Who had thought in the 90s that the future would see something called digital currency or cryptocurrency? But, this has become a reality as cryptocurrency is now ruling the financial market. In this crypto world, the first cryptocurrency introduced was Bitcoin, and till now, it is the best-known currency among its competitors existing today.
If we ever see the growth of Bitcoin’s value, then it has always seen growth, with minor highs and lows. The reason why cryptocurrency is the reliable currency for a novice investor. But, here is a question that comes to our mind: how is the first cryptocurrency still unbeatable in the digital currency market? And how bitcoin works in the crypto world?
Bitcoin was the first introduced cryptocurrency, which was released on 9th January 2009. Bitcoin is a decentralized digital currency that can be directly operated like buying, selling, or exchanging without involving any third or intermediate party. As this is an electronic payment system, every bitcoin payment is made available on a public platform accessible to all. These types of transactions become hard to reverse it’s difficult for people to fake a transaction.
Working Principle Of Bitcoin
The working principle of bitcoin is based on a distributed digital record, which is termed a blockchain. The blockchain is nothing but a linked chain of data that includes all the details regarding transactions, transaction details like date and time, value, details of buyer and seller, and one unique identification for every Bitcoin exchange. These data are stored in a simple unit that is called a block. Data entries are connected in chronological order making a blockchain.
Some Facts On Bitcoin: A Blockchain
- Blockchains aren’t controlled by a single entity or an organization but can be controlled by anyone.
- The blockchains are not personal. They are public. And anyone who has the link of the chain also has access to contribute to it. This contribution will add one more block, and hence the whole chain will be updated for all.
- Bitcoin transactions are the safest and trustworthy as they have the eyes of several bitcoin holders, as it is a decentralized digital currency.
Moreover, each transaction has a unique code that is long and has random numbers. This makes it difficult for fraudsters to guess the transaction code and reduces the chances of fraudulent activities.
What Does Bitcoin Mining Mean?
It is the same as the general mining we know, but it is done digitally to find more bitcoins here. Bitcoin mining is the process through which new coins are added, and the count keeps on increasing.
The bitcoin mining process involves solving mathematical puzzles that add a new transaction to the bitcoin blockchain as the puzzle verifies the transaction. The mathematical puzzles are given aren’t easy to solve.
The miners are always into solving puzzles and support the bitcoin system. In return for this, they get bitcoins, and these transactions are added to the blockchain.
If we look at the working principle of bitcoin, it is a sequential arrangement of transactions or a chain of bitcoin transactions that keeps increasing with new transactions. This forms a chain which we call a blockchain. Hence, we can conclude that bitcoin runs on the blockchain protocol, which helps in the growth of the currency.