What you need to know when trading Bitcoin (BTC) is how it works. Therefore, this time, we will introduce the mechanism of Bitcoin (BTC), from basic contents necessary for transactions such as how to purchase and store Bitcoin (BTC) to specialized contents such as mining and blockchain technology.
About Bitcoin (BTC)
Bitcoin (BTC) is one of the crypto assets (virtual currency) that can be used on the Internet. It is not a legal tender with coins and banknotes like yen and dollars, but a new payment method with electronic data payment function, which makes it easy to send money to distant countries via the Internet.
Payment methods that use electronic data include in-game currency used in online games and electronic money that can be used in shopping. All of these values are based on legal tender such as yen and can only be used by specific companies, countries / regions. Bitcoin (BTC), on the other hand, is a new payment method that has the potential to be used all over the world without being limited to a specific country or region.
Bitcoin (BTC) has been accepted as a payment method
In US, the “Act on Settlement of Funds” was amended and enforced in April 2017, and crypto assets (virtual currency) are defined as one of the means of settlement, not legal tender.
Definition of crypto assets (virtual currency)
- It is a property value that can be used for unspecified persons to pay the price to unspecified persons and can be purchased or sold to unspecified persons as the other party, and is recorded electronically, on the Internet, etc. Can be relocated using
- It is a property value that can be exchanged for other crypto assets (virtual currency) with an unspecified person as the other party, and it is recorded electronically and can be transferred using the Internet etc.
- Not fiat currency or assets denominated in fiat currency such as prepaid cards
As a result, Bitcoin (BTC) has become one of the payment methods like legal tender such as yen and dollar, and can be used for payment of goods and services and remittance between individuals and companies. .. In addition, Bitcoin (BTC) can be exchanged for fiat currencies of various countries, so it is beginning to be used all over the world across countries and regions.
How to store Bitcoin (BTC)
Legal tender such as yen can be stored in cash, but Bitcoin (BTC), which has different properties from legal tender, cannot be kept at hand like coins and banknotes.
Therefore, Bitcoin (BTC) installs a dedicated program on a personal computer or smartphone to create and store a “wallet” equivalent to a Bitcoin (BTC) wallet or bank account. The wallet has a “bitcoin address” that corresponds to the bank account number, and there is a wide range of information such as how much bitcoin (BTC) is in the wallet at which address and what kind of transaction was made with which wallet. It is open to the public. However, since the personal information of the owner of the wallet is not disclosed, it is characterized by high anonymity.
Difference between Bitcoin (BTC) and Altcoin
Bitcoin (BTC) is said to be the world’s first crypto asset (virtual currency) advocated by Satoshi Nakamoto. With the spread of the Internet, there was no central administrator such as a government or a bank, and it was developed as a “payment platform” for making “fast and cheap” payments across countries and regions. It has the largest transaction volume and market capitalization (as of October 2018), and is recognized by many as a synonym for crypto assets (virtual currency).
On the other hand, cryptographic assets (virtual currency) other than Bitcoin (BTC) are collectively called “altcoin”. Typical altcoins include Ripple (XRP) and Ethereum (ETH).
Many altcoins have different properties from Bitcoin (BTC). For example, Ethereum (ETH) uses a technology called smart contracts to manage transaction records and contract details without going through a central institution. I can.
It can be said that the biggest difference is that each crypto asset (virtual currency) is developed for different purposes in this way.
How Bitcoin (BTC) is managed
Legal tenders such as yen, dollars and euros are managed by the central banks of each country. However, Bitcoin (BTC) is not controlled by a specific country or region, but by a technology called “blockchain”.
Using blockchain technology, it is possible to record detailed information such as how much Bitcoin (BTC) is in which wallet and what kind of transaction was made with which wallet. And by disclosing that information widely, people all over the world monitor it so that the data is not tampered with, and protect the value of Bitcoin (BTC).
Bitcoin (BTC) mining. What is the mechanism
What is mining?
Mining generally refers to the act of digging out minerals such as gold and diamonds. So why is Bitcoin (BTC), a collection of data, “mined”?
Bitcoin (BTC) encrypts detailed data such as “when, who and who (address) traded how much Bitcoin (BTC)” and records it in a transaction ledger called “block”. I’m repeating. The system determines that the rewards for the work recorded in the transaction ledger will be paid in newly issued Bitcoin (BTC), which is called “mining” because it resembles the mining of gold and diamonds. became.
The upper limit of mining is
If Bitcoin (BTC) is issued every time you succeed in mining, Bitcoin (BTC) will continue to increase indefinitely, and inflation will reduce its value. Therefore, Bitcoin (BTC) has an upper limit on the number of issuances of “21 million BTC”. In addition, there is also a “half-life” in which the mining reward is halved when 21,000 blocks are generated, and the mechanism is such that 21 million BTC, which is the maximum number of Bitcoins (BTC), is not easily issued.
The half-life comes about once every four years, and the next half-life is expected to be around 2020. In addition, it is estimated that all Bitcoin (BTC) will be mined around 2140, calculated from the block generation speed and half-life.