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Bitcoin: how do they work?

They are safe haven assets like gold and the first insurance for cryptocurrency (Satec Underwriting, a company of Cattolica Assicurazioni). Who is fasting of crypto he must make up for lost time, he must find out what i am Bitcoin e how do they work.

In this guide, we turn to beginners and the less experienced to better explain the mechanism and the characteristics that distinguish the digital money.

It is a useful, essential but complete guide to help you understand the nature of virtual currency that is increasingly real and competitive.

You hear about it more and more often, you would like to use Bitcoin but first you need to understand how this revolutionary system works.

bitcoin how they work - Bitcoin: how do they work?

Bitcoin: how they work and what they are

Before explaining how it works, it is good that you understand thoroughly what is Bitcoin. We explain it to you in simple terms.

With the software Bitcoin was the first successfully realized distributed cryptocurrency, designed with the idea of ​​using the cryptography to control both the creation and the transfer of money. It is a system opposed to the conventional currency, unhooked by the central authorities.

Like real money, bitcoins are durable, portable, recognizable, divisible, limited, and hardly prone to counterfeiting. It's a P2P electronic money (peer-to-peer, free from central authority) which offers its users monetary autonomy thanks to decentralized networks, open source software and the use of cryptographic proofs.

Anyone can install this software available online 365 days a year without the need for permissions. No ID is required to use it. It's a fast and reliable system: transactions are transmitted in a matter of seconds to anyone, anywhere in the world. Nobody can block or freeze them. The issuance of electronic money and the handling of transactions are carried out collectively by the network.

There are those who define Bitcoin "a Swiss bank account in your pocket".

Bitcoins do not print, do not degrade, require no storage costs, are easy to hide, protect (with a secret private key) and store.

The entire Bitcoin network is based on the blockchain, a public and shared register.

Bitcoin, how they work: basics for beginners

Bitcoin relies on a system of public key cryptography with which it processes and verifies payments. Cryptocurrencies are sent from one address to another. very similar to e-mail: unlike the latter, however, the address for the bitcoin should be used only once. Consequently, each user should have a lot of addresses.

All confirmed payment transactions are transmitted to the network and included in the blockchain so as not to spend the bitcoins twice. In this way, the available balance is calculated by checking the new transactions.

Using cryptography protects both the integrity and the chronological order of the blockchain.

Every transaction is blocked, after an hour or two, by the enormous processing power that extends the blockchain more and more.

How to start using the Bitcoin wallet

We see how to start using Bitcoin.

You must, first of all, install the software dedicated on your PC or smartphone.

Once installed, the Bitcoin wallet immediately generate your first address. You can (and must) always create new ones whenever you want to make transactions.

To allow your friends to pay you (and vice versa), you can tell them one of your Bitcoin addresses.

We have said that transactions (i.e. transfers of values ​​between BTC wallets) are included in the blockchain. Each wallet contains a secret data set (private key o sow) to be used for the digital signature which proves the origin of the transaction preventing it from being altered or tampered with by anyone.

Only platform users can make transactions that are confirmed by the network 10-20 minutes later through a process called 'mining'.

What is the mining process

Il mining process (translatable into mining) is a distributed consensus system. It is used to confirm stand-by transactions and to include them in the blockchain. The goal is to keep chronological order, safeguard net neutrality and allow various computers to conform to the state of the system.

'Included' transactions are meant to be packaged in a block for compliance strict cryptographic rules that the network will verify. These are rules that prevent anyone from modifying previous blocks, otherwise the following blocks will be invalid. They don't even allow you to add new blocks. No one can verify what the blockchain contains or replace parts of it, perhaps to recover what has been spent.

The Bitcoin universe is starting to fascinate you, isn't it?

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Jacqueline Facconti

Graduated in Business Economics and Strategy, Management & Control with 110 cum laude from the University of Pisa, editor and editorial collaborator for various blogs and Economic and Business sites

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