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Everything That You Need To Know About Bitcoin

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Bitcoin is the first of the “crypto currencies” and a new form of scarce digital asset that seeks to transform itself into internet money. Among the characteristics that make it unique, it stands out that nobody controls it; no government, company, or person, and, instead, all network decisions are taken by the users themselves, transforming it into an open and decentralized network.

With bitcoin it is possible to transfer money or pay by internet instantly, globally, 24/7, without restrictions of time, age, country of origin or destination.

It can also be understood as a protocol for transferring value over the Internet. This protocol was originally proposed and developed by Satoshi Nakamoto (pseudonym used by the creator or anonymous creators of this technology) in 2009.

Is Bitcoin safe?

The Bitcoin protocol (the database or “Blockchain”), which defines the rules and functioning of the Bitcoin network, is public and open to anyone who wants to review or test it. In fact, to this day, thousands of people have reviewed its code and have tested the robustness and reliability of this protocol. However, those who have bitcoins must remember that, like any application on the Internet, bitcoins are susceptible to being stolen by hackers or thieves who violate the security of your computer, smartphone, or the vault where you store them says

How or why does the price of Bitcoin vary?

The crypto currency markets operate 24/7, 365 days a year, and it is in these that the price is reached according to the aggregate supply and demand at each moment of time. It is also important to consider that, as a consequence, the largest markets are the most influential when determining the price of a bitcoin. Today the largest markets are against USD, EUR and CNY.

Is Bitcoin like cash or like a credit card?

Bitcoin is a global, decentralized payment network, which is not dependent on anyone and which, as a consequence, no one controls. In this line, while bitcoin is not a currency, it looks and behaves more like a centralized payment network such as Visa or MasterCard.


bitcoin network

Why should I use bitcoin?

There are many reasons, from the practices, such as that with Bitcoin it is possible to transfer money over the Internet without intermediaries, with low commissions, 24/7, and without interruptions, to the most philosophical, such as that Bitcoin allows access to digital and transferable money without the need to depend on any bank or government. In this sense it is said that Bitcoin is similar to gold, in that it is scarce and only those who own the gold finally control it.

Where can I spend the bitcoin?

More and more companies around the world are accepting Bitcoin payments, from travel agencies like Expedia to computer manufacturers like Dell. It is also used by multinational non-profit organizations that depend on global collective funding for their livelihoods, such as Wikipedia.

Proof of Work Algorithm: SHA-256. The virtual currency formula

The Bitcoin system is designed so that adding a block to the network costs a lot of work (time and resources). In this way, blocks are prevented from being generated indiscriminately.

This is done through an algorithm such as Proof of Work, which is often used, for example, to avoid spam in the mail. The Bitcoin algorithm is known as Hashcash-SHA-256 or simply SHA-256 bitcoin algorithm.

The working test is to find a verification number containing each of the network blocks. The search for that number is done iteratively, by trial and error. In other words, random numbers are tried again and again until a specific number is found.

This requires a lot of computational power: A computer connected to the Bitcoin system constantly performing the search operations. Each of these connected computers is known as bitcoin miners.



Mining: How crypto coins are created

Miners are other nodes in the network. In addition to containing the transaction history of the network (the blockchain), they cede computing power from the computers to perform the transactions. Their main objective is to find the nonce of each block that is registered in the blockchain of bitcoin. Once they find it, they register it on the network.

As mentioned above, this work is done by testing possible verification numbers iteratively. As it requires a lot of computing power, this activity is encouraged and the miners are rewarded with bitcoin digital money for each block they solve.

Cryptomime mining is very competitive and requires very high power equipment. Special high-cost equipment is normally used. In addition, these machines must be connected 24 hours a day, so they consume a lot of electricity.

In short, mining is a project that requires an investment and has maintenance costs. However, the revaluation of electronic money such as bitcoin has kept mining profitable today.

Will it be a stable currency in the future?

Currently, being a technology in full development, the market for this crypto currency is very volatile and its value can vary greatly. Currently the value of 1 bitcoin varies according to the confidence of the market in its future. It is therefore normal that when there is a series of news and statements against electronic currency, its price falls.

However, many experts are already talking about the bitcoin standard, in analogy to the gold standard. Gold is a scarce resource, so throughout history its value has not undergone much variation. Bitcoin is also a limited resource, as it is a deflationary currency. When the bitcoin economy consolidates, these experts believe that the existence of a fixed number of bitcoins will stabilize its value. According to the bitcoin pattern theory, the price of cryptomoneda will remain much more constant over time.

However, this comparison between bitcoin and gold is only a theory. No one can know for sure the future of crypto coins.

Caveat emptor.

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