An Introduction to Bitcoin

During the 21st century, a revolutionary new cryptocurrency was created – Bitcoin. Bitcoin is a digital currency created by Satoshi Nakamoto in 2009 with the intent of creating a payment method that did not have to rely on third party confirmation. In addition to this, Bitcoin was also a response to the Great Financial Crisis which was caused due to the heavy reliance on banks as middlemen for transactions. Because of this, Bitcoin has lower transaction fees and is controlled by Bitcoin users around the world.

Bitcoin is completely controlled by via computer by Bitcoin miners, storing Bitcoin in its blockchain. Investopedia defines that a blockchain can “be thought of as a collection of blocks. In each block is a collection of transactions. ” Every miner’s computer has access to this blockchain and can see the transactions occurring within them, making the system almost impossible to cheat. The only way someone could cheat the system would be if they operated 51% of Bitcoin’s computing power. However, the miners that make up the other 49% would be able to fork to a new blockchain, making the attacker’s attempts futile.

Bitcoin mining is the process in which Bitcoin miners introduce new Bitcoin into circulation. This is done through adding new blocks to the Bitcoin blockchain. Discovering these blocks takes computational power to solve complex puzzles. The most common hardware component used for mining is a graphics card (GPU) because of its high-computational power compared to other computer parts. Some miners set up mining rigs, which are computers with dozens of GPUs with the purpose of discovering new blocks.

Sources:
https://www.investopedia.com/terms/b/bitcoin.asp
https://financialgym.com/blog/2021/1/2/bitcoin-101-what-is-bitcoin-and-why-was-it-created

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