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What is the bitcoin blockchain?

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What is bitcoin and what does it mean?

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Bitcoin is a digital currency that debuted in January 2009. It follows the ideas laid out in a white paper by the mysterious and pseudonymous Satoshi Nakamoto.12 The identity of the person(s) who created the technology remains a mystery. Bitcoin offers the promise of lower transaction fees than traditional online payment mechanisms and is governed by a decentralized authority, unlike government-issued currencies.

  • Bitcoin is classified as a cryptocurrency since it is encrypted. There are no real bitcoins; instead, balances are kept on a public ledger that everyone can see (although every record is encrypted).
  • Bitcoin is not issued or backed by banks or governments, and an individual bitcoin has no value as a commodity. While not legal tender in most parts of the world, Bitcoin is hugely popular and has led to the launch of hundreds of other cryptocurrencies, collectively known as altcoins
  • All Bitcoin transactions are verified with enormous amounts of computing power through a process known as "mining". 
  • Bitcoin is abbreviated as BTC when traded.


4 Facts about bitcoin.

1. Bitcoin is the world's largest cryptocurrency by market capitalization, launched in 2009.

2. Unlike traditional currency, Bitcoin is generated, distributed, traded and stored using a blockchain, which is a decentralized ledger system.

3. Bitcoin's history as a store of value checked; it has experienced several booms and busts in its short existence.

4. Bitcoin, the first virtual currency to gain worldwide acceptance and success, subsequently spawned a number of other cryptocurrencies.

 

Understanding the bitcoin blockchain

The Bitcoin system consists of a collection of computers (also known as "nodes" or "miners") that work together to run the Bitcoin code and maintain the blockchain. In a metaphorical sense, a blockchain can be thought of as a collection of blocks. A series of transactions is contained within each block. No one can game the system because all computers running the blockchain have the same list of blocks and transactions and can view new blocks filled with new Bitcoin transactions transparently.


Whether they are running a Bitcoin "node" or not, anyone can see these transactions happening in real-time. To commit a bad act, a bad actor would need to use 51% of the computing power that makes up Bitcoin. As of mid-November 2021, Bitcoin has around 13,768 full nodes and that number is growing, making such an attack highly unlikely.


But if an attack does occur, Bitcoin miners, the people who join the Bitcoin network with their computers, will likely leave a new blockchain, wasting the effort of the bad actor to carry out the attack.


Bitcoin token balances are protected using public and private keys, which are long strings of numbers and letters linked by the mathematical encryption algorithm that created them. The public key (comparable to a bank account number) serves as a globally published address to which others can send bitcoin. 

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