In today’s world, there is a currency that is several times more expensive than gold. A currency that in fact does not exist, but its value increases every year. The name of this currency is bitcoin. According to the latest data, since the end of 2016, the rate of bitcoin to the dollar has quadrupled. Every other young person has heard about this cryptocurrency. Someone is engaged in its mining, someone tries to trade it.
What is bitcoin in simple terms?
Bitcoin is a cryptocurrency (digital money), which has no physical embodiment. There are special accounting systems (blockchain) designed to monitor the movement of currency in the market. It can be compared to the usual cashless payment of any bank.
When you make any transaction with money, you don’t see that money in physical form either. They do not exist in the physical form, but the bank register records all the transactions made with the money.
Conventional money is kept in registries that are held by the respective banks and payment systems. Bitcoin electronic money is stored on all of the computers that produce the currency. Absolutely everyone can see the history of all his transactions with the currency. All the data in the blockchain is protected by a cryptography system. This protects them from being falsified.
Bitcoin is the most secure currency, it is almost impossible to counterfeit
How bitcoin currency works
A regular monetary currency is produced by the state. It is interconnected with gold, it is a kind of gold equivalent. Bitcoin cryptocurrency is not linked to a particular state. The new currency is not printed anywhere, it is produced on computers as a result of serving the needs of the same system.
Let’s break things down with an example. Suppose a purchase or any other bitcoin transaction takes place somewhere. That transaction has to be written into the blockchain of all the computers that serve that network. This is a very time-consuming process because a special signature must be stamped on the transaction. The signature is calculated based on special algorithms and requires computer power.
Somewhere on the other side of the earth there is a computer that performs the maintenance of this network. This computer is in charge of calculating and creating the signature. It gets a reward for the work done in the form of a certain amount of bitcoin currency. The remuneration for the work is transferred to a special bitcoin wallet.
All processes of signature calculation are conducted automatically while the computer is on. This process is called bitcoin mining. In literal translation from the English word “mining” means mining. In this case, we will be mining the bitcoin cryptocurrency. To carry out these processes, you will need a powerful computer or an entire mining farm. Mining farms are several computers connected into one network, which perform computational processes on a continuous basis. More specifically, mining virtual currencies basically requires only powerful video cards and power supplies.
It is the video cards that do all the computational processes. Serious earnings will require high performance cards (ATI RADEON at least seventh generation). Constant work of a mining farm requires serious expenses on electricity. And these systems will have a high heat output, so the room must have a good ventilation system. If the equipment overheats, it will fail very quickly.