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From its introduction to the public in the year 2009, bitcoin gained popularity and is now a widely used cryptocurrency in the world. The inventor might be an anonymous developer or a group of developers, using the name Satoshi Nakamoto. It further inspired the development of many other cryptocurrencies. Now it is the largest cryptocurrency by market capitalization.
Bitcoin is not a physical currency and uses a decentralized blockchain network for its creation and distribution. Cryptocurrency exchanges help you in buying bitcoins. No bank or any other government agency controls the transitions of bitcoin.
In due course, many countries legalized the usage of bitcoin. The country El Salvador even adopted the coin as a legal tender. Ukraine used the currency to raise donations from the international community while resisting the Russian invasion. Similarly, Iran used bitcoin to circumvent the effect of sanctions imposed on it.
How does Bitcoin work?
Blockchain is the underlying technology that stores a record of all BTC transactions. It’s an immutable public distributed ledger stored and maintained by a network of full nodes. The name Bitcoin is used interchangeably to refer to the blockchain network and the cryptocurrency that powers it. More precisely though, Bitcoin with a capital B is referring to the network, while Bitcoin used with a minor b is describing the asset.
New bitcoin is created through a process called mining. In the beginning, miners could use moderately powerful devices like CPUs and GPUs. As the number of Bitcoin miners increased, the difficulty of finding new blocks rose to the point that miners now need ASICs to mine profitably.
Processing power is needed to provide the necessary proof of work. This is the work that miners (another type of bitcoin node) need to perform to verify and add blocks of transactions to the blockchain by running software with unique hardware. They use mining software to “listen” for transactions broadcasted across the network and compete to generate the mathematical proof of work by generating hashes, which are not difficult to perform but energy intensive. That is why they require specialized mining hardware called application-specific integrated circuits (ASICs).
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