What is Bitcoin?

To explain Bitcointhe first thing to understand is that it is a decentralized network of trust. It's a computer program that allows people to send value to each other without the need for third party verification.

It can seem a little daunting if you attempt to understand it, but the truth is you don't really need to understand it to use it. Do you understand how other Internet protocols work? Probably not, but for anyone wanting a breakdown of Bitcoin in layman's terms read on.

What is Bitcoin and Where Does It Come From?

Bitcoin is the hardest money ever created. It is an open-source, decentralized, peer-to-peer, immutable, cryptographically secure, payment network that needs no trusted third party and everything can be audited on a public ledger.

It was created by Satoshi Nakamoto and launched on 3rd January 2009. Nobody knows who Satoshi is, or very few people do, but that is one of the beautiful things of Bitcoin.

Where Do Bitcoins Come From?

Every bitcoin (BTC) is minted into existence by miners. Miners are computers, also referred to the people who own the mining computers, but basically mining machines pick up transactions, hash them into blocks and then every 10 minutes or so, they try to work out the cryptographic mathematic puzzle to be the miner to add the block to the chain.

Whichever miner discovers the answer first, gets to add the block to the blockchain, and wins the block reward, which is currently 12.5 BTC. However, with the bitcoin halving almost upon us, the block reward is set to be cut to 6.25 BTC per block.

Th Bitcoin halving takes place every 210,000 blocks, which takes about 4 years. It will continue to be halved until the last bit of Bitcoin is mined in the 22nd century. Crazy, huh!

Each bitcoin is divisible by one hundred million, and each of these units 0.00000001 is called a satoshi, after the anonymous creator.

How Secure is Bitcoin?

Bitcoin is the most secure computer network ever created. The encrypted blockchain protocol is distributed globally on the network of nodes and mining machines.

The Bitcoin protocol uses the most secure hashing algorithm, SHA_256, to secure its encrypted blocks, and as long as 51% of nodes agree with each other, then nothing can be added to the blockchain.

If a rogue node tried to add transactions that he says took place, his node wouldn't align with the thousands of other nodes, and his version of the blockchain would be refused.

Is it possible for someone to hack Bitcoin? Well, nothing is unhackable, but to hack Bitcoin you need billions of dollars of processing power to have a chance. And even then, it's highly unlikely that any person trying to hack it, would gain over 50% control of the network.

Bitcoin really is the most secure network ever created.

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