What is Bitcoin?

What is Bitcoin?

Before diving into all the nuances of the world of cryptocurrencies, you need to turn to its origins and figure out where it all began.

НIt's no secret that in 2008, against the backdrop of the collapse of the US mortgage structure, there was a global financial crisis. It was difficult to find a person, an enterprise or a state, whom the blast wave of the global crisis bypassed. Everyone suffered to a greater or lesser extent. The dollar, an international currency, which for many years was and today still remains the flagship of the world economy, almost for the first time made itself doubt.

Some were passively indignant, others humbly accepted this state of affairs, but there were also those who no longer wanted to remain a chip on the gambling table of the largest states and banks. This is how the first cryptocurrency in history appeared - bitcoin. The true reasons for the creation of Bitcoin can only be guessed at, because the only thing we know about its creator is the name - Satoshi Nakamoto. Whether it was one person, or is it a group of developers - there are only guesses, no one has seen a real person with such a name and surname.

Here are the key features of Bitcoin that differentiate it from fiat or electronic money:


Decentralization

Unlike all modern payment systems, bitcoin does not have a centralized server that could be hacked in the era of hacker attacks and rewrite the history of transactions. The Bitcoin network is based on the Blockchain technology - a continuous sequential chain of blocks built according to certain rules, in which information about all transactions is stored. Simply put, each computer on which the bitcoin client program (wallet) is installed is a separate server (network node).


Safety

The structure of the "Bitcoin" network is built in such a way that after each created block, the computational algorithm becomes more complicated for calculating the entire chain anew and one more new block. Accordingly, the more blocks in the chain, the lower the likelihood of hacking the entire system. In addition, in order to take control of the network, control over 50% of the blocks is required, which is technically almost impossible to implement with the decentralized nature of bitcoin.


Transparency

The history of all Bitcoin transactions is publicly available. Anyone with an access key can view any transaction, right up to the first transactions of the mysterious Satoshi Nakamoto.


Lack of regulators

As mentioned above, thanks to the Blockchain technology, the Bitcoin network lacks a centralized regulatory body that is empowered to prohibit or permit transactions, freeze accounts and even increase the number of monetary units within the system itself. Transaction fees are set by the participants themselves, and any financial transactions with bitcoin are irrevocable, which in turn is both an advantage and a disadvantage.


Anonymity

The address in the system (account number) has absolutely no connection to the identity of the owner, because to open it, you just need to download the bitcoin client to your computer. The account number is a 34-digit string of numbers and Latin letters, which for convenience can be represented in the form of a QR code.


Network maintenance reward

Participants receive rewards in the form of new bitcoins for the computational operations required to carry out transactions. With each new block, the computation algorithms become more complicated, so the computation process has received a widespread definition of "mining" (from the English mining - extraction of minerals), and those who are engaged in it are miners. The task of the miners is to write in one block all transactions that have occurred in the network since the previous release (on average every 10 minutes), and "close" it with a cryptographic key. The next block is calculated on the basis of the previous one, which guarantees the irreversibility of transactions, and also prevents "fake" banknotes from entering the system. So the blocks are interconnected, forming a chain - Blockchain.


Bitcoin is the most popular and sought-after cryptocurrency today, and its impact on the digital currency market is hard to deny. However, Nakamoto's concept - to create a digital instrument that is transparent and universal in its purpose - is still only a concept. And if you take a closer look, there is already a way to implement it - Blockchain technology.

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