Important questions about Bitcoin
everyone should know Bitcoin is a decentralized digital currency without a central bank or single administrator that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries. Network nodes confirm transactions through cryptography and a public distributed ledger which is called a blockchain records them.
Bitcoin is one-of-a-kind because there is a finite number of them: 21 million.
Bitcoins are a reward for a process called mining.
What is Bitcoin mining?
Bitcoin mining is the process of verifying and adding transactions to the public ledger known as the blockchain as well as releasing new bitcoin.
Mining is a process that anyone with an internet connection and the right hardware can do. The mining process involves compiling recent transactions into blocks and trying to solve a computationally difficult puzzle. The individual who solves the puzzle first gets to place the next block on the blockchain and earn the rewards.
The benefits that encourage mining are transaction fees for the transactions included in the block as well as newly released bitcoin.
Who developed Bitcoin?
Satoshi Nakamoto is the name used by the unknown person or people who designed bitcoin and created its original reference implementation. As part of the implementation, Nakamoto also devised the first blockchain database. Bitcoin was developed by Satoshi Nakamoto a pseudonym for an individual or group of individuals in 2009. The true identity of Satoshi Nakamoto has never been revealed and it is unclear if Nakamoto is a single person or a group of people. Nakamoto released the Bitcoin white paper in October 2008 and the first Bitcoin block was mined in January 2009. Nakamoto is estimated to own approximately one million Bitcoins worth over $10 billion as of December 2017.
Who governs Bitcoin?
Bitcoin is a decentralized currency meaning there is no central authority that governs it. Instead, it is governed by the network of users who use it. There are a few key individuals and organizations who play a role in the governance of Bitcoin but ultimately it is up to the users to decide how the currency is used and what direction it goes in. A Bitcoin wallet is a digital space where you can store your Bitcoin. A Bitcoin wallet is a digital storage space for your Bitcoin holdings. It can take the form of a software program that stores your Bitcoin in a digital format and allows you to transact with other users. It can also take the form of a physical device such as a USB drive or even a physical piece of paper! No matter what form it takes your Bitcoin wallet is essential to owning and using Bitcoin.
How can you choose a Bitcoin wallet?
When choosing a Bitcoin wallet you will need to consider a few different factors.
First, you will need to decide whether you want a hot wallet or a cold wallet. Hot wallets are connected to the internet and are therefore more vulnerable to hacking. Cold wallets are not connected to the internet and are therefore more secure. They can be more difficult to use though.
Second, you will need to decide whether you want a custodial wallet or a non-custodial wallet. Custodial wallets allow you to store your Bitcoins on someone else's servers. Non-custodial wallets allow you to store your Bitcoins on your own device.
Finally, you will need to consider the fees associated with each type of wallet. A Bitcoin address is a digital code that allows you to receive or spend Bitcoins. A Bitcoin address is a single-use token that can be used to send and receive payments. Think of it as a physical address or an email address. It provides the equivalent of a physical mailing address which allows you to receive Bitcoin from other people. Once you have a Bitcoin address you can share it with others so they can send you Bitcoin. A Bitcoin address is a long string of numbers and letters that looks something like this: 1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2.
Can Bitcoin users remain anonymous?
Bitcoin is not entirely anonymous. When you make a transaction your IP address and wallet information are recorded on the blockchain. However, your personal information is not attached to your Bitcoin address so it is possible to be relatively anonymous when using Bitcoin. There are also ways to further increase your anonymity such as using a VPN or TOR.
Can I use my computer to mine Bitcoins?
Yes, you can. However, it's not profitable to do so anymore since the mining difficulty has increased so much that you'd likely spend more on electricity than you'd earn in Bitcoin. If you're still interested in mining Bitcoin you can do so through a cloud mining service like Genesis mining or Hashflare. That's all for this post. I hope it was informative and helpful. If you have any questions about Bitcoin feel free to leave them in the comments below and I'll do my best to answer them.