How Does Bitcoin Work?
Bitcoin operates on a decentralized digital network known as blockchain, which serves as a public ledger of all transactions. Each transaction is verified by network nodes through cryptography and recorded in a block. Once a block is filled, it is added to the chain, ensuring transparency and security.
Key Components:
- Blockchain: A distributed ledger that records all Bitcoin transactions, preventing double-spending.
- Mining: The process by which new bitcoins are created and transactions are confirmed. Miners solve complex mathematical problems to add blocks to the blockchain.
- Wallets: Digital wallets store users' bitcoins and allow them to send and receive funds securely.
Use Cases of Bitcoin:
Bitcoin is used for various purposes, including:
- Peer-to-Peer Transactions: Enables direct transfers without intermediaries.
- Store of Value: Often referred to as "digital gold," it is used as a hedge against inflation.
- Remittances: Offers a cost-effective way to send money internationally.
- Investment: Many view Bitcoin as a long-term investment opportunity.
Bitcoin continues to gain traction as more people and businesses recognize its potential, driving increased adoption across various industries.