Bitcoin is a consensus network that enables a new payment system and a completely digital money. It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen.
How does bitcoin work...
As a new user, you can get started with Bitcoin without understanding the technical details. Once you have installed a Bitcoin wallet on your computer or mobile phone, it will generate your first Bitcoin address and you can create more whenever you need one. You can disclose your addresses to your friends so that they can pay you or vice versa. In fact, this is pretty similar to how email works, except that Bitcoin addresses should only be used once.
Bitcoins are created when a “miner” (essentially, a node on the Bitcoin network that boasts very fast computers) beats other miners to package up the latest block of Bitcoin transactions and add it to Bitcoin’s blockchain—its famous shared ledger.
The winner, who receives newly-minted Bitcoin as their reward, wins the race by providing the answer to a mathematical problem that is deliberately designed to use up a lot of computing power, in order to maintain stability in the speed at which these blocks are “found.” People often say the miners solve mathematical problems, but all they really do is repeatedly try to guess a lucky number, as quickly as possible, using the brute force of powerful computers.
Bitcoin mining...
“Mining” Bitcoin is a notoriously expensive business—recent calculations by the lighting company Elite Fixtures suggest that it costs a fortune to mine one Bitcoin in some countries, with the cost being as much as $26,170 in South Korea.