Bitcoin Features and How It Works

✅ ✅Overview

Concept : The world's first successful decentralized digital currency

ㆍInitial issue date : January 3, 2009

ㆍUnit : BTC

ㆍDeveloper : Satoshi Nakamoto

Issuance method : Proof of Work (POW)

Maximum supply : 21 million BTC

Distribution supply : 19.3 million BTC (91.911 TP4T mined, mined until approximately 2140)

✅ ✅Features

Distributed Ledger Technology : Transactions are made directly between users (peer-to-peer) without a centralized authority, with all transaction information recorded on a distributed ledger.

Intangible assets: As a digital asset with no physical form, it is easy to store and transfer.

③ Limited mintage: Bitcoin's supply is limited to 21 million. This eliminates concerns about inflation and increases the stability of the value.

* Halving every 210,000 blocks (halving is typically a 4-year cycle)

④ Anonymity: Bitcoin only records transactions on a distributed ledger, so no trader's personal information is public.

Transaction fees: Fees are paid to include transaction information on the blockchain, with fees varying depending on the speed of the transaction.

✅ ✅How it works

① Mining : The process of adding new blocks and maintaining the blockchain. To do this, miners work on solving very complex math problems.

This math problem is generated using the SHA-256 hash algorithm, and miners must solve it to create a new block and add it to the blockchain.

Block : A blockchain is a record of transactions organized into units called "blocks" that are appended and chained together over time. Each block contains information from the previous block, resulting in a chain of data.

* Introduced a way to solve the problem to prevent blocks from being forged. Time to form one block is about 10 minutes. Currently mines 6.25 BTC per block

③ Wallet : A program that allows you to store BTC and create new addresses to trade Bitcoin.

*You need to create a wallet before you can mine and trade BTC. In short, a Bitcoin management tool.

④ Transaction : Transaction information. Transaction details are recorded on the blockchain and can be viewed by anyone. (including sending and receiving addresses and fees)

*The number of transactions and the aggregation of their quantities shows the level of transaction activity on the network.

⑤ Hashrate : The rate at which new transactions are added to the blockchain. Higher values increase blockchain security and speed up transaction processing.

*Hashrate is measured in terms of the number of hashing operations per second, the more hashing operations performed, the higher the hashrate. (=HashPower)

*Hashpower is BTC security power, the factor that drives BTC's intrinsic value.

⑥ Mining Difficulty : An indicator of the difficulty of the work required to mine Bitcoin. Miners must solve problems to create new blocks and add them to the blockchain.

* Difficulty is decreased if the mining time of the previous 2016 blocks is greater than or equal to 14 days, and increased if it is less than or equal to 14 days, to keep the minting rate of Bitcoin constant.

* More miners increase mining difficulty and decrease mining profitability. These adjustments play an important role in maintaining BTC's stability and minting rate.

⑦ Fee : The payment fee that the user sending BTC must pay when processing the transaction.

* Transactions that pay higher fees are processed faster, so the Bitcoin network prioritizes transactions with higher fees.

* Transactions with more data pay higher fees. Fluctuates based on volume and demand.