What Is Bitcoin?

written by Geo Coelho

What Is Bitcoin?

A look at the world’s most valuable digital currency

Bitcoin solves the double-spend problem

Seventeen days before the 44th President of the United States, Barack Obama, officially took office, the world’s first decentralized digital currency was born. 

On January 3, 2009, the Bitcoin network officially came into existence. It’s inventor, a mysterious  character known pseudonymously as Satoshi Nakamoto. Nakamoto mined Bitcoin’s 0 Block or Genesis Block, with the note: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”

Bitcoin is a decentralized digital currency designed to operate autonomously, without need for third-party intermediaries to confirm and validate transactions. This means the currency operates outside the bounds of any government authority or central banking system.

Bitcoin solved the double-spend problem previously prone to digital transactions. The technological underbelly of the digital currency — its cryptographically secure, publicly distributed database — helps eliminate the need for trusted intermediaries in a digital, financial transaction.

Double spending is as the name suggests. It refers to the incidence of a user spending a balance of his or her digital currency more than once. This of course is fraudulent activity. It also creates a ledger issue and at minimum leads to a debased currency system and therefore must be eliminated, if possible.

How does Bitcoin work?

Blockchain technology is the backbone of Bitcoin. The blockchain is essentially a shared public ledger accessible to anyone that is connected to the network. 

For a transaction to be considered successfully completed and valid, it must be recorded in the Bitcoin blockchain. This is done via “miners.”

Bitcoin miners use massive amounts of computer processing power in order to solve the mathematical process required to validate transactions submitted to the Bitcoin network.

Those miners that complete the equation first are rewarded with a block reward and transaction fees. As a result they are financially incentivized to help power the Bitcoin network.

Miners are also key to the finite supply of Bitcoin being minted as mining is the only way to release new cryptocurrency into circulation.

What is BTC, really?

Bitcoin, or BTC, is the cryptocurrency that fuels the entire ecosystem.

A Bitcoin can be boiled down to a piece of computer code. This code can be stored in hardware or software designed to hold digital currencies such as a cold wallet or a digital wallet application.

A Bitcoin address is a destination for your bitcoin and can be generated through any Bitcoin wallet. Bitcoin addresses can begin with “1”, “3”, or “bc1” and are 26 to 35 characters long, composed of alphabetic and numeric characters.

To transact with Bitcoin, you just need to input the destination Bitcoin address, enter the amount as you would any other online transaction, and send it.

How to invest in Bitcoin

Investing in Bitcoin has never been easier. OKCoin is a globally licensed exchange. To start investing, all you need to do is sign-up via email, verify your account, and add banking information. You can start investing in Bitcoin right now.
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