Bitcoin, Blockchain and Mining explained

Bitcoin is a new currency that was created in 2009 by an unknown person using the alias Satoshi Nakamoto. Transactions are made with no middle men – meaning, no banks! There are no transaction fees and no need to give your real name. – 1

HOW DOES IT WORK?

A transaction is a transfer of value between Bitcoin wallets that gets included in the block chain. Bitcoin wallets keep a secret piece of data called a private key or seed, which is used to sign transactions, providing a mathematical proof that they have come from the owner of the wallet.

HOW DO I GET BITCOIN?

Here’s the fastest way to get started with Bitcoin:
Step 1: Create a Bitcoin Wallet. A Bitcoin wallet allows you to start buying Bitcoin right away.
Step 2: Put Some Bitcoin in Your Wallet.
Step 3: Start Using Bitcoin.

1

Read: https://bitcoin.org/en/
Read: https://blockchain.info

HOW DO I BUY A BITCOIN?

Sign up for Coinbase – This first step is to sign up for a Coinbase account.
Connect Your Bank Account – After you sign up, connect your bank account.
Buy and Sell Bitcoin. – 1

Coinbase is one of the world’s largest Bitcoin exchanges – https://www.coinbase.com

You can withdraw from your Coinbase based on your bank connection.

DOES BITCOIN HAVE ANY VALUE?

Bitcoins do not have value as a physical commodity like gold and are not widely accepted as legal tender like dollars. In short, people accept and trade in Bitcoin because other people accept and trade in Bitcoin. It is recognized and accepted as a currency by many. Bitcoin is decentralized and limited. – 1

1 Bitcoin equals 522928.89 Vanuatu Vatu – 1

HOW ARE BITCOINS ARE MADE?

New bitcoins are generated by a competitive and decentralized process called “mining”. This process involves that individuals are rewarded by the network for their services. Bitcoin miners are processing transactions and securing the network using specialized hardware and are collecting new bitcoins in exchange.

Quartz (qz.com)

Every ten minutes or so mining computers collect a few hundred pending bitcoin transactions (a “block”) and turn them into a mathematical puzzle. The first miner to find the solution announces it to others on the network. The other miners then check whether the sender of the funds has the right to spend the money, and whether the solution to the puzzle is correct. If enough of them grant their approval, the block is cryptographically added to the ledger and the miners move on to the next set of transactions (hence the term “blockchain”). The miner who found the solution gets 25 bitcoins as a reward, but only after another 99 blocks have been added to the ledger. All this gives miners an incentive to participate in the system and validate transactions. Forcing miners to solve puzzles in order to add to the ledger provides protection: to double-spend a bitcoin, digital bank-robbers would need to rewrite the blockchain, and to do that they would have to control more than half of the network’s puzzle-solving capacity. Such a “51% attack” would be prohibitively expensive: bitcoin miners now have 13,000 times more combined number-crunching power than the world’s 500 biggest supercomputers. – 1

HOW DO I BECOME A BITCOIN MINER?

Purchase custom mining hardware.
When Bitcoin first started, it was possible to mine using only your desktop’s CPU and GPU.
Obtain a bitcoin wallet.
Secure your wallet.
Decide between joining a pool or going alone.
Download a mining program.
Run your miner.
Keep an eye on temperatures.
Check your profitability.

CAN YOU BUY A FRACTION OF A BITCOIN?

Firstly, yes, you can buy fractions of Bitcoin. Each Bitcoin is divided into 100 million units, each called a ‘satoshi’. If you’re looking how to buy fractions of Bitcoin, the process is similar to buying a full Bitcoin. You can also sell Bitcoins via Coinbase, and you can use it as a convenient online Bitcoin wallet. – 1

WHAT IS A BLOCKCHAIN

A digital ledger in which transactions made in bitcoin or another cryptocurrency are recorded chronologically and publicly. Computer connected to the Bitcoin network using a client that performs the task of validating and relaying transactions gets a copy of the blockchain, which gets downloaded automatically upon joining the Bitcoin network.

World Economic Forum

HOW DOES BLOCKCHAIN WORK

So the blockchain system has been designed to use nodes agreement to order transactions and prevent the fraud described above. The Bitcoin network orders transaction by putting them together into groups called blocks, each block contains a definite amount of transactions and a link to the previous block. – 1

Source: PWC

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