Bitcoin Explained
Bitcoin is a digital currency, also called virtual currency or crypto-currency, which is basically a reward for the people who devote computing power to the blockchain network. To further simplify what bitcoin is, The Bitcoin Foundation provides this explanation:
-an innovative payment network and a new kind of money.
Bitcoins are created by solving complex math problems which increase in difficulty over time. During certain times, depending on the difficulty, mining equipment efficiency, and operational costs. it can actually cost more to produce a bitcoin than what a bitcoin itself it even worth. Other times, bitcoin can be very profitable and they are traded on exchanges similar to stocks but traded more like a commodity.
Watch the video for a good starting place and to gain some more knowledge about Bitcoin, mining, and the blockchain network.
What is the Blockchain?
The blockchain is a P2P (peer-to-peer) network connected through the Internet that conglomerates software around the world providing a public ledger and transaction confirmation system. The blockchain keeps a record of every transaction and confirms each transactions validity and authenticity. Most people, and companies, accept that a number of 3 to 6 confirmations is adequate proof that a transaction is valid and considered confirmed.
The blockchain itself is what is considered the real marvel of Bitcoin. This is the technology that will eventually change the world as we know it in the way of providing additional functionality that will be built on the blockchain.
The blockchain is a permissionless system, meaning that there is no requirement for an additional trust or governance beyond itself. This is a limitation of permissioned systems that require transacting parties to trust a 3rd party(s) (such as a bank) where the only enforcement of that trust are the trusted parties themselves and the agreements between them. This is the fundamental limitation that blockchain technology overcomes.
The blockchain is a permissionless system, meaning that there is no requirement for an additional trust or governance beyond itself. This is a limitation of permissioned systems that require transacting parties to trust a 3rd party(s) (such as a bank) where the only enforcement of that trust are the trusted parties themselves and the agreements between them. This is the fundamental limitation that blockchain technology overcomes.
There are many initiatives currently working on various software and hardware projects that will revolutionize many processes that are handled differently today.
What is Mining?
Mining is the process of producing bitcoins. Once achievable with nothing more than a single, CPU (central processing unit) based, home computer, it has now become a multi-billion dollar industry and a complicated, expensive, process involving equipment with short life expectancy with no further value past its shelf life. Due to the high costs of equipment, manufacturing, and power consumption, profit margins on bitcoin mining vary and not profitable during certain times of increased difficulty, high power costs, and technological performance roadblocks for less efficient mining organizations.