How Bitcoin and other cryptocurrencies work

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Many have heard that cryptocurrencies are digital units. People have always thought about reforming the monetary system. But in the 90s, engineers and programmers thought about it, which significantly influenced the modern world. The task was to earn money, the mission of which would be uniform and predictable. It was necessary to solve the issue of transferring money between participants and take care of the security of storing money so that no one could steal it. Also the idea was to make a platform that belongs to no one.

The Internet gave all the possibilities for fast and safe transfer of money, but difficulties arose with other points. But as a result, a crypto-exchange was created. This is one of the main criteria for successful digital trading, so it is important to choose a reliable one, for example, cryptocurrency exchange Odos. There are other important selection criteria, but it is important to understand that the whole result will depend on the right exchange.

Why does the cryptocurrency belong to no one and no one controls them

There are many products in the world that no one owns: e-mail, the Linux operating system, and even the Internet. If standards are published and the license allows them to be used, and its code is open, then this standard is open and does not belong to anyone. It’s interesting that anyone can do it. Most cryptocurrencies are not owned by anyone, which means that they are not dependent on banks, politics, laws or religion. But still, it is impossible to carry out any fraudulent schemes, since cryptocurrencies are controlled by the blockchain.

How Bitcoin works

Almost everyone who studies the topic of crypto is wondering where Bitcoins come from? Example: you have two Bitcoins and you want to transfer one of them to a friend. He gives you his wallet number and you use a special program to generate a new transaction and sign it. And this transaction gets into the blockchain. And after that mining works. In fact, during mining, money is taken from nowhere according to predetermined rules. Below we have written a list of these rules:

  1. Users will not be able to prescribe a larger reward for themselves than it should be, and other participants will not accept its block in the chain.
  2. The user cannot prescribe more Bitcoins than he has, because everything is recorded in a common chain.
  3. A user can steal money from another user if he finds out his secret key and signs a transaction to transfer money to himself with this key.

In simple terms, Bitcoin is a huge single chain with blocks, where it is recorded who and to whom transfers Bitcoins. There are no wallets where cryptocurrency is stored.

What is provided by Bitcoin

Bitcoin is backed by the same thing that all government currencies are backed by – people’s trust. It all started with the fact that in 2008 an article was published where the rules for transferring Bitcoin transactions were described. Many engineers and programmers appreciated this idea and some of them became members of the Bitcoin network. At some point, a man appeared who wanted to have Bitcoin as a souvenir and offered one dollar for it. And from that moment on, Bitcoin had a market value and a rate. When this rate became stable, sellers of services appeared.

We can conclude that Bitcoin and other cryptocurrencies are developing and transforming very quickly. The ideal time for a deep study of this topic is now, because tomorrow it will be much more difficult to reach a high level.

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