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What is bitcoin?

by | Dec 21, 2018 | Cryptocurrency | 0 comments

Bitcoin (BTC) is the first cryptocurrency (virtual currency) created in 2009 by Satoshi Nakamoto. It is a means of payment accepted by an increasing number of traders, motivated by transaction rate lower than those practice by establish financial organizations.

Bitcoins are exchange from particular to particular on the web without traditional financial institutions. A transaction is irreversible and can’t be cancel.

It is the most important cryptocurrency with a capitalization of around 71 billion of us dollar in august 2018.

Unlike other currencies, bitcoin has no legal rate (it can be denied by a trader). Its value is not regulated by a central bank (for example federal reserve for us dollar or central European bank for euro).

Its unit is Bitcoin (BTC) and its, subunit is Satoshi. 1 BTC = 100.000.000 satoshi.

Creation and emission of bitcoin:

In the traditional monetary system, central banks print currency for the economy. With bitcoin, it is generated by computer algorithm on a regular basis: The Blockchain. It is done gradually with an upper limit of 21 millions units:

  • Between 2009 (date of creation) and 2013, 50 bitcoins was created each ten minutes. This amount was divided by two for all the 210 000 mining blocks (around all 4 years).
  • From January 2013 to july 2016, 25 bitcoins are emitted all ten minutes.
  • Since July 9 2016, 12,5 bitcoins are emitted each ten minutes.
    These Bitcoins created each 10 minutes are distributed to miners who have realize the validation of block.

The limit of 21 millions bitcoins could be reached around the year 2140. It is one of its limit. In fact, the blockchain was created at first to have a max of 21 millions bitcoins, it is a limit defined by its creator. Up to today, more than 17 434 012 millions bitcoins are emitted.

Control, Validation and Signature of bitcoins transactions:

Lets imagine a buyer who pays in bitcoins, it starts through his personal account (wallet for example) that we call « address ». An invoice of bitcoin is equivalent to a transfer from one address « A » to an address « B ». The transaction is verified by the network, the registered in a block.

A block is a suit of consolidated transactions which took place in a given period of time. They are set in sequence, and it give a block of chain thus blockchain.

These transactions are assembled in “blocks” by miners by adding a header, which hold the length of the block, the number of transactions, the date and time. It is then converted in what is called a “Hash” (series of numbers and letters). This is attached to the block, then integrated in the block chain. You have to know that a hash is calculated using the hash of the preceding block, that is why they are strongly linked.

In addition to emitting bitcoin, the blockchain is also a huge « database » which has the history of all the transactions made by users since its creation.

Mining is a technical operation allowing the validation of all the transactions inside a block.

The hash is in fact a digital signature. It is kept with the block at the end of the blockchain.

Is Mining an exclusive business of specialist?
Everyone can start mining of bitcoin. For that, you have to: either invest in the technical infrastructure too complex, unless you are a programming expert. Or, you chose the cloud mining. Cloud Mining consist to buy virtual material to a contractor for a given period of time. (Everything is done online)

Income of miners

Bitcoins created each 10 minutes are distributed to miners who have realize the validation of blocks. Moreover, miners reclaim transactions fees generated by all the operations made by the contain of the block.

How to receive and spend bitcoins?

Start by creating your Wallet (Bitcoin wallet).

Generate your public address, which is represented in the form of a chain of characters of the type “34eFfugtubn7qfRrQuZKbPnLwwsbYjSmM1”, equivalent to an account number.

  • To receive bitcoins, you need to supply your public address to your debtor.
  • To send bitcoins, access your wallet, use the public address creditor, then follow the given steps.

Buy, Sell or Exchange bitcoins:

A great number of exchange platform offer you the opportunity to convert your currency (dollar, euro, etc.) into cryptocurrency (and reciprocally), against some fees.

Some publicity websites also permit you to obtain free fractions of bitcoins. (exp. Bitcoin Faucets)


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