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What is Bitcoin? Let's simplify it by comparing it to gold. Why does gold have value? Not just because Indian aunties wear it on wedding, but because we, as a society, have collectively assigned it value. Why? Well, there's a limited supply of gold in the world, and it takes time, effort, and resources to mine it. Enter Bitcoin, our digital counterpart to gold.
Imagine Bitcoin as a digital record book, where every transaction is meticulously recorded. This record book is called the blockchain.
Each page in this book represents a block, and every time someone engages in a Bitcoin transaction, a new block is added to the chain.
But here's the magical part: once a block is written, it's immutable—it can't be altered or erased.
How actually it works ?
Bitcoin utilizes something called Proof of Work, a robust algorithm that ensures the security and integrity of the network.
Here's how it works:
across the globe, there are individuals and organizations engaged in Bitcoin mining. These miners maintain a distributed record, essentially a long copy detailing who owns how many bitcoins.
The beauty of Bitcoin lies in its decentralized nature. It's exceedingly challenging for any single entity to control the network. Even if someone attempted to generate more bitcoins than exist in the world, the network would collectively reject such an attempt—unless they were able to compromise more than 50% of the network, a feat highly improbable due to the distributed nature of Bitcoin.
But why do people participate in Bitcoin mining? Well, they're incentivized to do so. Miners are periodically rewarded with bitcoins for their efforts in securing the network. This process not only maintains the integrity of Bitcoin but also ensures its continued operation and security.
In essence, Bitcoin operates as a digital gold rush—a decentralized, secure, and finite digital asset that derives its value from the collective trust and consensus of its users. Just as gold has been revered throughout history for its scarcity and utility, Bitcoin represents a modern-day digital store of value, underpinned by cutting-edge technology and cryptographic principles.