In simple terms, bitcoin is the new digital currency. But such a definition cannot be limited, because in order to understand the essence of bitcoin, it is necessary to know where they came from and why they are currently so expensive.
Bitcoin: what is it in simple terms
At its core, the system for mining, storing, exchanging bitcoins is an ordinary computer program. At the same time, most modern programs can be located on a separate computer or server, and bitcoin and information about it are stored on many millions of machines of users who are not just not familiar with each other, but even located at different ends of the globe.
A similar principle of operation for torrents known to many. On the computers of many users, a special program is installed - a torrent tracker, which allows users to communicate through it with each other and exchange files. At the same time, the files themselves are stored on the computer of one or several users, and not on all owners of the torrent tracker. For the exchange and storage of data, powerful servers are not needed, in fact, in each individual case, the server is the user's machine, on which a certain file is stored.
The bitcoin system works in a similar way. But if the task of a torrent is to transfer files, then the task of the bitcoin system is to give users virtual digital glasses, coins.
Where do bitcoins come from
Developed an electronic payment system Satoshi Nakamoto. The idea behind the bitcoin system was for people to be able to use their money without any centralized control. At the same time, the costs of currency circulation were supposed to be minimal, and the speed of information transfer should be instant.
Since Bitcoin is a currency, it is important to understand where it comes from. If ordinary paper money, and, accordingly, their electronic counterpart are issued by the central banks of states, then with bitcoins everything is different.
Bitcoins are not printed by states and their bodies, their emission is possible only in digital form and is programmatically limited to 21 million bitcoins. The emission of bitcoins is possible only in digital form, and any of the users of the program can mine currency using the computing power of their computer. All transactions on the network are processed by users' computers, and therefore, when answering the question "what is bcoin", one can say that it is an independent payment system.
A few words should be said about securing bitcoins. Unlike any national currency, they are not backed by anything. Any user can run a script on his computer for the extraction of this digital currency and, as it were, become a mini central bank. The script code itself is published in the public domain in its original form, and therefore everyone can familiarize themselves with it.
What are bitcoins and what are they issued for
The bitcoin transaction data exchange system must be supported by so-called miners. They provide their computers (sometimes huge mining farms with incredible computing power) to process transactions.
In simple terms, the miner receives the task to process some mathematical operations, and for this he receives coins.
At the same time, a total of no more than 3600 coins can be obtained by miners per day, and therefore the mining process is becoming more and more complicated. Thus, the system regulates itself and monitors the complication of tasks with increased competition among bitcoin miners.
Thus, we understand that bitcoin is such an ordinary program code that generates mathematical problems for miners for which they receive coins. In the future, they sell these coins on exchanges for real money.
Why is Bitcoin so expensive
Having figured out what bitcoin is, many users are faced with a misunderstanding of why it is so expensive.
It is known that the price depends primarily on two factors: supply and demand. If the supply does not keep up with the demand, then the price of the product rises. In the case of bitcoins, this is because there are more people who want to buy bitcoins than those who want to sell them.
As mentioned above, it is impossible to mine more than 3600 coins per day due to the fact that there are software restrictions, and the total amount of bitcoins in circulation can be no more than 21 million. It is this limitation that affects the offer.
But there are more and more users who want to get a new currency, so the demand for such a product is growing.
A lot of people who understand well what bitcoins are expect to get rich quick by buying coins at a cheaper price and then reselling them at a higher price. Miners are guided by the same principles when buying expensive equipment for their farms.
