Bitcoin employs a network of computers around the globe connected together through the internet to create a public ledger which contain a record of all the transactions made on the network. This public ledger maintained over the connected computers is known as the blockchain. The blockchain uses the science of cryptography and mathematics to secure the network such that individuals can send money directly between themselves over the internet without the need for a third party. All transactions made on the network are confirmed by the participating parties before being added to the blockchain. Once transaction is added to the blockchain, it becomes impossible to modify.
New Bitcoins are created through a process called mining ( a process analogous to the mining of precious metals like Gold) as a reward for members of the community who uses their computing power to secure the network and confirm transactions. Only 21 million Bitcoins can ever be created. This makes Bitcoin scarce-an important characteristic that makes Bitcoin perfectly suitable for use as a legal tender. The finite nature of Bitcoin makes the entire Bitcoin ecosystem free from inflation-a canker-worm that eats away our values stored in fiat currencies over time.
Bitcoin as a community based digital asset uses a consensus mechanism based on Proof-of-Work to confirm and add transaction on the network as well as vote on important update to the bitcoin source code.
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Israel Martins is a cryptocurrency researcher and trader since 2016, passionate about blockchain and other emerging technologies.