Bitcoin (BTC, Bitcoin) is a decentralized cryptocurrency proposed by Satoshi Nakamoto in 2008. Decentralized means that Bitcoin does not have any centralized servers for issuing new coins, processing transactions or storing funds. Unlike other currencies we are more familiar with like USD, which can be touched (or seen in a bank account), there is no single body or central bank that controls Bitcoin. Bitcoin network started to process transactions on January 3, 2009.
Bitcoin is universally perceived as the first digital currency. Its transactions and issues are regulated by an extensive peer-to-peer network. The cryptocurrency uses a single database distributed in the network, included in a decentralized peer-to-peer network, which uses an electronic digital signature and is supported by a proof-of-work protocol to ensure the security and legitimacy of funds presented in circulation.
Bitcoins are sent and received through software or sites called ”Bitcoin wallets”. Wallets send and confirm transactions on the Bitcoin network using a ”Bitcoin address” - a unique identifier for a user on the network. A person can have many addresses, creating them on their own initiative, which does not even require an Internet connection. Creating an address for just one transaction or one correspondent helps to maintain anonymity. One wallet can handle multiple addresses.
For a Bitcoin transaction to go through, it must be first included in a block containing other transactions made in the network and then added to the blockchain. This process requires checking if the transaction is valid and not malicious, e.g. that the funds transmitted within it have not been spent previously somewhere else. This is one of the most prominent issues in the space of digital payments because there are no physical banknotes. Satoshi Nakomoto successfully solved this problem by proposing the process of validating transactions called mining.
It is the process of recording transactions on the blockchain. Network nodes use blockchain to distinguish real transactions from attempts to spend the same funds twice. The main goal of mining is to reach a consensus between the nodes of the network on which transactions are considered legitimate. Validation of transactions is done via solving complex mathematical problems using computational power and reaching a consensus on the current state of the blockchain.
For adding blocks into the blockchain, miners get rewarded with portions of Bitcoin. This is the only way Bitcoin is emitted and its emission is limited - the number of coins will not exceed 21,000,000. According to calculations, the emission of Bitcoin will end in 2045. Initially, the reward was 50 BTC, but, according to the algorithm, every 210 000 blocks is reduced in half.
Bitcoin is the first cryptocurrency by market capitalization, now exceeding 1 trillion dollars, and is available for purchase at almost all cryptocurrency exchanges out there. Despite the fact that Bitcoin has experienced ups and downs in its history, from a global perspective, bitcoins price in dollars has grown massively, as can be seen on BTC historical price chart. Today Bitcoin price moves around the level of 60000 dollars and, according to most analysts, has a positive outlook.
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