Bitcoin how it works

Bitcoin how it works

Talking to a friend you learned about the existence of Bitcoin.Bitcoin how it works? What intrigued you and now here you are, on my site, eager to learn more, or better understand how the whole system on which this cryptocurrency is based and how to use it can be exploited. I am wrong? No, here. Well, given the situation I can not help but suggest you take a few minutes of free time all for yourself, to make yourself comfortable and to concentrate on reading this guide of mine entirely dedicated to the subject.

In the following lines it will in fact be my concern to explain to you what exactly Bitcoins are, how to make them to earn (or buy) and obviously also how and where to spend them. In short, at the end of this article you will have a pretty complete picture about it and, if you want, you can finally venture into the world of cryptocurrencies going to put the same concepts into practice.

Then? Do you want to go to the point and deepen the topic? Yes? Very well! So I would say that I do not waste any more precious time, that we have to talk away and start immediately to get busy. Put yourself in front of your trustworthy PC and read the instructions I am about to give you. I am sure that in the end you will not even have a single doubt about the operation of Bitcoin and you will even be ready to provide any explanations to other acquaintances of yours who are interested in the thing. What do you think we bet?

Bitcoin how it works Notion Basics

Bitcoin how it works

Let’s start from the basics. The Bitcoin, as I told you at the beginning, are a cryptocurrency, or a type of digital currency (it is not the only one but it is certainly the most widespread at the time) that can be generated by exploiting the computing power of computers. Like the euro, Bitcoins can be used for the sale of goods and / or services.

With this exception, Bitcoins are profoundly distinguished from “traditional” currencies for various reasons. First, they do not have a central bank or an entity that acts as an intermediary between the people who exchange them because everything is based on an open source peer-to-peer network that uses a database distributed among users’ computers, the so-called nodes. This database contains all the transactions that took place on the Bitcoin network and can be consulted by anyone.

At this point I’m sure you’re wondering if Bitcoins are legal or not. If so, know that the answer is affirmative. Bitcoins are in fact legal all over the globe, the regularity of transactions is guaranteed by a system of public key cryptography thanks to which users are unable to spend the same coins for several times or in any case to make up the purse (the tool that it must be used to collect the Bitcoin possessed) of which one is not actually owner. In short, everything under control!

As far as the value question is concerned, that of the Bitcoin oscillates in a perennial manner. In order to monitor it, it is necessary to refer to specific services that show the current assessment on all the main exchange markets of the Network. Also know that, contrary to what one might think, the value of Bitcoins is not infinite. A maximum of 21 million is foreseen and every four years the quantity of coins generated is halved on the basis of a deflationary rule.

Bitcoin how it works – Bitcoin purse

Bitcoin how it works

As anticipated a few lines more on, all the Bitcoins owned must be collected within a dedicated digital wallet (which is a sort of client), what in technical jargon is called wallet, and which therefore allows to make and receive payments Bitcoin . Of digital wallets for Bitcoins there are several, you can choose the one that best suits you among the various available on the net and follow the instructions contained therein to open your Bitcoin purse.

Among the various clients available, Bitcoin Core is undoubtedly the most widespread. You can download it for free from the Bitcoin.org website, on which several other clients are also available for all major operating systems, including mobile ones.

Returning to Bitcoin Core, this is a multi-platform software (therefore compatible with Windows, Mac and Linux) from the operation quite elementary. Once downloaded, install it by starting the .exe package obtained and always click on Next. If you are using a Mac, you must drag the program’s icon to the Applications folder. Subsequently, regardless of the operating system, start the software and indicate the folder in which to save your wallet.

Once this is done, I suggest you to immediately put your purse safe by enabling the encryption function by going to the Settings menu and then clicking on Encrypt purse. In order to prevent future problems from occurring, I also suggest, from time to time, to create backup copies by invoking the item Backup wallet always attached to the application menu.

Another very important thing that I advise you to do when you use Bitcoin Core or any other wallet is to wait for the program to completely synchronize with the cryptocurrency network so that the blockchain is downloaded onto the computer in use. bases the system, which is the database in which all Bitcoin transactions are recorded.

As easily deducible from the name itself, the blockchain is structured in blocks. These blocks are unique and contain a fixed number of coins plus the public keys of the person making the transactions and the data of the previous block. The number of Bitcoins created per block was initially 50 but this number has been programmed for every four years, as mentioned at the beginning of the article. How to know the estimated date for the next change in the value of the blocks? Simple: visit the dedicated Bitcoin Clock site.

