Cryptocurrency Bitcoin: Features and How It Works

Cryptocurrency Bitcoin: Features and How It Works

Bitcoin is a cryptocurrency. This means that it is a virtual currency that acts as money and a form of payment. Cryptocurrencies are peer-to-peer payment methods that are outside the control of a group, person or entity. This is way different from fiat money, which is controlled by a central body such as the central bank.

Facts about Bitcoin

One bitcoin can be divided into eight decimal places. This means that you can have 100 millionths of a bitcoin. This percentage of the whole is called a satoshi. There is room for the coin to be divisible by more decimal places. However, this is subject to a nod from the participating miners.

The division into various decimal places is also vital for transactions with the coin, especially now that its value has gone up several thousand times since it was first released. You can always deposit several hundred millions of the coin at any of the most popular bitcoin casinos in New Zealand or at your bitcoin-accepting merchant without a problem. It would have been hard if you could only transact with high-value coins.

In June 2021, El Salvador led the pack by officially adopting bitcoin as its legal tender. Here, people buy and sell using bitcoin around the country.

The Start of Bitcoin

The coin was made known to the public in 2009 via an anonymous developer group called Satoshi Nakamoto. However, a domain called was registered in August 2008. This domain is WhoisGuard protected. Therefore, it is not possible to know the identity of the person who created the domain, as it is not available to the general public.

After the creation of the website, there was an announcement at that a cryptography mailing list was in the offing and the anonymous group has been working on a new electronic cash system that is peer-to-peer and will not be held by a third party. Consequently, a white paper found its way onto that gave more details about the new system. This white paper became the basis for the operations of bitcoin.

The first bitcoin block was mined in 2009, with the name Bitcoin 0, also called the Genesis block. Coin minors got a token as a reward for their effort. However, these rewards are halved after every 210,000 blocks are mined. Here is an example: in 2009, the reward for a block was 50 bitcoin. In 2020, after the third halving, the reward for the same block went down to just 6.25 bitcoin.

The Blockchain Technology

Bitcoin uses blockchain technology to ensure the safety and authenticate transactions in its network. A blockchain is a shared database or distributed ledger that stores transaction information as it happens. Each transaction’s information is held in a block. These blocks then connect to each other, creating a chain.

Once a new transaction is made, the information is recorded in a block and encrypted. Validators, called miners, then validate this transaction for the block to be closed. Once a block is complete, a bitcoin is created to reward all the miners that worked on it according to the current reward rates. They can use the rewarded bitcoin as they wish.

The coin uses SHA-256 encryption to safeguard the data in each block. This means that this data is made into a 256-bit hexadecimal number that contains all information about the transaction and the connections to other blocks.

How to Buy a Bitcoin

One way to earn bitcoin is by mining. Unfortunately, this is an energy-intensive task that requires specific software and hardware. The rewards are fewer with the halving rule discussed above. Therefore, if you wish to use bitcoin, the best route is to buy it. Due to its price, many people can only buy portions of it.

To purchase a coin, you need to install a bitcoin wallet. There are several wallets on the market today, many of which are free and available on both mobile and desktop platforms. Then, you will have to visit a cryptocurrency exchange and buy a cryptocurrency equivalent to the amount you deposit. Most wallets do this for you. The only things you are required to do are deposit cash into the wallet and exchange it for cryptocurrency.

How Do You Use Bitcoin?

You can use bitcoin primarily to buy goods and services online. There are millions of merchants, e-commerce sites, casinos and gaming platforms that accept the coin around the globe. Some exchanges even have debit cards to make payments easy for you. Other platforms use QR codes to read your wallet address and complete the transaction.

You can also invest in bitcoin. Just like the fiat money market, the changes in bitcoin value may earn you a profit. As many people use the coin, the value and amount of coins that move in the market will continue to go up. If you bought the coin when the value was low, you got to benefit from the increase in price.

About the Author, Adam Parker

Adam Parker is currently the webmaster of He has spent over a decade in the role on various platforms. Parker handles all the website maintenance tasks, including website design, functionality testing and ensuring that it is always accessible.


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