What is Bitcoin?

What is Bitcoin (BTC), what are its features and what does it do?

Publication Date: 27.07.2023

Bitcoin, the world's most popular cryptocurrency, is a digital currency that can be transferred from user to user without the need for intermediaries. It was discovered in 2008 by an unknown person or group named Satoshi Nakamoto. It is a system that operates on a distributed network, without being dependent on a central authority, and is secured by cryptographic methods. It can be used both as a means of payment and as an investment tool.




Who Was Bitcoin Developed By?
 

Satoshi Nakamoto, the creator of Bitcoin, published an article known as the Bitcoin white paper in 2008 and explained how Bitcoin works. Satoshi Nakamoto launched the Bitcoin network in 2009, creating the first block and calling it "genesis block". He contributed to the Bitcoin network until 2010 and then disappeared. His identity is still unknown.


What are the Purpose and Features of Bitcoin?
The purpose of Bitcoin is to offer a secure, fast and cheap payment system that takes place directly between users, without the need for intermediaries. Some important features are:

• Limited supply: The total supply of Bitcoin is limited to 21 million units. In this way, the value of Bitcoin tends to increase.
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• Transparency: All transactions made on the Bitcoin network are recorded publicly. This record is called the “blockchain”. Blockchain ensures Bitcoin's reliability
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• Resistance to censorship: The Bitcoin network cannot be controlled or stopped by a central authority. This makes it resistant to censorship.
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• Personal control: Bitcoin users own and are responsible for their own money. They can spend or keep their money as they wish.
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• Global access: The Bitcoin network is accessible to anyone connected to the internet. In this way, it can function as a global currency.

How Does Bitcoin Work?
The Bitcoin network is a distributed system consisting of computers around the world. These computers are called “nodes”. Nodes ensure the healthy functioning of the network by downloading and updating the blockchain. They also verify and confirm transactions made on the network.

Transactions made on the Bitcoin network are secured with digital signatures. A digital signature proves the identity of the person making the transaction and guarantees that the transaction is unalterable. It also consists of two parts called private key and public key. The private key is used to sign the transaction and is kept secret. The public key is used to verify the transaction and is public.

Transactions made on the Bitcoin network are added to blocks created at regular intervals. A block contains a group of transactions and carries the cryptographic digest of the block that preceded it. In this way, blocks are connected to each other and form the blockchain. The blockchain is the public record of the Bitcoin network and is shared by all nodes.

To add a new block to the blockchain, a competition takes place between nodes. We call this competition "mining", which we are all familiar with. Mining requires solving a mathematical puzzle to find the cryptographic hash of the block. This puzzle varies depending on the content of the block and its difficulty level can be adjusted. The first node to solve the puzzle announces the new block to the network and has it added to the blockchain. Additionally, it receives the fees for transactions in the new block and newly created Bitcoins as rewards.