Our reliance on the internet allows us to communicate and to transact without any physical material or strings. This innovation in technology has given way to the online trading system, which we are using right now.
In the year 2017, cryptocurrency started to gain attention. Cryptocurrency is a digital system that allows the interchange and transmission of digital tokens. This happens in a decentralized manner, which means that there is no central bank working in between.
In the year 2009, the first unit of cryptocurrency has arrived. We are talking about Bitcoin. So, what is Bitcoin? Just hold on and read more.
What is Bitcoin?
Bitcoin is electronic cash that can be traded in exchange for dollars, goods, and services. It uses a blockchain or a ledger to record all of its transactions, which means that there are no middlemen. If you have a small business, this one can be favorable for you as it does not require credit card charges. Any government regulation does not also control it.
There are problems in computer science. These are the double-spending and Byzantine General. Double spending happens when traded coins are spent more than once. This has been solving by Bitcoin by providing a peer-to-peer transaction. Once a transaction is about to start, it will be verified in the blockchain by the users who maintain the ledger.
Since the ledger is distributed among thousands of nodes, it raises the question as to how they will assure that the one they are receiving is a not falsified copy. This problem is known as the Byzantine General. Bitcoin solved this through the use of a solution given out of solving a mathematical problem. Once solved, it will be added to the blockchain as a new block every 10 minutes. So when a miner is about to choose between competing blockchains, the longer chain will be chosen as it depicts a company of 51% honest miners.
How to Earn Bitcoin
There are ways you can obtain coins. You can purchase Bitcoin in exchange for fiat currency, and may also trade in a cryptocurrency exchange like the Bittrex and Bitstamp. You can trade an Ethereum for a Bitcoin too. You can also be paid by cryptocurrency by playing games or just sharing articles.
Storage for Bitcoin
There are various you can keep your bitcoin. It can be in the form of an electronic wallet, software wallet, online wallet, mobile wallet, hardware wallet, and paper wallet. Among these, the hardware wallet is the safest. This is done offline where you can put your hardware wallets in bank vaults like Ledger, and Trezor.
The least safe form of bitcoin storage is the online wallet. It is managed by a third party, which also has the keys. Once their server fails, you can lose your bitcoin address and, of course, your bitcoin itself.
What does Bitcoin miners do?
Now, if you are a coin miner, you are the one verifying the bitcoin transactions. In exchange for your work, you may be qualified to receive a Bitcoin also. The first requirement is to verify a 1MB value of the transaction.
The second requirement is challenging, and only a bit of luck might help you win. As we mentioned earlier, a miner solves a problem but is guesswork to obtain a right combination of numbers, which is a 64-digit number. This is the second requirement you need to have to gain a Bitcoin.
Apart from regulating the bitcoin ecosystem, bitcoin miners also help to circulate the cryptocurrency. They obtain additional bitcoin available in the circulation. As of 2019, there are 18 million bitcoins; however, by the year 2140, it will not be circulated anymore. This is because the amount of bitcoin circulated is decreasing as the years go by.
Amount Earn by a Bitcoin Miner
The first year of Bitcoin in the year 2009 has earned 50 bitcoin per block mine. After three years, 50 bitcoin turns into 25 bitcoin. In the year 2016, 25 bitcoin go halves to 12.5 bitcoin. Right now, the year 2020, the amount of bitcoin will be halved by obtaining 6.25 bitcoin. The price of one bitcoin is 7,952.44 dollars, so just multiply it by 6.25 bitcoin, and you will obtain 49,702.75 dollars.
From 20 million in 2009, the mine bitcoin now is only about 2, 625,000 million, which means that bitcoin mining gets tougher over the years. Indeed, bitcoin adjusts the mining difficulty every two weeks to keep the block production regulated.
Now, if you are up to bitcoin mining, you need efficient computer equipment to have a chance of getting out of a hash problem. One tool you can use is the graphic processing unit, which can do fast mathematical calculations.
Reasons Why to Invest in Bitcoin
- Demand will increase its value.
Overall, there are 21 million bitcoins. Almost 17 million of that was already mined. It only means that the supply decreases. So, applying the law of supply and demand, we can see that in the next few years, due to scarcity, we can obtain more value out of it. It can be a good investment in the long run.
- It saves you time and keeps your investment safe.
The international bank requires more effort and fees. So, whenever you are about to send money to your family abroad, you can’t transact easily. With bitcoin, you can instantly send money anywhere in the world at low fees. You can be assured that your investment is away from malware and viruses.