Bitcoin: how it works

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Basics

Let's start with the basics. Bitcoins, as I already mentioned at the beginning, are one criptovaluta, that is a type of digital currency (it is not the only one but it is certainly the most widespread at the moment) that can be generated by exploiting the computing power of computers. Like euros, Bitcoins can be used for the purchase and sale of goods and / or services.


With this exception, Bitcoins differ profoundly from "traditional" currencies for various reasons. Firstly, they do not have a central bank or an institution that acts as an intermediary between the people who exchange them since everything is based on an open source peer-to-peer network that exploits a database distributed among users' computers. the so-called Nodi. This database contains all the transactions that took place on the Bitcoin network and can be consulted by anyone.


At this point I'm sure you are wondering if Bitcoins are what legal or not. If so, know that the answer is yes. Bitcoins are in fact legal all over the globe, the regularity of transactions is guaranteed by a public key cryptographic system thanks to which users are unable to spend the same coins for several times or in any case both to rig the purse (the tool that must be used to collect the Bitcoins owned) that you do not actually own. In short, everything under control!

As for the question instead value, that of Bitcoins fluctuates perennially. To monitor it, it is necessary to refer to specific services that show the current valuation on all the main trading markets of the Network. Also know that, contrary to what one might think, the value of Bitcoins is not infinite. A maximum of 21 million are foreseen and every four years the amount of coins generated is halved based on a deflationary rule.



Bitcoin coin purse

As anticipated a few lines above, all the Bitcoins owned must be collected inside a special digital wallet (which is a sort of client), what in technical jargon is called wallet, and which therefore allows you to make and receive Bitcoin payments. There are several digital wallets for Bitcoins, you can choose the one that best suits you among the various available on the net and follow the instructions contained therein to open your Bitcoin wallet.

Among the various clients available, the most popular is undoubtedly Bitcoin Core. You can download it for free from the website Bitcoin.org, on which several other clients are also available for all major operating systems, including mobile ones.

Returning to Bitcoin Core, it is a multi-platform software (therefore compatible with Windows, Mac and Linux) with a fairly elementary operation. Once downloaded, install it by launching the package .exe obtained and always click on NEXT. If you are using a Mac, you need to drag the program icon to the folder Applications. Subsequently, regardless of the operating system, start the software and indicate the folder in which to save your wallet.

Once this is done, I advise you to immediately secure your wallet by enabling the encryption function by going to the menu Settings and then clicking on Coin purse digit. In order to avoid the onset of future problems, I also suggest, from time to time, to create backup copies by calling up the voice Coin purse backup always attached to the application menu.


Another very important thing that I advise you to do when using Bitcoin Core or any other wallet is to wait for the program to synchronize completely with the cryptocurrency network so that the blockchain on which the system is based, that is the database in which all Bitcoin transactions are recorded.


As can be easily deduced from the name itself, the blockchain it is structured in blocks. These blocks are unique and contain a fixed number of coins plus the public keys of the person carrying out the transactions and the data of the previous block. The number of Bitcoins created per block was initially 50 but this number was scheduled for every four years, as mentioned at the beginning of the article. How to know the estimated date for the next block value change? Simple: they visit the appropriate site Bitcoin Clock.

To know theaddress of your purse (which is essential to be able to send and receive money) you have to go to the menu Fillet program and click Reception addresses. If you want, you can also create custom ones (but still belonging to the same wallet) by simply clicking on the button New.

Generate Bitcoin

Now that it is finally clear to you what Bitcoins are and how to keep and exploit them, you are finally ready to move on to the next chapter, the one related to how generate this cryptocurrency.

In theory, it is possible to generate new Bitcoins by having the CPU or GPU of the computer perform an activity that, again in technical jargon, is defined mining and that as time passes it increases more and more in complexity. Technically it involves attacking data protected with encryption based on the SHA-256 algorithm using the brute force technique.


However, considering that the creation of Bitcoin - as well as that of other digital currencies - requires considerable computing power and therefore also a high energy expenditure, "common" users can rely on some alternative solutions designed specifically for the purpose, those that you find indicated. in detail below.

Mining


Some companies have marketed computers specifically designed to make Bitcoin, however, consuming much less energy than traditional PCs. To be exact, these are the ones that are defined ASIC Bitcoin Miner.

I know, this may sound very tempting but it is good to keep in mind that most of these specific computers have poor build quality and, consequently, their performance is reduced in a very short time. In any case, if you are willing to make the purchase you can contact all the most common online platforms for electronic commerce.

Mining Pool

Another good solution to accumulate Bitcoin without burdening the health of the PC and without spending rivers of euros on electricity is the mining pool. It is a system that, by exploiting the technology of distributed computing, allows multiple users around the globe to combine the computing powers of their computers to perform mining. At the end of the operation, the value of the mined block is divided among all users.

