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What is Bitcoin? and How does Bitcoin work?


What is Bitcoin? 

Bitcoin is a decentralized digital currency that permits fast payments to anybody, anywhere globally. Peer-to-peer technology is used by Bitcoin to operate decentralized, with the network managing transactions and creating new bitcoin.

What is Bitcoin


The majority of issues with the present banking system are addressed with bitcoin:

  • Permissionless and international transactions are features of bitcoin. Anyone on the globe can install the software.
  • Anonymous: Since using Bitcoin does not require a valid ID, it is suitable for those who lack access to banking services, value their privacy, utilize computers, or reside in regions with weak financial infrastructure.
  • Private: Bitcoin can enable robust financial privacy when utilized carefully.
  • Censorship-resistant: No transaction, regardless of its size, can be frozen or blocked by anyone.
  • Fast: Data may go over the Internet almost as quickly as transactions.
  • Cheap: Fees may be extremely minimal.
  • Once decided, irreversible, like money (but consumer protection is still possible.)
  • 24 x 7 x 365 days a year, available online at all times.

              Some interesting facts

              • Only 21 million bitcoins will ever exist.
              • Have no storage costs.
              • Easy to protect and hide. Can be stored on a phone, computer encrypted on a paper backup, or memorized in your head.
              • No counterparty risk. If you keep the seed phrase of a bitcoin wallet secret.
              • Can be under divided possession with Multisignature.
              • The original Bitcoin software by Satoshi Nakamoto was released under the MIT license. Most client software derived or "from scratch", also uses open-source licensing.

              What Is Multi-signature (multi-sig)?

              • It refers to requiring multiple keys to authorize a Bitcoin transaction, rather than a single signature from one key. It has a number of applications.
              • Dividing up responsibility for possession of bitcoins among multiple people.
              • Avoiding a single point of failure, making it substantially more difficult for the wallet to be compromised.
              • m-of-n backup where the loss of a single seed doesn't lead to loss of the wallet.

              How does Bitcoin work?

              • Bitcoin processes and verifies payments using public-key cryptography, peer-to-peer networking, and proof-of-work. 
              • Each user may have a large number of addresses, and bitcoins are sent (or signed over) from one address to another. 
              • To prevent the contained bitcoins from being used twice, every payment transaction is broadcast to the network and recorded in the blockchain. 
              • The enormous computing power that keeps expanding the blockchain locks each transaction in time after an hour or two. These methods allow everyone to access Bitcoin's quick and incredibly secure payment network.

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