reputation as the most robust cryptocurrency in the world. Hardly can the digital news circulars fail to mention Bitcoin. Bitcoin has become a force in the global economy, which is hard to ignore. If you're interested in investing in Bitcoin, understanding how it works is the first and most crucial stride. You must understand a lot about Bitcoin but start with the basics is necessary. You can be sure that Bitcoin is still undergoing growth and development. You might be interested in BitiCodes to better experience trading cryptocurrencies.  Hence, you can always learn something new about it. 

Did you know that trading Bitcoin is one of the ways you can generate returns within a significantly short period? Bitcoin's speed of growth since its launch is simply impeccable. That way, you will generate income anytime if the markets are favorable. Without further ado, here are some things you should know about Bitcoin: 

Brief History

Before Bitcoin launched, centralized authorities remained dominant in regulating currency use and circulation. The Bitcoin developer- Satoshi Nakamoto- saw the centralized authorities as a limitation to the freedom of operation among currency users. And this led to the development of a decentralized digital currency- Bitcoin. 

While some other developers tried introducing a decentralized currency, the main problem was handling double-spend. Satoshi Nakamoto successfully addressed this problem, eventually launching Bitcoin, the first-ever decentralized digital money. With a timestamped permanent transaction ledger, Nakamoto effectively addressed the issue of spending the same currency twice (Double-Spend). Today, Bitcoin ranks as the most robust cryptocurrency globally. 

What is Bitcoin?

In layman's language, Bitcoin is the digital or electronic form of money. It is, however, notable that there are specific elements that make Bitcoin an outstanding currency. Cryptography technology is the primary mechanism behind verifying transactions in this case. In other words, Bitcoin uses cryptography to decode and encode messages for verification purposes. 

From a different perspective, Bitcoin is a decentralized form of digital money based on thousands of computers in blockchain technology. And this means that there is no central organization that regulates or oversees Bitcoin transactions. Blockchain technology features a chain of blocks and nodes spread worldwide. The main aim of choosing a decentralized currency was to facilitate users' safety while ensuring convenience in conducting assorted transactions. 

What is Bitcoin Mining?

Did you know that moners create a new bitcoin approximately every 10 minutes today? Have you ever wondered how they achieve this? That is what Bitcoin mining is all about. In essence, a new block bearing recent transaction information requires some updates on the Bitcoin Blockchain. Miners make the updates. It is, however, notable that validation of the updates is necessary through a mechanism known as proof-of-work. The whole process entails solving complex math problems, after which the miners make validation. To earn as a Bitcoin miner, you must provide proof of work. 

Bitcoin mining, though complex, is one of the most lucrative ventures. In essence, each successful validation of proof-of-work generates 6.25 Bitcoin. It is, however, notable that the amount of Bitcoin mentioned above will reduce by half within four years. And this means that there is a limit to the Bitcoin that you can mine.

The Bottom Line

Gathering ample information about Bitcoin could be your foundation for success today. Bitcoin remains a strong cryptocurrency with the highest value compared to others. Learning the art of trading Bitcoin is necessary since you can easily generate returns quickly. However, you must be strategic in trading or investing in Bitcoin.


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