How does Bitcoin work?

Bitcoin is a decentralized digital currency that allows peer-to-peer transactions without the need for intermediaries like banks or payment processors. It was created in 2009 by an unknown person or group of people using the pseudonym Satoshi Nakamoto.

At its core, Bitcoin operates on a distributed ledger called the blockchain, which is maintained by a network of computers around the world. This ledger keeps a record of all transactions that have ever taken place on the Bitcoin network.

When someone wants to send Bitcoin to someone else, they create a transaction and broadcast it to the network. Miners on the network then validate the transaction and add it to a block on the blockchain. In exchange for their work, miners receive a reward in the form of newly created bitcoins.

The security of the Bitcoin network is ensured through a process called mining. Miners compete to solve complex mathematical puzzles, and the first one to solve the puzzle gets to add the next block to the blockchain. This process ensures that the blockchain is always kept up-to-date and that no one can alter or delete past transactions.

Bitcoin is also designed to have a limited supply of 21 million bitcoins, which is expected to be reached in 2140. This scarcity, combined with the decentralized nature of the network, has led to Bitcoin being seen as a store of value and a potential hedge against inflation.

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