What is Bitcoin

All About Cryptocurrencies: What is Bitcoin?

Bitcoin had been available than what you think of. It has been present ever since 2009 and it sprung from the idea of the mysterious Satoshi Nakamoto’s white paper. What Bitcoin really is that a cheaper alternative from the traditional online payments and transactions and is closely governed by decentralized authority.

See also: Cryptocurrency: An Introduction to Digital Currencies

If you’re wondering, there are no physical Bitcoins available for purchase; they only exist in balances associated with public and private keys. These are then kept in a public ledger, along with all Bitcoins transactions that were verified by a massive amount of computing powers.

The terms used for recording Bitcoins are “keys”. These “keys” are number and letter that are linked through a mathematical encryption algorithm. Public Keys are the locations used for Bitcoin sending, while Private Keys are meant to safeguard your account and are just used to authorize Bitcoins Transmissions. You can say that the Public Keys are the bank account number, while Private Keys are similar to ATM pin numbers.

Bitcoin Mining

What is Bitcoin Mining?

Bitcoin Mining is the act where new cryptocurrencies are released. The process of Bitcoin mining involves collating previous transactions into blocks and trying to solve a computationally difficult puzzle. The catch is you have to be the first one to solve the puzzle gets to place the next block on the block chain and claim the rewards; the mining also gives the miner Bitcoin accompanied with the newly released cryptocurrency.

Bitcoin Mining is decentralized, anyone in the world with the proper tools and internet can mine. Bitcoin’s security is solely dependent on this decentralization, every move and decisions made are based on a consensus.

But how hard it is to mine Bitcoins?

It actually depends on how much effort you put in if you choose to follow the software innate protocol, the Bitcoin network mining comes for two weeks or so, but the network constantly and automatically updates the difficulty of mining. It keeps the difficulty on a rate that can stabilize the discovery of a new block.

One reason why the mining’s difficulty is always updated is because; the harder the level is the less profitable mining is for miners, and the more people mining, the less profitable mining is because of the distribution to each miner. The payout is always dependent on a number of transaction fees, the block reward, and of the price of Bitcoin; the more people mining means more people will share and split of the profit.

Read also: Managing Risk in Cryptocurrencies


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