Bitcoin

ELI5 - What is Bitcoin and how does it work?

Bitcoin is the first decentralized cryptocurrency, created by the mysterious Satoshi Nakamoto in 2008. At its heart, Bitcoin is a list of transactions, showing who's sent and received the currency. Bitcoin can be moved between users' addresses, or public keys, by signing transactions with their corresponding private keys (like a password).

Rather than a central authority (like a bank) updating the list, Bitcoin introduced a new technology called blockchain, a cryptographic list distributed over a large network. Blockchain solved the main issue preventing the success of earlier digital currencies, namely allowing bad actors to spend their money more than once.

To do this, Bitcoin relies on users, known as miners, who loan computer CPU power to the network. Miners' computers make trillions of guesses to solve the trial-and-error math problem of organizing the latest transactions into a "block." Once a solution is found, however, the other computers in the network can easily verify it as correct. When this "consensus" is reached, the miner who solved the block receives a Bitcoin award, and their solution is permanently added to the blockchain.

By drollparadox7655 1 year ago