Over the last decade, the demand for cryptocurrencies has skyrocketed. Crypto has caught the interest of speculators and seasoned investors alike. And amid all the hype, Bitcoin has secured a sweet spot in the popular imagination.<\/p>\n
In this article, we delve into the workings of Bitcoin. Because while it generates billions in profits, the pioneering crypto poses some significant environmental concerns. Understanding what is Bitcoin and how it works, is always the first step towards the ‘DYOR’ crypto philosophy. And you should always do your research before investing!<\/p>\n
Bitcoin is not any other coin that you can carry around in your wallet. It\u2019s a virtual currency programmed by thousands of individual programmers who believe in the concept of it.<\/p>\n
Bitcoin is a virtual currency or decentralized digital asset. It can be sent or received using blockchain technology in a peer-to-peer fashion. The term Bitcoin is also used to refer to the underlying blockchain network itself. (On this blog, we usually use Bitcoin when we are referring to the network, and Bitcoin when we are referring to the coin).<\/p>\n
Bitcoin has been revolutionary since its inception because it found a way to bypass the need for a centralized authority, like central banks, to transact. All the transactions are recorded on a public distributed ledger called a blockchain. All transactions can be tracked using this ledger.<\/p>\n
An unknown individual or group of individuals called Satoshi Nakomoto <\/span>created Bitcoin in 2009. Satoshi was behind the white paper that was released during the coin\u2019s launch, setting the crypto ball rolling.<\/span><\/p>\n Bitcoin has since turned into one of the most lucrative ventures in the world but\u00a0the identity of Satoshi remains shrouded<\/span>.<\/p>\n At the heart of Bitcoin\u2019s operation is what is called mining. Bitcoin Mining<\/a><\/strong> is the process by which new bitcoins come into circulation and new transactions are verified. That\u2019s two birds with one stone. Here\u2019s explaining how it works.<\/p>\n Each BTC transaction is grouped into blocks along with other transactions. These blocks in turn form a chain-like digital record\u2014called a blockchain. This record is accessible to all users. Once the transactions are recorded, they cannot be changed, modified, or deleted. This makes blockchain tamper-free (that is, immutable).<\/span><\/p>\n When a Bitcoin transaction takes place, data about that transaction is added to a block. And through mining, that block of data is verified and added to the chain.<\/p>\n The verification and updating of these blocks are done independently by people called miners. These miners are rewarded each time they successfully mine a block. The reward is new bitcoin\/s that the miner can hold or sell.<\/p>\n Now, every user has an equal opportunity to add new blocks and they are motivated to mine by the incentive on offer. But when there are many competitors, how do we know which user gets to mine a block and earn the reward? All miners get to compete to solve the hash or complex mathematical equation.<\/p>\n The decentralized nature of the network and the complexity of the hash ensure that no two users can find the answer at the same time. The person who succeeds is said to have mined a BTC.<\/p>\n That\u2019s how BTC ensures that the number of bitcoins in circulation keeps increasing and transactions keep getting verified.<\/p>\n There is a problem that arises due to the fact that users are incentivized to participate in mining. The problem is this: the number of bitcoins in circulation too will be on the rise. And over time, as the supply keeps rising with continuous mining, Bitcoin can turn inflationary and cause its value to drop. To prevent this, the Bitcoin blockchain has a safeguard that counters the possibility of inflation. The safeguard is known as halving.<\/p>\n BTC halving<\/strong><\/a> is a regulative measure in the mining process that ensures that every four years, the block rewards for mining are cut in half. This is a way for the rewards system to limit the bitcoins in supply. The reward for the final bitcoin mined will be zero in value.<\/p>\n In comparative terms, halving ensures that the mining process is like traditional mineral mining. With intensive mining, the availability of resources is reduced. This naturally limits the mineral\u2019s supply. The reduced supply in turn boosts the value of the mineral in supply. Likewise, BTC mining guarantees that crypto\u2019s value keeps rising.<\/p>\n So now that you know a fair bit about BTC, let\u2019s sum up the key plus points.<\/p>\n There are a plethora of ways to get BTC but the easiest way is still buying on financial investing platforms like CoinSwitch. With CoinSwitch all it takes is 5-7 mins to get your KYC approved and start trading. <\/span><\/p>\n Because of the high computational power computers needed for Bitcoin mining, and due to the fact that millions of users are involved, the energy demands of the crypto giant are concerning. As mining increases, the computational power required to create new coins also keeps going up. To sum it up, Bitcoin mining and other transactions involved come with significant costs for the environment.<\/p>\nHow does Bitcoin work?<\/b><\/h2>\n
What is Bitcoin halving, and how does it work?<\/b><\/h2>\n
What are some great things about Bitcoin?<\/b><\/h2>\n
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How to get Bitcoins?
<\/span><\/h2>\nBitcoin and its environmental impact<\/b><\/h2>\n