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What is Bitcoin?! Bitcoin is a decentralized digital currency without a central bank or central bank, centrally sending transfers from a user to the Bitcoin network, without the need for an intermediary. This image has reappeared and exacerbated again, making it present in many people whom I forced to search.
What is Bitcoin?
Bitcoin was invented in 2008 by an unknown group using the name Satoshi Nakamoto and start ed in 2009 when its source code was given to the internet as free open source software. Bitcoins were paid for in a process called mining. Which can be exchanged for other currencies, products and services and has taken the transaction code of BTCH or XBT.
A study by the University of Cambridge estimated that in 2017, there were 2.9 to 5.8 million users using a wallet with cryptocurrencies, most of them using Bitcoin.
You can see this article, which will explain to you a lot about cryptocurrency mining:-
Information about cryptocurrency mining a complete guide
Bitcoin has been blamed for its illegal use, high electricity consumption during mining, price volatility and theft from transfers with other currencies. What some economists, including Nobel laureates, have described as a soap bubble device. It is also worth noting that Bitcoin has also been used as an investment, although many regulators have issued warnings to investors about Bitcoin, but transactions from network nodes are usually secured by encryption and are recorded in a publicly distributed registry called Blockchain Blockchain.
Bitcoin is based on an open source protocol. So the source code of the program is public and available to anyone who wants to check the details of its operation. The above principle allows anyone to freely copy and develop their own software in order to promote better mining opportunities. Software design and mining is a means to achieve some goals such as creating production and transaction standards for swappable software units while retaining the ownership information of the Bitcoin units that have already been created without the need for a central entity for control or third-party approval.
The use of the program is free and available in all countries of the world where there is an Internet connection. The primary function of the software is to execute bitcoin transactions, resend information and validate it to the rest of the network.
Since the software is open source, there can be many different versions of it. Basically anyone with the right skills can create a network, copy a lot of Bitcoin software and add or modify it with whatever code base they want. In this sense the software components have been created by default by the developers integrating the innovations available from open source software for the intended users to do mining on their devices.
The strength of the network is also ensured by its acceptance by other users. The network formed by Bitcoin users is made up of users of the same version of the software. It is suggested to make changes to the code among themselves, it is the approval and acceptance of the user community that leads to the creation of the network.
What are the reasons for the spread of the digital currency Bitcoin?
There are several reasons that led to the spread and increase in the strength of the Bitcoin Donna currency over all other digital currencies, and made it in the lead by 15 times, and these reasons we can, on the Plus Programs website, summarize them in several points:-
- Transparency of the source code of the Bitcoin digital currency software.
- The integrity and transparency of the information circulated among users who mine the digital currency Bitcoin.
- The robustness of the network against malicious software attacks that may harm farms or mining hardware in general.
- The planned limited production of bitcoins will not exceed 21 million bitcoins.
- The protection provided by the encryption algorithms used against malicious software for the network itself, as well as for other complementary reasons.
Bitcoin software and development is the core of the Bitcoin trading system. By being able to exchange information impartially regardless of who the recipient is within the network, the limited availability and the limited amount of bitcoins, the underlying specifications of the network also create a secure exchange of value. Whatever value users find is directly reflected with the value they are willing to exchange for it, which in turn is based on the laws of supply and demand without intermediaries such as countries, central issuers such as banks or authorities and governments.
In order to be useful as a medium of circulation it must be introduced into circulation gradually to meet the needs of trading, but also to be limited in the total number This is achieved artificially and its production rate plus the maximum number is considered part of the rules of the network.
It has been proven that the maximum number of bitcoins to be produced is 21 million, and their production rate will gradually decrease until around the year 2140 when the last production takes place.
How to mine bitcoin digital currency?
Since Bitcoin is decentralized, it needs the input of many computers and randomly from all over the world to confirm the transactions that take place all over the world. This process requires a huge amount of computing power as well as an abundance of energy. New bitcoins are issued every ten minutes which are awarded as a reward to those who contribute to confirm transactions depending on the amount of each contribution.
Those who confirm transactions in order to get the reward are called miners or miners and do the mining.
Every transaction made with Bitcoin undergoes a validation check and is then placed in a block with other completed transactions. Each block created has a direct relationship with the immediately preceding block and with all other blocks. This creates a block chain. The relationship of each new block to the previous block is determined by a mathematical algorithm which however is difficult to generate.
Each time a new block is created, a number of new bitcoins is automatically generated and distributed to those who have solved the algorithm according to their individual contribution. This process is called mining.
It is worth noting that the higher the percentage of the total computing power devoted to solving the algorithm, the higher the percentage of new bitcoins generated. For example, when someone who specializes in bitcoin mining has many miners like GPUs modified to solve the algorithm, you will get a larger portion of the new bitcoin mined by someone with only one miner. The algorithm is always built so hard to solve that all the computing power of all the miners on the planet dedicated to solving it takes an average of 10 minutes to solve.
