What is Bitcoin (BTC) and how it works
Bitcoin (BTC) is no more than a decentralized virtual currency that offers several benefits to those who spend it. Invented by Satoshi Nakamoto, it is a completely digital type of money; there are no physical notes worth 100 that you have in your wallet. It’s like an online version of the cash you generally use to buy products and services without a receipt. Bitcoin is revolutionary.
Not many stores still accept this virtual currency and some countries ban it completely. However, some companies are buying BTC as a form of investment by leveraging the hype of the moment. In October two years ago, for example, PayPal announced that it would allow its customers to buy and sell bitcoin. You can imagine what happened on social media.
Elon Musk, the richest man in the world, CEO of Tesla, and recent owner of Twitter, wrote right here that bitcoin is a good thing. When the richest person in the world lends his support to a virtual currency it must really be a big deal. Thanks to Elon Musk’s comments, the value of BTC has soared. A single Bitcoin has gone from the value of about 4200 euros to more than 32000 euros!
As the topic of virtual currency has become global interest, the Bank of Singapore has suggested that BTC may replace gold as a reserve. However, others see the risks associated with it, and for example, the Head of the Bank of England Andrew Bailey, has warned about the unpredictability, and volatility of the currency stating that virtual currency makes him “very nervous”. Now you may be wondering what this bitcoin really is and how it works? By reading you will learn something useful and necessary to know.
How does bitcoin work?
Each bitcoin is basically a digital, purely virtual file that is stored in a Wallet application on both smartphones and computers. It is possible to send BTC, or perhaps fractions of it, to your mobile app, and then you can send it to other people.
Every transaction is recorded in a public directory called the blockchain. Those who use it enjoy tremendous advantages. This revolutionary technology can be used in many areas. The security of blockchain makes traceability possible and prevents theft and fraud. For example, it prevents people from spending money they do not have. It also prevents other parties, such as banking institutions from deleting or voiding transactions.
How do people actually get bitcoins?
There are three main ways to get BTC: you can buy bitcoins using real money, you can get paid for selling a product or a service, you can create them yourself using a computer, and also you can become a Bitcoin miner.
How are new BTC created?
For the bitcoin system to work, people must allow their computers to process transactions for everyone. To do this, the computers have to be very powerful to process incredibly complex calculations, and for this, they use a great amount of electricity.
Miners are rewarded for their work with BTC currency. This is a good reason to install very powerful computers. This process is called mining and the number of miners is increasing. We may have reached break-even, though. The cost of energy, because of many geopolitical issues, has soared, and if you start mining now, it could be years before you get a single coin. You could be bankrupt in a few months because you could spend more money on electricity to mine than the the coin would be worth.
Why are bitcoins valuable?
Although completely virtual, BTC have value because people are willing to exchange them for real goods and services by paying for them even with cash. There are many other things besides money that we consider valuable. Give an example, metals such as gold, silver, and diamonds. The Aztecs once used cocoa beans as a form of money.
Why do people want to own bitcoins?
Anonymity and speed of transactions are probably the most valued strengths of cryptocurrencies. In fact, with proper care, it is possible to spend the currency anonymously. Many other people like the fact that they are decentralized, which means that bitcoins are not controlled by the government or banks. Even though all transactions are publicly recorded, unless you say so, no one could know your account details. In an online Twitter chat in January 2021, Elon Musk, said he was a big supporter of BTC. He even went so far as to change his Twitter bio to “#bitcoin.” He has consistently shown his support for virtual currencies in recent years and because of his wealth and popularity has influenced large movements of cryptocurrencies. As a result of Elon Musk’s actions, the value of bitcoin has grown exponentially.
Is bitcoin safe?
It is very difficult to copy, create fake ones, or spend coins you do not own because every transaction is publicly recorded. As with real money, however, it is possible to lose your wallet and lose your crypto forever. Hackers pull off big heists and you can read several articles of attacks and subsequent thefts on websites that allow you to store your digital currencies remotely.
Since it was created in 2009 the value of BTC has fluctuated continuously and many people believe that because of this volatility it is not safe enough to turn their “real money” into bitcoin. This concern was also expressed by the head of the Bank of England, Andrew Bailey, about two years ago. He said he was “very nervous” about people using the virtual currency for payments, pointing out that investors should realize that its price is extremely volatile. Andrew Bailey meant that the value could, without any warning, drop significantly at any time and that investors could lose a lot of money.
The use of Bitcoin (BTC) in the best online casinos
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