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A What is a bitcoin

A What is a bitcoin

What is a bitcoin

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Bitcoin is known as a type of cryptocurrency because it uses cryptography to keep it secure. There are no physical bitcoins, only balances kept on a public ledger that everyone has transparent access to (although each record is encrypted). All Bitcoin transactions are verified by a massive amount of computing power via a process known as "mining." Bitcoin is not issued or backed by any banks or governments, nor is an individual bitcoin valuable as a commodity. Despite it not being legal tender in most parts of the world, Bitcoin is very popular and has triggered the launch of hundreds of other cryptocurrencies, collectively referred to as altcoins. Bitcoin is commonly abbreviated as BTC when traded.

Bitcoin

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The Bitcoin system is a collection of computers (also referred to as "nodes" or "miners") that all run Bitcoin's code and store its blockchain. Figuratively speaking, a blockchain can be thought of as a collection of blocks. In each block is a collection of transactions. Because all of the computers running the blockchain have the same list of blocks and transactions and can transparently see these new blocks as they're filled with new Bitcoin transactions, no one can cheat the system.

Anyone—whether they run a Bitcoin "node" or not—can see these transactions occurring in real time. To achieve a nefarious act, a bad actor would need to operate 51% of the computing power that makes up Bitcoin. Bitcoin has around 13,768 full nodes, as of mid-November 2021, and this number is growing, making such an attack quite unlikely. But if an attack were to happen, Bitcoin miners—the people who take part in the Bitcoin network with their computers—would likely split off to a new blockchain, making the effort the bad actor put forth to achieve the attack a waste. Balances of Bitcoin tokens are kept using public and private "keys," which are long strings of numbers and letters linked through the mathematical encryption algorithm that creates them. The public key (comparable to a bank account number) serves as the address published to the world and to which others may send Bitcoin. (Source: www.investopedia.com)

 

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