Bitcoin’s massive popularity has attracted many brand-new investors and improved the status of cryptocurrencies in our society. In fact, the bull cycle of Bitcoin in the past year is one of the reasons why there is mass adoption of Bitcoin today. In case you want to invest in BTC for the first time, keep reading. In this article, we explain more about the Bitcoin ecosystem and how it operates.
The Blockchain Network
When it comes to the crucial components of the Bitcoin ecosystem, blockchain technology is definitely one of the most vital factors of Bitcoin’s success. Bitcoin is a virtual currency created to operate in a distributed and decentralized online payment system without the influence of any central authority. Actually, based on a cryptographic protocol, it was designed to function without a trusted third party. This is the main attribute of the Blochian network that makes it appealing.
The blockchain network is peer-to-peer based, and the same software runs over every node (computer system) in the network. This makes the network tamper-proof, and it is impossible for one node to take control or make changes without that being immediately obvious to the other users, as everything is transparent. Another advantage is that thanks to this technology, you can transfer funds instantly for negligible fees.
Crypto trading is one other factor that is part of the Bitcoin system. Without crypto exchange platforms, it would be impossible to quickly trade and get BTC. This was the case before the first Bitcoin exchange platforms were founded, as mining was the only option in obtaining BTC. Nowadays, one platform that stands out is Bitcoin Billionaire, which is a high-performance automated trading system that relies on AI technology. You can make up to 70% daily earnings here, while the minimum deposit to open an account is only $250. Plus, what makes this a great site for beginners is the excellent trading guide.
As the blockchain system is a peer-to-peer-based and distributed public ledger, the contribution of the miners is essential for an uninterrupted and safe operation of the network. In other words, users won’t be able to transfer funds on the network without the miners. A miner is a user in the network that has a high-quality computer system, or nowadays, they use special computer equipment in order to mine on the network. When it comes to mining, it is actually the process of verifying blocks of transactions that are approximately 1 MB in size; this prevents double-spending from happening and keeps the network fair and safe for everyone involved.
New BTC and Bitcoin Halving
The mining process also has one important outcome, and it is the way through which new BTC is being generated in the network. The mining process isn’t easy because it is regulated by the protocols of the blockchain network, created by the original creator Satoshi Nakamoto. He devised the event Bitcoin halving.
It happens after four years, or after 210,000 blocks are added to the network, which cuts in half the reward of the miners. This event results in higher costs for mining, and it reduces the reward; hence miners don’t produce new BTC as they used to.
Moreover, the blockchain network also makes mining more difficult, so whenever about 2,016 blocks are mined based on the collective computing power, and increases the mining difficulty and make the whole process much slower.
Thus, miners work as part of mining farms or pools in order to offset the costs and reach their block rewards faster. In conclusion the blockchain network was designed to maximise the value of Bitcoin without compromising the security of the network or relying on the contribution from third parties.