Should You Invest In Bitcoin?

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Bitcoin (BTC) was created by Satoshi Nakamoto, an anonymous individual or group, in 2009. Often considered the pioneer of cryptocurrencies, it was the first decentralised currency to gain popularity and is now considered the best-known cryptocurrency in the world.

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How does Bitcoin work?

Bitcoin's operation can be divided into two key components: blockchain technology and bitcoin transactions.

Blockchain

  • Decentralised ledger: Bitcoin operates on a decentralised ledger called the blockchain: a chain of blocks containing data relating to bitcoin transactions.
  • Mining: Miners, using specialised software, validate and add new transactions to the blockchain through a consensus mechanism called “Proof of Work”.
  • Security: The blockchain's decentralised nature ensures security and immutability. Once a transaction is added to a block, it is secured using cryptography and becomes almost impossible to alter.

Transactions

  • Digital wallets: Users need a digital wallet to send, receive and store Bitcoin. Each wallet has a public address, similar to an account number, and a private key, like a password.
  • Initiating transactions: To send bitcoin, a user initiates a transaction by signing it with their private key. This digitally signed transaction is then broadcast to the network.
  • Verification: Miners on the network verify the transaction's validity by confirming that the sender has the necessary bitcoin to send, and that the private key is legitimate.
  • Inclusion in blocks: Valid transactions are included in a block by miners. These blocks are then linked to the previous block in the chain.
  • Confirmation: Several subsequent blocks are added to the blockchain to confirm the transaction's permanence. The more confirmations, the more secure the transaction.

Bitcoin’s value proposition lies in its scarcity and security, as well as its potential to serve as a store of value. While Bitcoin's future is uncertain, it has undeniably paved the way for the broader adoption of cryptocurrencies and blockchain technology across a variety of industries.

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