What Is Bitcoin?
Updated: Sep 13, 2021
Interested in Bitcoin? If you’re new to cryptocurrency, it’s best to start with the basics! Here’s what you need to know about Bitcoin and the blockchain.
How Does Bitcoin Differ from Other Currencies?
Most currencies, like the US dollar, are circulated by a central government. These traditional currencies are called fiat currencies. Cryptocurrencies, on the other hand, have a decentralized system that is not tied to any government or other organization. Cryptocurrencies are entirely digital with no physical coins or bills.
Bitcoin (often abbreviated to BTC) is a very popular cryptocurrency. While there are thousands of other cryptocurrencies in existence, Bitcoin remains the most well-known and the largest cryptocurrency in terms of market capitalization. Most other cryptos are actually imitations of Bitcoin. You will often see the word “bitcoin” used to refer to cryptocurrency in general.
How Can Bitcoin Be Used?
It doesn’t matter who you are or where you live: anyone can get a bitcoin wallet and buy bitcoin! If you want to spend it, you can make online payments with it. Not all vendors accept bitcoin, but many do. If you have a business, you can choose to accept bitcoin as a payment for your products or services.
What Is the Blockchain?
Bitcoin is based on blockchain technology, which is a set of protocols and processes designed to create a secure digital currency. Essentially, Bitcoin’s blockchain is a distributed ledger. Every Bitcoin transaction is recorded in this ledger, which helps protect against fraud and potential theft.
The blockchain consists of chains of discrete blocks of information (representing groups of transactions), arranged chronologically. Bitcoin’s blockchain is distributed, which means that it is public and anyone can see it. It is constantly being verified by everyone who has access to it, ensuring that everything adds up, which greatly reduces the chances of fraud.
Blockchain is mostly used for cryptocurrency right now, but it could be used for a wide range of other things in the future.
What Is Bitcoin Mining?
Bitcoin mining uses powerful computers to solve complex number problems with the goal of confirming groups of transactions (or blocks) that fit a strict set of cryptographic rules. Essentially, for each transaction, the computer has to confirm it by guessing a number equal to or less than a specific 64-digit code. Since there are trillions of possibilities, this takes a lot of computing power.
Digital mining maintains the public ledger that makes Bitcoin secure. As a reward for maintaining the Bitcoin network, miners are compensated with bitcoin. This is how new bitcoin tokens enter circulation. To earn bitcoin by mining, you need to be the first to solve each number problem – if you aren’t the first, you won’t earn anything. Bitcoin miners all around the world compete to be the first to correctly solve each code in an effort to earn bitcoins. The best way to do this is to have powerful mining rigs that are constantly working around the clock, thus providing more opportunities to be the first to verify any given transaction. Digital mining companies like US Digital Mining and Hosting offer valuable opportunities to reap the benefits of bitcoin mining. Contact us to learn more or to get started!