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What is Bitcoin and How Can It Make You Rich?

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What is Bitcoin? Unlike companies like Visa and Paypal, Bitcoin is not owned by an individual or company. It is the world’s first completely open-source payment network in which anyone with an internet connection can participate. Bitcoin was designed to be used on the internet and doesn’t have any central controlling authority like banks or an admin.

Now, what’s more to know about Bitcoin, and most importantly, how can we earn from it?

Continue reading.

What is Bitcoin

Bitcoin is a cryptocurrency that uses cryptography to keep it secure. There are no physical coins, and the technology is strictly virtual, which means that it exists only as programs on a computer. The database, however, although it is encrypted is accessible to everyone with an internet connection. Also, know that the database is called the blockchain and it contains the complete history of all transactions from its launch date till this very moment.

Invention

In 2008, an author named Satoshi Nakamoto wrote an academic white paper titled Bitcoin: A Peer-to-Peer Electronic Cash System.

It set out the theory and design of a system for a digital currency free of control from any organization or government.

Satoshi, wrote:

“The root problem with conventional currencies is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.”

On the 9th of January 2009, the software he described in his paper was completed and released to the public

He continued working on the project with various developers until 2010 when he or she withdrew from the project and left it to run on its own. To this day, the real identity of Nakamoto has never been revealed and they have not made any public statement in years.

Now Bitcoin is open-source, meaning that anyone can view, use or contribute to the code for free. Currently, many companies and organizations work to improve the software, including MIT.

How Does It Work

Unlike traditional finance which requires banks or financial services to act as gatekeepers during financial transactions, Bitcoin is decentralized, and any two people anywhere in the world can send coins to each other without the involvement of a third party.

Since its inception in 2009, all Bitcoins transactions are verified by proof of work consensus which uses huge amounts of computing power in a process known as mining. Now, mining is a process by which blocks of transactions are verified, and added to the blockchain by the blockchain participants called miners. Here, the miner’s job is only to provide CPU power, which automatically runs the program to validate transfers, and there is no manual intervention by the miner.

A variety of hardware can be used in mining. However, some yield higher rewards than others. Certain computer chips, called application-specific integrated circuits (ASICs), and more advanced processing units, such as graphic processing units (GPUs), can achieve more rewards. These elaborate mining processors are known as mining rigs.

These miners compete using powerful computers to solve complex mathematical equations, the winner, earns the right to permanently add a new block to the blockchain and earns a reward in bitcoins. A new block is added every 10 minutes to the blockchain. Bitcoin has no central authority over it, it is strictly maintained by blockchain technology which is irreversible and immutable.

Bitcoins have a fixed number ever to be minted. 21 million. This means there will only be 21 million bitcoins by the time all the bitcoins have been minted. As of November 2021, there are over 18.875 million Bitcoins in existence and less than 2.125 million Bitcoins left to mine, this characteristic makes it very resilient to inflation and manipulation.

It is also important to know that mining adds and verifies transaction records across the network. Miners are rewarded with some Bitcoins; the reward is halved every 210,000 blocks(approximately 4 years). The block reward was 50 new bitcoins in 2009. On May 11, 2020, the third halving occurred, bringing the reward for each block discovery down to 6.25 bitcoins.

The total number of coins will be in circulation by the year 2140.

What Gives Bitcoin Value

There are lots of things other than money which we consider valuable like gold and diamonds. The pre-colonial Africans used cowries as money. Bitcoins are valuable because people are willing to exchange them for real goods and services, and even cash.

The same technique that applies to giving value to the dollar, pound sterling, yen, euro, also applies to bitcoin. It has proven that it can store value, be traded, is scarce, secure, easily divisible, and can be used for transactions of all sizes.

Just as you can store cash in a wallet, Bitcoin is stored in software wallets, which are accessible through client software. Bitcoin can be divided into seven decimal places, a thousand of a bitcoin is known as a mill, and one-millionth of a bitcoin is known as a satoshi.

It can be exchanged with cash, there are different exchanges that provide this service. However, it can also be carried out in person.

Why was Bitcoin Created

Bitcoin was created as a way for people to send money over the internet. The digital currency was intended to provide an alternative payment system that would operate free of central control but otherwise be used just like traditional currencies.

There has been criticism on how the Bitcoin network operates, emphasis has been made on the amount of electricity it consumes.

The University of Cambridge has an online calculator that tracks energy consumption and at the beginning of 2021 it was estimated to use over 100 terawatt-hours annually.

Is Bitcoin Secure

security
security

The encryption technology behind Bitcoin is the SHA-256 algorithm designed by the US National Security Agency. As of now, it is impossible to crack. There have also been cases of bitcoin hacks in the past, but these hacks have been on services that store bitcoin for clients, so it was the website of these companies that were hacked and not the bitcoin network itself.

One major problem of the Bitcoin network is, if anyone sends Bitcoin to someone else in error or you lose your private keys, your bitcoin cannot be recovered. it is gone forever.

Bitcoin Is The New Money

It’s like an online version of cash that can be used to purchase products and services.

There are three popular ways to get Bitcoins.

  1. You can buy Bitcoins using paper money/cash.
  2. You can sell things and let people pay you with Bitcoins.
  3. Through mining Bitcoin.

Early adopters of Bitcoin have seen a very significant increase in profit on their investments. Hence, Bitcoin, despite being a mode of payment, can also be an investment product.

Investors in Bitcoin leverage on the volatility of the market to buy when the prices are low, and sell when the price is increased, thus making a profit. This process, however, requires some skill as cryptocurrencies are generally volatile.

In Summary

conclusion
conclusion

In conclusion, we have established that Bitcoin can be sent across the planet as easily as you can pay with cash in the physical world. It isn’t closed on weekends, doesn’t charge you a fee to access your money, and doesn’t impose any arbitrary limits.

Also, due to the cryptographic nature of the Bitcoin network, bitcoin payments are more secure than any other form of payment(except for the unlikely situation of a 51% attack).

Secondly, when making a bitcoin payment, no sensitive information is required to be sent.

Finally, Bitcoin is super safe. In over ten years of existence, the bitcoin network has never been successfully hacked.

I hope you got some value from this post. For more content on cryptocurrency, visit wayamask

If you have any questions or comments, write them in the comment section below and I will do my best to get back to you.

Keep learning! Keep Earning!!

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