When analyzing and explaining the functioning of the economy led by Bitcoin, it is a somewhat complex process for anyone who wants to enter this digital market.
In general, Bitcoin is recorded in a large accounting book that, for technology specialists, is considered a database, where all the information of the transactions carried out with Bitcoin is stored, which is called the Blockchain.
Miners and users are in charge of mining (extraction of cryptocurrencies), investment operations, and doing the methods to advertise the cryptocurrency, respectively.
The miners perform the security and protection of the transactions, ensuring that they are carried out without sudden cancellations or even fraud.
What is Bitcoin, and how does it work?
Bitcoin is a digital currency, decentralized and independent of the traditional market, so it is not based on any economic model that carries out financial operations.
It indicates that it does not have a legal basis or regulations like traditional currencies.
Bitcoin has come to position itself globally at such a high level that there are even ATMs capable of dispensing this famous digital currency, just as it happens with the cash that we are used to withdrawing from a bank.
Its operation is straightforward and depends on the perspective you want to analyze; if it is the user’s point of view, Bitcoin works through an application either on a desktop computer or Smartphone, where Bitcoin is sent and received; it’s that simple.
From a technological perspective, its operation may be a little more challenging to understand, but basically, Bitcoin is developed under a platform called Blockchain and is considered an accounting network for public use, where any user can verify the transactions made.
These transactions are backed by a security system of digital signatures, which belong to the shipping addresses, which could be compared to bank accounts in the traditional market.
It allows Bitcoin users to be in charge of controlling their transactions without the intervention of intermediaries or third parties.
On the other hand, we find Bitcoin mining, which works through mining, where anyone using the appropriate equipment or hardware can achieve a reward by deciphering the mathematical logarithms of a specific Blockchain block.
What does the bitcoin protocol refer to?
It is essential to know that a protocol refers to a set of norms and rules that govern Bitcoin in this case, which was created in 2008 by a group of people from which the name of Satoshi Nakamoto emerges as the creator.
This supposed creator does not mean that he is its owner; Bitcoin was launched on the market as a digital currency that will reduce inflation in the world due to having a limited number of coins to be issued.
That is why when we talk about the Bitcoin protocol, it is the global way of covering the concepts and practices that characterize the most prestigious of digital currencies.
Consequently, no regulatory body can obtain benefits by controlling and managing the Blockchain and Bitcoin platform.
When Bitcoin was created, its value reached a fraction of a dollar, something that has changed significantly over time because Bitcoin comparisons were reversed, where currently; 1 dollar is equivalent to a relative fraction of bitcoin.
The increase or decrease in its value is due to the support and trust that the digital currency can generate in its users and potential investors.
The Bitcoin protocol establishes a constant and fixed generation of new bitcoin units, making mining work extremely attractive and lucrative for those who carry it out.
If there is greater access of miners to the network, the difficulty of obtaining benefits increases, so the miners must manage so that the costs generated by this mining process are as low as possible, achieving it efficiently.
Nobody controls the increase or decrease of profits in bitcoin mining; the system automatically adjusts the Bitcoin protocol, where even bitcoins that do not conform to the said protocol can be rejected.
When we find this type of information, we must analyze and evaluate all the pros and cons that cryptocurrencies offer to the digital market and their possible global impact in a couple of years.
Deciding to use Bitcoin or not is to consider the risks at the bottom of the investments.
Currently, the numbers of businesses that have decided to bet on Bitcoin are many among some we can find, restaurants, exchange houses, and online clothing and footwear stores; definitely, everything indicates that it will continue to grow.
Every day, there are exchange operations with Bitcoin that represent millions of dollars in this digital currency, which is not fictitious.