How Does Bitcoin Work?
Each bitcoin is a computer file and this file is stored on a computer or smartphone in a digital wallet. Bitcoins works pretty simply – people can send you Bitcoins directly to your digital wallet and you can send as well. The transactions are recorded in a list which is public and it is known as the blockchain. This list makes it possible to track the history of Bitcoins transactions and to stop users from wasting coins they don’t own, undoing transactions, making copies, and etc.
The blockchain is accessible at any given time to everyone and can be changed or modified with the computing power, as well as, the will of the majority of the network. In other words, you are protected as it is almost impossible to fall victim to a human error or another failure.
The value of Bitcoins is determined by how much people are willing to pay or exchange it for at the moment. In order to process a certain transaction, you need to start a process called mining. Mining includes a computer solving a complicated mathematical problem and the solution is a 64-digit number. When the mathematical problem is solved, one Bitcoin block is processed. In order to compensate for the power of computer chips, the level of difficulty of the problem adapts to make sure a secure and steady stream of new Bitcoins are generated each day. Currently, there are about 16 million Bitcoins.To receive a Bitcoin and complete the transaction, you need to have a Bitcoin address which is a string of letters and numbers (from 27 to 34 letters and numbers) and it is like a virtual post box. There is no register of Bitcoin addresses, meaning users can use them to protect their personality when making a certain transaction.