What is Bitcoin?
If you have watched the news recently, you’ve probably heard the word Bitcoin. But just what is Bitcoin? And where did it come from?
What is Bitcoin?
Bitcoin is a digital currency or software which can be used for peer to peer transactions. Bitcoin is famous because it is decentralized, meaning no one company or government oversees the coin, rather it is governed by a ledger which records all Bitcoin transactions as they process. This ledger is made possible because of something known as blockchain technology.
History of Bitcoin
Where did Bitcoin come from? Bitcoin was created in 2008 by someone, or a group of people, going by the pseudonym Satoshi Nakamoto. After the Bitcoin blockchain was launched, Satoshi Nakamoto faded into oblivion and has not been heard from since. To this day, no one knows the real identity of the creator of Bitcoin.
Satoshi Nakamoto got many of his ideas for Bitcoin from the cyberpunk online community, as well as from Bit gold, which was another digital project in the early 2000’s which included many similar software aspects to Bitcoin.
How Does Bitcoin Work?
Bitcoin is run by people with large computers known as miners. These miners run their computers around the clock to verify the transactions of people using the blockchain. This verification process is known as proof of work, as the computers verify that work has been done, and it is this consensus method which enables Bitcoin to remain decentralized.
When you want to send Bitcoin to a friend, you get their address and input it into a section of your Bitcoin wallet which is used to send money. The transaction is then encrypted and sent to the miners of Bitcoin. What these miners do is run fancy computers which verify transactions just like yours. Your transaction is verified when these computers check to make sure you actually own the Bitcoin you are trying to send and all the nodes agree (this is the consensus method). Once the transaction has been verified, it is added to a block of data with an assortment of other transactions. When the block is full, it is uploaded to the blockchain. Your friend will then see the Bitcoin you sent in their wallet.
Of course there are a lot of other complicated algorithms involved in a Bitcoin transaction, but this is the basics of how it works. If you want to learn more about different cryptocurrencies, and the science behind them, visit Stably’s website at Stably.io.
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