Instead, to know the address of your purse (which is essential to send and receive money) you have to go to the File menu of the program and click on Receiving addresses. If you want, you can also create custom (but still belonging to the same wallet) simply by clicking on the New button.

Bitcoin how it works – Generate Bitcoin

Now that it is finally clear to you what the Bitcoins are and how to keep them and exploit you are finally ready to move on to the next chapter, the one about how to generate this cryptocurrency.

In theory it is possible to generate new Bitcoins by making the CPU or the GPU of the computer run an activity that, always in technical jargon, is called mining and that as time passes increases more and more complexity. Technically it is a matter of attacking through the brute force technique of data protected with cryptography based on the SHA-256 algorithm.

However, considering that the creation of Bitcoin – as well as that of other digital coins – requires considerable computing power and therefore also a high energy expenditure, the “common” users can rely on some alternative solutions designed specifically for the purpose, those that you find in detail below.

Bitcoin how it works – Mining

Bitcoin how it works

Another good solution to accumulate Bitcoin without weighing on the health of the PC and without spending euro rivers on electricity is the mining pool. It is a system that, using distributed computing technology, allows more users around the globe to combine the computational powers of their computers for mining. At the end of the operation, the value of the mined block is divided among all the users.

There are a number of mining pool systems, among the most famous of which we mention Slushpool. To exploit them you need to use special clients, such as BFGMiner that uses the computing power of the GPU and is compatible with all operating systems (if you are a MacOS / OS X user you can download it from here).

Bitcoin how it works – ASIC

Bitcoin how it works

Also using the ASIC (acronym for Application-Specific Integrated Circuit) in USB format is another good way to earn Bitcoins. It is a sort of USB stick, with a minimum cost of 50 euros, which are connected to the computer and which integrate circuits designed to solve precise calculations quickly and effectively. Energy consumption is rather low and even in this case they can be found without problems on online stores.

Bitcoin how it works – Affiliate systems

Bitcoin how it works

Another solution that you can rely on to earn Bitcoins is that of affiliations. More precisely, by registering on specific Internet sites, as in the case of QoinPro, it is possible to collect a small number of Bitcoins every day without practically doing anything.

As anticipated, the sum of Bitcoin earned daily in this way is very low. However, a small increase can be achieved by having other people subscribe to the service through their referral link.

Bitcoin how it works – Buy Bitcoin

Bitcoin how it works

In addition to being generated, Bitcoins can also be bought, nothing and nobody forbids you to do so. If you’re interested, you can rely on some special services, such as Bitstamp, which allows you to open an account and “gorging” with digital coins bought by other users of the site. To start, just visit the main web page of the service, click on the Create account item at the top, fill in the form with your data and click on the Register button.

Once the registration has been completed and completed, you can start buying Bitcoin by logging in to the site with the data that you have automatically provided in the registration confirmation (I recommend, however, to access the password you have changed in automatic from the service), clicking Buy / Sell which you can access by pressing the button with the three horizontal lines at the top right and selecting one of the available options.

Bitcoin how it works – Spend the Bitcoins

Bitcoin how it works

At this point you will certainly be asking yourself: how and where can the Bitcoins earned and / or bought be spent? The question is legitimate and the answer is in some respects obvious: online, on digital stores that support this method of payment, but also in physical stores, those that do the same.

You can easily recognize all online stores that allow you to pay for Bitcoin because prices are also indicated (or only) in BTC and generally on the site is also displayed the logo of the criptovaluta.

On the other hand, as far as physical stores are concerned, even if compared to online ones, the “signs of recognition” are practically the same as above. Keep in mind that in Italy the thing is less widespread than abroad but not absent. You can however facilitate the search for physical stores that allow payment in Bitcoin by consulting the map on the CoinMap.org website which, in fact, indicates the spread of electronic money throughout the globe.

Bitcoin how it works – Further useful information

Bitcoin how it works

As you have undoubtedly got to notice yourself, with the necessary explanations to understand how the cryptocurrency Bitcoin works is not complicated at all, indeed we even say that it is easy. Nevertheless, if something was not clear to you and I wanted to go further into this question, I would advise you to take a look at the section on how to start the Bitcoin.org website, which includes a guide to help you. it is possible to begin to take the first steps in the world of the cryptocurrency in question, with many interesting links and suggestions.

Bitcoin how it works