How Does BitCoin Work?

Bitcoin working
Written by Rauf Saddique

This is brain stuff and I’ve got some bad news for you money is imaginary now I don’t mean that this printed piece of paper is make believe i can feel its texture and the ink even smudges off on my fingers but when you compare it to this other piece of paper what’s really the difference well one is a recognized currency and the other

isn’t and the reason why well people agree that this piece of paper is a dollar and has value that’s where money’s worth comes from we all pretend it’s a currency this is one reason why the digital currency Bitcoin appeals to some people see it’s not tied to any political system or government.

So it’s not vulnerable to any of their failings like the economic collapse in 2008 all it needs is for people to believe in it but lately well some people are having a crisis of faith that’s why today on brain stuff we’re going to quickly establish some facts about bit going to better inform your beliefs about it now basically its virtual money you can use to buy and sell things online and mimics real world limited resources like gold for instance it’s also a cryptocurrency meaning that it’s encrypted in a way that prevents it from being copy see every bit going transaction is recorded using a blockchain now that information acts like a ledger that is encoded onto the Bitcoin itself this prevents people from spending the same Bitcoin more than once since everyone else on the currency’s peer-to-peer network knows that it just was spent it’s essentially just a number associated with an Internet address you can store it on your phone or a hard drive until it’s used again now here are some ways you could acquire bitcoins accept them as payment for goods and services exchange them for a more traditional form of currency or you can mind them that’s right like gold bitcoins are mind not black or atomic grill brush vectors but by powerful computers and like gold the more people mine bitcoins the less there are to be found so they become harder to find so instead of physically mining with a pickaxe you could attempt to solve math problems for the computer imagine the problem is something like X plus y equals 15 now if you can figure out what x and y are congratulations you get a bitcoin with little competition the problems are easier to solve but when more people join the search you’ve got a race and the problems get way more difficult but as Bitcoin miners dwindle the math problems will get easier again to ensure the flow is steady their value is boosted and they remain inflation proof not all have been mind yet and we expect they won’t be until around 2140 so let’s say you heard all this and thought you know.

I want to grow up to be a professional Bitcoin miner and trader well there are a few risks you should probably know about first for instance because there’s no regulatory agency setting a bit coins value it tends to fluctuate wildly another Bitcoin problem is security now actually the format itself is fine but that doesn’t protect it from hackers who target the banks and exchanges that deal in bitcoins again this isn’t the fault of the currency if a bank was robbed you wouldn’t blame the dollar bill for getting stolen right so Bitcoin has its lumps in’ for it to become widely used its volatility needs to settle down quite a bit it’s currently a high-risk currency that’s totally unpredictable and we didn’t even get into the mysterious identity of bitcoins founder satoshi nakamoto now personally I think the biggest drawback to bitcoin is that you just can’t make it rain.

If you’d had experiences with Bitcoin let us know in the comments below and let us know if there are any topics you’d like us to cover.

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Rauf Saddique

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