Journey into the World of Bitcoin: An Introduction of Cryptocurrency

Bitcoin Creation History

Bitcoin is currently the most popular alternate currency in the world. It is the first cryptocurrency initially released in 2009 and became popular in 2022. A simple example for those who don't know about cryptocurrency is a digital currency. In 2008, a group of unknown members or individuals invented cryptocurrency under the pseudonym Satoshi Nakamoto. The anonymous name used by the creator designed Cryptocurrency with a cap to limit the supply. This increases its scarcity over time, which tends to increase demand and price. Cryptocurrency is not controlled by any government or bank. Even this is not printed on any paper. It is traded only through computer networks. The transaction process is verified through the cryptography of the network nodes and recorded in the blockchain. As per the record, the price of 1 bitcoin rose to a maximum of 50 thousand dollars. Now the question is what is mining? This mining does not refer to the collection of gold from the mine. So how is Bitcoin mining done?

During the 2007-08 financial crisis Home prices began to fall, subprime lenders began to file for bankruptcy, and losses from subprime loan investments caused a panic that froze the global lending system. Also, financial institutions were left holding trillions of dollars worth of near-worthless investments in subprime mortgages. Ecomistsis also largely blame this recession on the US government's wrong policies. Many companies go bankrupt. In such a crisis, a new type of currency is introduced which is called Cryptocurrency. Bitcoin is the first experimental Cryptocurrency.

Bitcoin Mining

Bitcoin is a digital asset designed to work in peer-to-peer transactions as a currency. Satoshi Nakamoto first initiated a Bitcoin transaction by giving Hal Finney 10 Bitcoins in 2009. The Economist magazines describe Bitcoin as serving the following three purposes.

• A store of value

• A unit of account

• A medium of Exchange

It is important to have a basic understanding of how Bitcoin Mining works. The transactions of Bitcoin complete using computers by the sender and recipient. Only the sender and recipient control the transaction process. No active governments, banks, or financial institutions can be informed or monitor these transactions. The process of completing financial transactions like Bitcoin, the study of secure communications techniques that allow one sender and recipient of a message to view its contents is called Cryptography. If someone wants to make a transaction by paying Bitcoins, then verifying whether he has bitcoins is done through Cryptography. It is used to protect digital data. The authenticity of the transaction is verified through Cryptography.

Generally, every bank has a central server where all customer accounts are kept. But since there is no bank or government intervention in the case of Bitcoin transactions, who will do the work of verifying the authenticity of the transactions, the question remains. The answer to this question is Bitcoin Mining. Many volunteers and freelancers around the world do this mining work. Those who successfully mined Bitcoin, receive a predetermined amount of Bitcoin. The money that is earned by keeping the Bitcoin transaction process active is called Bitcoin Mining. It is the process by which new Bitcoins are entered into circulation.

Blockchain

Bitcoin mining is a complex technological and computational process of validating the bitcoin transaction over the network. This process is designed to be very complex. Because any written program by a computer can be reproduced as much as desired through normal copy-paste. Since Bitcoin is a digital currency, anybody could increase their money by copy-pasting if it were written in general language. That's why transactions are recorded in a kind of secret language which is called Blockchain. It's also known as an irreversible open ledger that facilitates the process of recording every single transaction and tracking assets. Usually, banks keep the details of transactions confidential even from their clients. But in Blockchain, every transaction or digital event is shared among different participants. Information in the ledger can only be updated by the consensus of the participants and once recorded information can never be changed.

Bitcoin Data Center

Bitcoin is known as a secure system because its information remains immutable. All data is stored on numerous powerful computers. Nowadays, Bitcoin transactions have increased so much that Bitcoin mining has become more difficult than before. Early Bitcoin mining could be done from home. Many can earn extra money by doing mining work in their spare time. But at present due to booming BItcoin transactions mining is not easy as it used to be without expensive data centers. Even after investing millions in a data center, there is no guarantee of 100% profitability.

Building a profitable mining farm requires thousands of powerful computers that need to be kept running day and night, cold weather, and a low-cost electricity supply. Computer servers consist of high-powered graphics cards or GPU. These high-performing computer servers and electronic devices scattering heat constantly. So cold regions are chosen for building Bitcoin mining data centers. The largest number of data centers are located in countries like Russia, Iceland, Canada, Norway, Switzerland, Netherlands, China, the United States, etc. Along with cold weather, these data centers need uninterrupted enormous computation power with low-cost to mine Bitcoin. High energy prices are not favorable for the operational cost of data centers. Even though the price is affordable, many data centers monthly cost exceeds millions per month.

At present, Bitcoin mining is an expensive and difficult task. But yet this field become a competitive business. But the production of Bitcoin has a certain limit. The number of Bitcoins will never exceed 21 million. A total of 19,276,325 bitcoins have already been produced till 29 January 2023 and 17,23,675 are left to be mined. Bitcoin is considered by many to be one of the most successful digital currencies ever created. But it is also a risky asset.

The developer of Bitcoin tops the list of Bitcoin owners, reportedly holding over 1 million Bitcoin. According to Bloomberg Changpeng Zhao - founder of Binance is estimated to be worth $96 billion.