Bitcoin is a payment system. Or maybe it’s a cryptocurrency or a blockchain? What is it, and what do these words mean? In this article, we will understand what bitcoin is, where cryptocurrency comes from, and what it takes to create bitcoin. A lot has already been said and written about this, but still, not everyone understands the essence.
What Are Cryptocurrencies and Bitcoin?
In the world of cryptocurrencies, every client performs administrative functions and donates some power of their computer or server to keep the entire network operational. Such a network is called peer-to-peer. Such a system is needed only for one purpose — the complete absence of control by government agencies or commercial corporations.
Bitcoin was the first cryptocurrency created with the primary goal of digitizing and democratizing money through decentralized anti-fraud technology. After Bitcoin, new cryptocurrencies began to emerge that pursued the same purpose as Bitcoin, with their respective technologies and goals in areas such as money movement, privacy, entertainment, specific technological solutions, etc.
It is a way to organize information. The main idea and meaning of the blockchain are that each block contains information both about itself and about the previous block:
- For this, sequential parts are used, connected not only by number.
- The important thing is that changes to one block in the middle of the chain will cause changes in subsequent blocks.
- Since each client of the bitcoin payment system performs the function of an administrator, copies of such chains are stored independently of each other.
- If the user wants to cheat, the system will see it and will not allow it.
All over the world, this technology is actively used to transfer cryptocurrencies. If you have sent cryptocurrency over the blockchain, thousands of computers around the world will confirm and store all the information about the transfer.
The process of sending a transfer will take a few minutes. Money on the blockchain cannot be lost or counterfeited. There are no third parties and intermediaries, and the accuracy of calculations is guaranteed by the mathematical accuracy of the technology.
Blockchain technology acts as a highway, and cryptocurrencies are cars that travel on a highway. In addition to working as a backbone for cryptocurrencies, blockchain is also responsible for registering all cryptocurrency movements, acting like a large 100% public digital ledger.
Thus, cryptocurrency is a form of digital or virtual money characterized by a decentralized nature. Bitcoin is the main and most popular cryptocurrency. In turn, blockchain is a decentralized database that is simultaneously stored on multiple computers connected via the Internet.