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what is bitcoin and how does it work

What Is Bitcoin?

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Bitcoin is a decentralized digital currency created in 2009 by an anonymous person (or group) called Satoshi Nakamoto.

It allows people to send and receive money over the internet without a bank or middleman.

Unlike traditional money:

  • No central bank controls it

  • It’s not printed by governments

  • It exists only digitally

How Does Bitcoin Work?

Bitcoin runs on a technology called blockchain.

1️⃣ The Blockchain (Public Ledger)

Think of the blockchain like a public spreadsheet:

  • Every transaction is recorded

  • Anyone can view it

  • No one can secretly change it

Transactions are grouped into “blocks” and linked together — forming a chain of blocks → blockchain.

2️⃣ Mining (How New Bitcoin Is Created)

Bitcoin is created through a process called mining:

  • Powerful computers solve complex math problems

  • The first one to solve it adds a new block to the blockchain

  • The miner earns newly created Bitcoin as a reward

There will only ever be 21 million Bitcoin, which makes it scarce.

3️⃣ Wallets (How You Store It)

You don’t store Bitcoin physically.

You store it in a crypto wallet, which contains:

  • A public address (like your email — people send BTC to this)

  • A private key (like your password — never share this)

If you lose your private key, you lose your Bitcoin.

4️⃣ Transactions

When you send Bitcoin:

  1. You enter someone’s wallet address

  2. The transaction gets broadcast to the network

  3. Miners verify it

  4. It gets added to the blockchain

  5. The receiver gets the Bitcoin

This usually takes 10–60 minutes depending on network activity.

Why Do People Use Bitcoin?

  • 💸 To send money globally

  • 🛡️ As protection from inflation

  • 📈 As an investment

  • 🔒 For financial independence

Simple Example

Imagine sending $10 to someone in another country:

  • Bank → 2–5 days + fees

  • Bitcoin → minutes + often lower fees

If you want, I can also explain:

  • How Bitcoin price moves

  • How to trade it safely

  • How to start investing

  • Or the risks involved

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