Bitcoin is a popular digital currency, created and stored electronically. It’s not centrally controlled, nor are bitcoins printed; instead, bitcoins are made by people and businesses through software that solves mathematical problems. Bitcoins belong to a growing category of digital money called cryptocurrency.
There’s many advantages to using Bitcoin, many of which include: Quick, Easy and Convenient - You can send and receive bitcoins anywhere in the world at any time in a matter of a few minutes. Low Fees – Normally, the fees for Bitcoin transactions are very small. Bitcoin fees can fluctuate due to the dynamic fee market. In addition, some wallets will also allow you to pay a fee you’re willing to spend. With higher fees, you’ll get faster confirmation of your transactions. Secure – When using Bitcoin, users remain in control of their transactions. You’re also protected from identity theft since Bitcoin payments can be made without personal information associated with the transaction. Transparent - All Bitcoin transactions are fully available on the blockchain for anybody to verify and use in real-time.
Bitcoin transactions are composed of an amount, an input (sending address), an output (receiving address) and private keys (the keys which allow you to spend your bitcoins). A user simply enters a receiving address and if the person possesses the private key associated with the bitcoins they are trying to spend the transaction is sent and verified with the help of miners confirming blocks of exchanges (transactions) within the Bitcoin blockchain. The blockchain is a database of all recorded transactions since Bitcoin’s inception.
The blockchain, is a huge, shared public ledger where the entire Bitcoin network is situated. All verified transactions are added to the Blockchain, where everyone can see information pertaining to Bitcoin wallets and verify their balances.
The blockchain records all of the newly minted bitcoins rewarded to miners who find blocks. Blocks are sets of sent/received transactions that miners confirm for the network. As these actions take place within the Bitcoin protocol the blockchain acts as a ledger of account for all transactions undertaken within the Bitcoin network.
Bitcoin mining primarily involves adding previous Bitcoin transaction records to the blockchain. The people involved are called miners; their job is to confirm the transactions to the network by solving mathematical problems using a software, as well as work towards using the blockchain to distinguish legitimate transactions and ensure that double spending does not occur. Double spending is when the same Bitcoins have been used twice. The main goal of mining is to ensure security within the Bitcoin network. As a secondary goal, mining is also used to introduce Bitcoins into the system. As an incentive, miners get paid in Bitcoin for their services.