There are several mining pool systems, among the most famous of which I point out Slushpool. To exploit them you need to use special clients, such as BFGMiner which uses the computing power of the GPU and is compatible with all operating systems (if you are a macOS / OS X user you can download it from here).

ASIC

Also resort to the use of ASIC (acronym for Application-Specific Integrated Circuit) in USB format is another good way to earn Bitcoins. It is a sort of USB stick, with a minimum cost of 50 euros, which must be connected to the computer and which integrate circuits designed to solve precise calculations quickly and effectively. Energy consumption is quite low and even in this case it can be found without problems on the online stores.

Affiliate systems

Another solution that you can rely on to earn Bitcoins is that of affiliations. More precisely, by registering on specific Internet sites, as in the case of QoinPro, it is possible to cash out a small number of Bitcoins every day without doing practically anything.

As anticipated, the amount of Bitcoin earned daily in this way is very low. However, a small increase can be obtained by having other people subscribe to the service through their referral link.

Buying Bitcoins

In addition to being generated, Bitcoins can also be bought, nothing and nobody forbids you to do so. If this interests you, you can rely on some special services, such as Young Platform: it is an exchange based in Turin, available as a website and as an app for Android and iOS, created specifically for those taking their first steps in the world of cryptocurrencies and want to start making investments in this field in a simple way and, above all, , safety.

Young Platform, infatti, is one of the very few regulated in your languagen exchanges e it relies entirely on in your languagen banks (Banca Sella e Azzoaglio Bank). Furthermore, its technological infrastructure is signed Modulus, a well-known name in the industry that has the likes of JP Morgan Chase, Nasdaq and Goldman Sachs in its client portfolio. The custody, identity verification and on-chain analysis services are guaranteed by their partners: Fireblocks, Onfido and Chainanalysis.

In addition to Bitcoins, Young Platform also allows you to buy and sell many other cryptocurrencies, such as Ethereum, Polkadot e Dogecoin (every month the choice is further enriched), with the possibility of making classic deposits by bank transfer but also deposits with credit / debit cards, Apple Pay and cash, through supermarkets and partner shops (eg Pam, Penny Market, Carrefour and Panorama).

To start buying Bitcoin with Young Platform, all you have to do is connect to the official website, click on the item for create a free account and fill out the registration form that is proposed to you. Once logged in, you will be able to buy and sell cryptocurrencies very easily, even from the app, following the quick instructions on the screen and using the deposit systems of your choice.

If then, before trying your hand at buying Bitcoin or other cryptocurrencies, you want deepen your knowledge of traditional finance, cryptoeconomics, blockchain and cryptocurrencies, you must know that it exists Young Academy: an in your languagen portal, completely free, where you can find them more than 70 items that explain in a simple and clear way everything there is to know about the world of cryptocurrencies and its surroundings. Articles are broken down according to the reader's knowledge level, so you can find both content for beginners, both for users more prepared with intermediate experience.

Then there is the investor handbook, which provides all the practical tools to become a more informed investor. Once the subject has been studied, it is possible to test yourself with the quizzes in the Stepdrop app (available for Android and iOS), by participating in which, if you give the right answers, you can earn YNG tokens to be imported with a simple swipe up in theexchange Young Platform to obtain advantageous discounts. Read more here.

Spending Bitcoins

At this point you are certainly wondering: but how and where can the Bitcoins earned and / or bought be spent? The question is legitimate and the answer is in some ways taken for granted: online, on digital stores that support this payment method, but also in physical stores, those who do the same.

You can easily recognize all the online stores that allow you to pay for Bitcoins as the prices are also (or only) indicated in BTC and generally on the site is also exposed the logo of cryptocurrency.

As for the physical stores, although compared to the online ones they are much lower in number, the "signs of recognition" are practically the same as above. Keep in mind that in the city it is less common than abroad but not absent. However, you can make it easier to find physical stores that allow payment in Bitcoin by consulting the map on the website CoinMap.org which, in fact, signals the spread of electronic money throughout the globe.

Further useful info

As you have undoubtedly had the opportunity to notice yourself, with the necessary explanations understanding how the Bitcoin cryptocurrency works is not at all complicated, indeed we even say that it is easy. Nevertheless, in case something is not clear to you and you would therefore like to investigate the matter further, I would like to advise you to take a look at the section dedicated to how to get started on the website Bitcoin.org which inside includes a guide thanks to which it is possible to start taking the first steps in the world of the cryptocurrency in question, with many interesting links and tips.

Article created in collaboration with Young.

Bitcoin: how it works


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