Don’t fool yourself by believing that bitcoin is the currency that you normally have in your pocket. Bitcoin is a wholly digital system composed of a set of protocols and processes. It is known as the most successful one among plenty of attempts people did to develop virtual currency by using cryptography. That’s why competition is at its peak.
HOW BITCOIN WORKS
Bitcoin currency uses peer-to-peer technology in order to service instant payments. There are many independent individuals and companies who participate in the Bitcoin network. Those individuals who are using bitcoins are called “miners”. These people are motivated by transaction fees paid in bitcoin. Attractive rewards like one bitcoin divisible to eight decimal places and this smallest unit are referred to as a Satoshi.
Bitcoins are released to the circulation by the process of mining. The process involves the activity of solving a computerized puzzle to discover a new block which is added to the block chain and eventually miner receives a reward of bitcoins in return. The reward decreases every 4 years starting from 50 new bitcoins in 2009. The mining process becomes more complex as the increasing amount of bitcoin is created. Additionally, the amount of computing power also increases.