How Bitcoin Works? Valuable Information

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In a nutshell, cryptocurrencies work very similar to how email works. Imagine your email client (outlook, gmail,thunderbird) had the ability to attach money and you can send or receive money to other people by giving them your address or send to their address. The actual “how” of How bitcoin works is probably too technical for most of us, but to simplify this explanation bitcoin is a massive network of computers all carrying an exact copy of the same database - this database records transactions that are created. Some of these computers are “mining” for more bitcoin - when a computer “mines” for bitcoin, it’s actually in the process of solving a mathematical algorithm. When it solves a part of the puzzle it is rewarded with a portion of bitcoin. The bitcoin is then stored in a wallet and can then be spent, traded, sold etc but most people who use bitcoin would not use their computers to mine because only specialist machines are used for bitcoin today. In the past anyone could do it from their PC’s but it has advanced to the point where “super computers” are used. You do not need to know how to mine in order to use bitcoin. Most bitcoin users do not mine and no one is required to learn about it. To further explain how bitcoin works, assume person A sends another person B a bitcoin or a part of a bitcoin (a bitcoin is broken down into 1 million bits and any amount of bits can be used in a transaction)

Person B gives person A their bitcoin address, this address is then entered in the recipient’s section of person A’s wallet. The amount of bitcoin to be sent is then entered and once the transaction is initiated the transaction is then written to every copy of the database across the internet - when the transaction has been verified by at least a handful of the computers on the network then the entire network recognises that transaction and it cannot be disputed - at this point the receiving bitcoin address will be allocated the bitcoin that was sent and the receiver can do with it what they want to.

As stated earlier, cryptocurrencies are somewhat similar to email in that you have a sender address and a receiving address and a storage place. Except that email goes through a centralized server that handles all the emails, bitcoin goes direct from person to person and each side has secret cryptographic keys which prevent tampering, forgery or theft. Bitcoin wallets allow you to generate as many different bitcoin addresses as you want and some people suggest never to use the same address twice for advanced security.

That is really the basic way that cryptocurrencies work to send and receive money.

Credit: iCoinpro Want to learn more?: http://www.discovericoinpro.com/DreamTeam