Bitcoin (BTC) is a digital (crypto) currency created in 2009. Bitcoin operates without control from banks or governments, and transactions are made directly between users (peer-to-peer). This currency was created by an individual or group using the pseudonym Satoshi Nakamoto.
Here is a summary of how Bitcoin works:
How Bitcoin Works
· Blockchain: All Bitcoin transactions are recorded in a public digital ledger called the blockchain. These records are transparent, secure, and immutable.
· Digital Wallet: Bitcoin is stored in a digital wallet. This wallet holds the private keys that function like a digital signature to prove ownership and carry out transactions.
· Mining: The process of validating transactions and adding them to the blockchain is called mining. "Miners" use advanced computers to solve complex mathematical problems, and in return, they receive new Bitcoin.
Key Characteristics of Bitcoin:
· Decentralized: Not controlled by any central authority or institution.
· Limited Supply: The number of Bitcoin that will be created is limited to only 21 million coins, making it scarce.
· Divisible: 1 Bitcoin can be divided into 100 million smallest units called satoshi.
What is the Use of Bitcoin?
Bitcoin has several key functions:
· Medium of Exchange: Can be used to buy goods or services from merchants that accept it, especially online.
· Store of Value: Many people view Bitcoin as "digital gold" due to its scarcity, making it a long-term investment.
· Transfer Tool: Enables the quick transfer of money across countries at relatively low costs.
⚠️ Risks to Consider
Before getting involved with Bitcoin, understand the risks:
· High Volatility: Bitcoin prices can fluctuate drastically in a short period. This is a high-risk investment.
· Wallet Security: If the private key of a digital wallet is lost or stolen, your Bitcoin cannot be recovered. No one can restore it.
· Not Widely Accepted: Acceptance as a payment method in the real world is still limited.
· Evolving Regulations: Regulations related to cryptocurrency continue to change in various countries.
