Bitcoin is a Cryptocurrency, How Does It Work?

bitcoin

Bitcoin is a virtual or digital currency ( cryptocurrency ) that is traded for profit.  One of the attractions of this cryptocurrency is its sudden increase in value.

Bitcoin history

Bitcoin is a digital currency or cryptocurrency that is believed to be only 21 million in the world.
Various articles mention that Bitcoin is a currency masterpiece created by a person named Satoshi Nakamoto in 2009. 

However, it is also unclear whether it was Satoshi who created the new popular digital currency around 2013 or not. The data about Satoshi are also very mysterious.

Initially published Bitcoin only consisted of 50 units in the world. This currency is not controlled by banks or other institutions. 

Although no one owns it intact and intangible, this currency is still hunted by traders in making quick profits.
In its working system, Bitcoin consists of three main parts, namely blockchain, mining network, and wallet.

How Bitcoin works

Since its circulation, Bitcoin has increased in price every day which is due to many factors. 

One of them is the increasing number of devotees from all over the world. The way Bitcoin works can be divided into three, namely Blockchain, Mining, and Wallet.

1. Blockchain

The Bitcoin blockchain is a list of every Bitcoin transaction that has ever taken place. Before a transaction enters this chain, it is not considered complete.

As the name implies, blockchain consists of a set of blocks that contain new transactions and are associated with previous blocks that contain old transactions.

Blockchain is useful to protect the transaction data and digital money owned by miners and owners. The level of security is high enough that it is difficult for hackers to penetrate.

2. Mining

In mining, some people are in charge of guarding old transactions and making sure new ones are recorded, as well as creating new blocks. 

For their services, they will accept Bitcoin.

To get Bitcoin you don't have to be a trader, but you can also be a miner. 

Until now, the miners who get the highest Bitcoin are only willing to get 12.5 Bitcoin that comes out every 10 minutes.

However, being a miner is not an easy matter. There is a complex mathematical puzzle regarding blockchain that miners have to solve for Bitcoin to come out. 

You could say being a miner means being the owner of Bitcoin without cash, aka relying on math skills alone.

3. Wallet

Bitcoin wallets are the part of Bitcoin that users often see. 

A wallet is the private key or key of the Bitcoin owner to add transactions to the blockchain at an address called the public key or you could say the Bitcoin market.

As previously explained, Bitcoin is only stored in transaction records called the blockchain.

How to get Bitcoin

Bitcoin is a digital currency that we will never have physically. However, you can sell it and get cash from the sale. 

The way to get Bitcoin that most people do is by mining. 

This mining allows you to get Bitcoin with only mathematical logic. 

However, apart from being a miner, there are other ways to get Bitcoin.

1. Buy Bitcoin on an official exchange

There are many companies that broker Bitcoin buying and selling

2. Read books on PaidBooks

With the PaidBooks site you can read books and get Bitcoin in return. There are more than 600 book titles available there.

3. Writing information about cryptocurrency

A hobby of writing? You can channel it on Coinality and Bitcointalk. There, you will get paid in Bitcoin as long as you write information about digital currency or cryptocurrency.

Bitcoin trading opportunities and risks

Owning Bitcoin can provide advantages or disadvantages. To be clear, check the following Bitcoin investment opportunities and risks.

Opportunity

In Bitcoin investing, the biggest advantage is a promising return. However, this is not always the case because of the many risks involved. 

Apart from returns, here are other Bitcoin investment opportunities and advantages:

  • The global network that makes Bitcoin is not only the target of traders from various countries.
  • It's more practical because you don't have to wait a long time to make a transaction.
  • It's safer because it implements a complex digital code that makes it difficult for hackers to penetrate this code.
  • It is free of transaction fees and is recognized in some countries as a means of payment for large-scale transactions.

Risk

One of the risks involved in Bitcoin trading is the absence of legal protection from the government. Because this currency is not recognized in the financial services industry. 

Here are some of the risks of Bitcoin trading :

  • Transactions are complicated so they are prone to errors that cause losses for investors.
  • The risk of loss is high because the prices are volatile.
  • There is no person in charge, including the party that houses the Bitcoin transaction
    Prone to fraud because not all Bitcoin transaction containers are registered or licensed.

Choosing to invest in Bitcoin is certainly very promising. However, if you look at the very high risk behind it, we better consider it several times.
 

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