that Bitcoin It has become a profitable source of income, since about 40 thousand dollars per unit is known to all, it is also known to be an example of digital currencythat is, money that does not exist in physical form.
but understand them proces It is not as simple as you imagine and one of the drawbacks is related to the fact that to explain their mechanisms you have to resort to a series of Words close to technology blockchain Which most people ignore its true meaning.
In this general confusion we want to give our readers a guide BTC Starting with the words absolutely necessary to understand the performance Bitcoin.
The first step to understanding how Bitcoins work is to understand what the Blockchain is
The first thing you need to know if you want to understand how the technological architecture that supports i . supports Bitcoin is what blockchain.
Blockchain is a decentralized platform that acts as a file Database Digital, i.e. in which the transaction is indelibly recorded when purchasing cryptocurrencies.
There is no single blockchain, but cryptocurrencies run on different platforms, where i Bitcoin They have their own network.
Which means “mining” Bitcoin
verb “for me” In Italian this term translates as “extract” “mining” In Bitcoin parlance, this term refers to the process by which new BTC tokens are mined.
That is, every time a new Bitcoin is “mined”, it is said in jargon that it is “mined”, referring to the process of creating new tokens as “Bitcoin Mining”.
Mining, which tries to be as simple as possible while leaving its literal meaning alone, in the field of cryptocurrency refers to the process by which a series of hardware Its purpose is to try to solve complex, solved mathematical operations that validate transactions by adding new blocks to the network, i.e. new accounting records to the large database which are blockchain.
A block has been added to the network, as a reward for those who did it, new blocks are extracted Bitcoin symbol.
Who are the “Bitcoin Miners”
Miners are nothing but people who mine bitcoin, That is, those with devices that are able to add blocks to the network by validating transactions and executing BTC mining.
When a new block is added to i Miners There is a bonus, which we can say represents their salary, this bonus is made specifically from the new BTC tokens.
Currently for every added block miners receive 6.25 Bitcoinbut as we will see, the reward changes over time.
Stick to our days every time a block, that is accounting record6.25 new BTC coins are generated and those who participated in the validation of transactions recorded in the block will participate in the reward.
What is the Proof of Work (PoW) approval protocol?
What we have described so far is “mining” This is how the new tokens are used Bitcoin They are materially created.
Validating transactions on the blockchain through this system, i.e. networked devices that solve computations by adding “blocks”, is called a protocol. Proof of Work (PoW).
Only cryptocurrencies like i Bitcoin Which uses the Proof of Work protocol “polished” with this process called “mining”. The most common alternative is proof of stake, but Bitcoins remain faithfully pinned to PoW for now. PoS cryptocurrencies are not created through “mining,” but with a process called “staking.”
For a detailed explanation of what Proof of Stake (PoS) is and its differences with Proof of Work (PoW), see YouTube’s guide to Currency desk:
The relationship of halving and bitcoin and how it works
We’ve already talked about how “Miners” They are rewarded by extracting new tokens Bitcoin When adding a block to the network, what we didn’t say is that for every 210,000 blocks added its reward is halved, and this phenomenon is called: half.
Half means specifically “half” On average, there are four-year dreams, so to offset any miner losses, the halving follows, a rise in the price of bitcoin per unit.
What does Bitcoin “Hard Cap” mean?
hard cap With regard to bitcoin and cryptocurrencies, this refers to the maximum supply of tokens that can be generated.
In the case of bitcoins, the Hard Cap has an incredibly low limit equal to only 21,000 million tokensBecause this digital currency is intended to be a store of value and as a safe haven like gold, it should be limited in quantity.
What are “altcoins” in the cryptocurrency world?
Let’s get out of business Bitcoin And we arrive at a term developed by contrast, which is: “Altcoin”.
By altcoin we mean any type of cryptocurrency other than Bitcoin.
Altcoins have a subcategory of i memecoin These are cryptocurrencies that are born for the purpose of gaming and are not tied to specific ecosystems, such as i Dogecoinwhose value depends on the “vitality” of the meme that represents them.
Are Bitcoin and Bitcoin Cash the same?
In addition to Bitcoins, there are Bitcoin Cashthis is technically called one fork, That is, the blockchain was born of separation from another parent platform.
BitocinCash is currently a blockchain with its eponymous cryptocurrency operating independently of Bitcoins.
So the answer to the question posed in the title, if Bitcoin and BitcoinCash are the same, is no: Two distinct cryptocurrencies.
What does ‘DeFi’ and ‘peer-to-peer exchange’ mean?
the term DeFi It is nothing more than a method by which it is done “Decentralized” finance, of which cryptocurrencies are an example, since unlike fiat currencies can be exchanged without intermediaries managing everything, these are specific forms of exchange “peer to peer”.
Ambiguous Term in Bitcoin Vocabulary: ‘HODL’ (Wait for Dear Life)
Another word that is often heard in relation to bitcoin is the acronym HODL, this means “Wait for dear life” It refers to a long-term investment strategy. This is for purchase Bitcoin Not for trading, but for long-term holding, i.e. as a safe haven like gold.
What is the difference between Hot Wallet and Cryptocurrency Cold Wallet
The hot wallet It’s nothing but simple crypto wallets, like Metamsk or Trust Walletwhich connects to the Internet to store cryptocurrencies.
when i cold wallet They are external devices that allow cryptocurrency to be stored offline, as if they were stored in simple pens USB.
Who are the bitcoin whales?
the term whale, Meaning, “whale,” in the cryptocurrency world, refers to holders of coins who own at least one million tokens.
to be one Bitcoin whale You must have at least 1 million BTC, one of the most famous people among the largest BTC owners is Michael Saylor MicroStrategy, as well as the mysterious “creator” of Bitcoin itself Satoshi Nakamoto.
Bitcoin: Bear and Bull market
Bear and bull market terms regarding Bitcoin They point to two different directions in the market. When the Bitcoin market goes up, we have a file bull marketIf the price follows a downtrend and the currency is losing our market capital Alcohol market.
These are terms that refer to market stages and can refer to both Bitcoins and others Origin.