Thus over time the system adapts the algorithm solution and makes it more difficult because at the same time the total computing power available to solve it increases as technology advances and new miners are built. This leads us to another conclusion that all miners over time produce fewer bitcoin sub-dividments, because over time they make up a smaller percentage of the total computing power available to solve the algorithm, and as a result they get a smaller fraction of the bitcoin split when the miners reach a point of consumption More money on electricity than on bitcoin, it wouldn't make sense to run it and need to replace it and set up a new farm.
Conversely, if the overall global computing power of miners is reduced by banning mining in some countries, the share of bitcoin splitting remaining miners will be greater, thus incentivizing new players to enter the market and possibly allowing old miners to reopen their mining farms once again.
However, profitability is not only determined by the number of bitcoins that are mined, the number of bitcoins generated with each new block is decreasing very slightly each time. Within 4 years, the bitcoins generated with each new block are halved. That is, the last bitcoins will be created in the year 2140. Then the total number of bitcoins in existence will be only 21 million.
What are the benefits of using Bitcoin?
There are many benefits that you will gain when dealing with the digital currency Bitcoin, including:-
- The speed of transactions in the digital currency Bitcoin where Bitcoin transactions occur instantly and are announced simultaneously all over the world. The beauty of it is that it does not require any infrastructure other than some form of free software on your PC or smartphone, and an Internet connection.
- Very low transaction cost as the current cost per transaction regardless of the amount of transfers is only about 5 cents. This amount is automatically compensated to users, who check and verify transactions as a reward for the processing power they invest in protecting the network from malicious attacks.
- Protecting the user from theft Since only the user has the ability to trade, and has highly protected access to their bitcoins, it is almost impossible for them to be stolen by third parties as long as the encryption is not violated.
- Where the provisions allow it to be transferred only under certain circumstances such as the transfer of currencies by some pre-agreed parties at the same time to avoid unilateral exposure or only after a certain period of time.
- Bitcoin Portability No matter how many bitcoins, storage wallets or passwords are basically very small, they can be easily transferred, recorded on paper and even memorized.
- Transparency of transactions and rules. All transactions made on the network are publicly available and transparent. So anyone can look at any address and see what past transactions were made with it, how many bitcoins were transferred, as well as those that were sent.
- This applies to all transactions executed on the network up to the first. The same applies to all rules under which the Software operates and to which users agree. There is no hidden rule in the program, and it cannot exist because other users simply will not accept it.
- Nature of Use Where a change in any feature or rules of the Program is effective only when it has been accepted by the community that comprises the network. This is to avoid malicious changes that can fundamentally change the program as the majority of users will recognize it and not accept it, but also great flexibility and speed of reaction in case of unexpected errors or failures during operation.
Having a global, dedicated and active community that deals professionally with the quality of the software while being completely open to feedback, suggestions and criticism from all parties is invaluable to the feasibility of the software.
- Decentralized Nature One of the most important features of the Bitcoin digital currency mining network is its decentralized nature, which does not require any central control or confirmation authority. Each node in the network strengthens it further, but if it is affected in any way, the operation of the network as a whole will not be affected. Accordingly, the infection of a large part of the computers that make up the network will not significantly affect its operation. The only way to prevent the network from working is to cut off all computers from the network, in short, to cut off the Internet all over the world which is beyond anyone's ability nowadays. However, with the reopening of the Internet, the network will continue from where it left off completely.
- Bitcoin subdivisions where each Bitcoin is divided into 8 decimal places up to 0.00000001 are called Satoshi, allowing small transactions not possible with other instruments or traditional currencies. Adding more decimals is left to network approval if needed in the future.
- Irrevocable Transactions All Bitcoin transactions are final and irrevocable. This has an added advantage for those with bitcoin products that transactions such as for example used in credit card frauds cannot be cancelled. This usually gives additional incentives for companies to offer their products at lower prices, due to immediate and irrevocable payment. On the other hand, users who buy bitcoin need to be careful in their choices, as the product or service provider that does not have a reliable presence in the market may not be so as not to be deceived.
- Transaction privacy Where, through the program, each user can create an almost unlimited number of addresses from which to carry out their transactions. These addresses are pseudonyms, meaning they have no direct relationship to actual data or the user's location, although they have network-identifiable features. This way the user can maintain their privacy by separating their transactions from their personal information.
This does not mean anonymity for transactions by definition as all transactions are published, and even if a single transaction has a known public recipient, the identity of the user may be extracted from the additional information. This is the main reason why bitcoins are not suitable for transactions related to illegal activities. Do not trust extortionists who demand money in Bitcoin so that you do not fall under the brunt of their theft like those who demand ransom after encrypting the device,
The dangers of Bitcoin mining
There are some dangers that bitcoin dealers may face, and these dangers are:
Loss of wallet private keys All a user needs to control the user's bitcoin is to know their wallet private keys. Although the software already provides adequate protection for the average user, it must be alert against viruses or malware. With little effort in securing private keys.
