Are you tired of constantly hearing about Bitcoin’s price skyrocketing one moment and plummeting the next, yet still struggling to grasp what it actually is and why everyone is so obsessed with it?
In this article, we will explore what a Bitcoin is, the technology that powers it, and how it works. We’re also going to cover why this technology is considered groundbreaking and why there’s so much hype around it.
So, strap in and get ready to explore the asset that’s shaping the future.
What is a Bitcoin
Bitcoin is a digital asset that operates primarily on a decentralized, cryptographically secured system called a Blockchain. Let’s break that down into bite-sized pieces so you can kind of grasp the concept behind this groundbreaking asset.
Bitcoin as a digital asset: Bitcoin, unlike traditional physical assets (e.g gold, cash, etc.), is created, stored, and distributed on the internet. There are no physical Bitcoins in existence and the asset doesn’t come with a certificate of ownership.
What is a decentralized framework/system: A decentralized framework is a system that is governed and operated by multiple entities, with no single entity having complete control.
The relevance of cryptographic security: Cryptographic techniques employ advanced mathematical algorithms and protocols to encrypt data, making it unreadable and inaccessible to people who don’t have the correct authorization key.
Putting everything together, we can conclude that Bitcoin is a digital asset that operates on a fully transparent yet highly secure technology, which is publicly distributed.
Who created Bitcoin
The true identity of Bitcoin’s founder remains unknown to this day. However, the asset’s whitepaper and original software were created by an individual or group using the pseudonym Satoshi Nakamoto.
Over the past two decades, several individuals have publicly claimed to be Satoshi Nakamoto, with Australian businessman and computer scientist Craig Wright being the most recent.
Wright’s claims of being Satoshi Nakamoto were later investigated and proven false. It was discovered that a majority of the evidence he presented to back up his claims were fabricated.
How does Bitcoin work
Bitcoin is created, stored, and transmitted on a decentralized public ledger called the Blockchain. This technology is the groundbreaking element driving the Bitcoin innovation.
So how does this “Blockchain” work?
The Blockchain acts as a digital ledger which records comprehensive data about operations performed on it. What differentiates it from traditional ledgers is that it is not controlled by a single entity and new data added to the record is securely encrypted such that it cannot be altered or replicated.
This is one of Bitcoin’s main selling points: the fact that every transaction performed using the asset is available for anyone to see, and these records are tamper-proof.
Bitcoins on the Blockchain are allocated among various holders. These holders have unique authorization keys which grant them access to their coins stored on the network.
When a transfer is made from one holder to another, the transaction is broadcast throughout the network to entities who hold a copy of the complete ledger (otherwise known as nodes) and the ledger is updated to reflect this change.
This new transaction, together with other new transactions, is added to a block. Miners then compete to solve a complex mathematical problem, and the first to succeed adds said block to the existing chain.
