Hello and welcome to a new Cryptomatics episode! Today, I will explain what exactly Bitcoin
is, how does it work, what mining is, and how safe it is to invest in Bitcoin. What is Bitcoin? Bitcoin is the first digital currency
and it was created in 2009. Since it is decentralized, it doesn’t require the help of
intermediaries such as banks or governments. Instead, it uses a peer-to-peer computer
network which confirms the transactions made. Fiat money, which is the money you have
in your wallet or on your credit card, is supported and regulated by the government. In the past, money were solely representative, meaning money in circulation were corresponding to
reserves of gold or silver which they represented. Instead, Bitcoin relies on
peer-to-peer technology, which is a network of people,
and software-driven cryptography. This means that Bitcoin is backed,
not by gold or silver, but by a code.
How Does Bitcoin Work? You can imagine Bitcoin being a computer
file that you own in your digital wallet app. You can send Bitcoin to your
digital wallet or to other people. All transactions are registered in a list that is
public and which bears the name of “blockchain.” As a result, the history of every Bitcoin
is known, which is meant to stop people from committing fraud since authorities simply need to
follow the cryptocurrency through the blockchain. How Is New Bitcoin Being Created? New Bitcoins enter circulation through mining. Mining means solving computationally difficult
puzzles in order to discover a new block. Once the new block is discovered,
it becomes part of the blockchain.
Bitcoin mining also means adding and
verifying transactions on the network. In return, a miner receives some Bitcoin – though,
every 210,000 blocks, the reward is halved. So if you received 50 Bitcoins for mining in
2009, now the reward is worth only 6 Bitcoins. In order for mining to happen, computer
chips are used, like Application-specific integrated circuits(ASICs) and Graphics processing units(GPUs.)
Is Bitcoin Safe? Every Bitcoin transaction is being recorded
on the blockchain, which is public, meaning that it is really hard to copy
Bitcoins, create fake ones, or steal them. Still, there are things that can happen,
such as forgetting your wallet password, and there are cases of theft, although
we should mention they are rare, especially compared to the theft of fiat money. One of the things that is used
against Bitcoin is its volatility, since its price is being driven by demand, and has
notoriously gone up and down through the years. Bitcoin is often compared to fiat money, but, overall, it seems that using
Bitcoin may actually be a lot safer.
Conclusions Bitcoin is the first cryptocurrency ever
created, and after more than a decade, it still dominates the market, having the largest
market capitalization out of all cryptocurrencies. Old school investors may shun it,
but new investors tend to embrace it, which means that the chances of Bitcoin
being here to stay are ever-increasing. I hope you enjoyed today’s video, and if you have other questions about Bitcoin,
don't hesitate to tell us in the comment section. So much for today, don't forget to
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latest concepts in the crypto sector..