Bitcoin exchange rate fluctuations Since bitcoins do not have a central authority to intervene in fluctuations in supply and demand as with government currencies, bitcoin is subject to greater fluctuations in its exchange rate with most other currencies.
An additional factor affecting the exchange rate is the trading of large amounts of bitcoin, they disproportionately affect the exchange rates of the exchanges. This phenomenon is expected to decrease over time, provided the economy is sufficiently developed to be able to participate and develop the appropriate infrastructure found in traditional capital markets.
Another additional factor affecting exchange rate fluctuations is the nature of Bitcoin itself and in particular that it can be transferred quickly anywhere in the world. This leads to a much faster action and reaction between supply and demand than conventional values.
- Unclear legal framework Although European legislation has taken steps to create conditions for centrally controlled or issued digital currencies, the decentralized nature of bitcoin as well as other features introduce new standards that have not been fully addressed.
- Network security and youth The Bitcoin network has weaknesses and the funny thing is that most of them are known from the writing of the original proposal for how the program works, and are partially predictable and leave room for interaction on the network and users.
So far, these weaknesses have been corrected within a few hours of their appearance without any significant impact on the network's work or the exchange rate with other currencies.
Does Bitcoin mining affect the environment?
Power Compare reports that the energy used in Bitcoin mining has increased significantly in the first two weeks of January 2018. The electricity used for mining has exceeded about 40 TWh. According to the report, the electricity used for this purpose this year exceeded the total electricity consumption in 159 countries. As for energy consumption, its production has also increased significantly, and most of the power generation consists of generating electricity from traditional methods such as oil and coal, which have a bad impact on the environment.
What are the ways to get bitcoin?
Bitcoins are generally obtained through several different ways, including:-
- The mining that we mentioned before, which is the process of processing Bitcoin transactions. This method requires powerful computers and devices, as well as huge power.
- Buy bitcoins from exchanges for buying and selling digital currency bitcoin and others or exchanging them like these sites:-
Here is another exchange:
How to deal with digital currency Bitcoin?
Bitcoin is a system based on UTXO i.e. unspent transaction output, which translates as unspent coins. UTXO amounts are tied to addresses that can be spent through blockchain registration.
For example, when user A wants to transfer monetary units to another user B, he creates a transaction in which he specifies the amount of bitcoins he offers from UTXO he wants to spend and the address of recipient B, which he signs with his private key and transfers it to the BTC network for verification of the contract that It receives the transaction from the cipher signatures and the validity of the UTXO's possession before it is accepted and retransmitted.
This action propagates the transaction indefinitely until it reaches all nodes on the network and finally the transaction is validated by a miner and mined in block form. Once a transaction is on the blockchain and receives confirmation for a reasonable number of subsequent blocks, the transaction can be considered a permanent part of the blockchain, and therefore accepted by all participants.
Here is a picture of a Bitcoin wallet
What are the profits from bitcoin mining?
The profitability of bitcoin mining is mostly dependent on the block reward, which is a decreasing amount of bitcoins that the protocol allows each miner to issue when a valid block is created. The amount of bitcoins that the protocol allows to be created is halved every 210,000 blocks. Another source of profitability for miners is transaction fees and bonuses that users allocate to miners who include their remittances in a valid block. Given that the reward the protocol gives miners per block decreases over time and tends towards zero, in the long run mining profitability will become increasingly dependent on transaction fees.
What are coin mining pools?
Mining rewards are paid to the Bitcoin miner who discovers a solution to a puzzle first, and the probability that the participant will be the person who discovers the solution is equal to the portion of the total mining power on the network.
Participants with a small percentage of mining power have very little chance of discovering the next block on their own. For example, a mining card that can be purchased for $2,000 represents less than 0.001% of the network's mining power and with such a small chance of finding the next block it may be a long time before a miner finds a single block, and the difficulty of going up makes things worse. The miner may never get his investment back. The solution to this problem is the establishment of mining farms.
Mining pools are operated by cooperating parties and coordinating groups of miners. By working together in a group and sharing the payments among all participants, miners can have a steady flow of bitcoin starting from the day they activate the miners. Statistics about some mining pools can be found on Blockchain.info.
Why do people want bitcoins?
Some people like Bitcoin because it is not controlled by the government or banks. People can also spend their bitcoins anonymously. Although all transactions are recorded, no one will know your account number unless you tell them.
In an online chat with social media users in January 2021, the world's richest man, Elon Musk, said he was a huge supporter of Bitcoin. He even went so far as to change his Twitter bio to #bitcoin.
He has often shown his support for online currencies in recent years and caused major moves in their values due to his personal wealth and influence. This particular endorsement has sent the value of Bitcoin skyrocketing.
This video talks about a lot about what is Bitcoin and how you can collect it:
At the end of our article, we will have learned a lot about the digital currency Bitcoin, through a brief about it and the reasons that led to its spread, with its benefits, risks and impact on environmental pollution and energy drain with comprehensive knowledge through this guide about what is Bitcoin and how you can collect it.
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